Have you ever bought something and you didn’t understand how it worked? No, why would I buy something I didn’t understand?? WELL– Do you really know HOW your car works? It starts, it drives, I get the oil changed from time to time, But no I’m not an engine specialist. Or what about electronics? I put the batteries in and Voila ‘i’m in business!’ But exactly how do those tiny computers make it work? Beats me!
It’s typical and we don’t even realize it.
As you near retirement and prepare to live on a fixed income, accounts which can provide sustainable income, such as an income rider, become great options. You can control your tax liability and stay in control of your money. Some tools have options or riders which enhance your account. They may be titled guaranteed lifetime income, guaranteed withdrawal benefit or guaranteed income options. They might use LIB or LIBR to note the option on your statement. Most likely the enhanced option costs a fee. If you are unsure if you are paying a fee or not, contact us for a review of your account.
Growth & Income
The rider boasts of guaranteed growth. As your retirement grows before you begin making withdrawals you defer your growth and your tax payment. As the years go on your account will compound and grow along with the rider. The rider will have a guaranteed earnings percent, such as 6%, which means regardless of how the stock market is performing your rider value will increase 6%. WHOA! What an amazing benefit! Then I can take income from an account growing at 6% per year. Sign me up!
But hold on. The rider has a time frame and other stipulations. If you purchase a product with this benefit at age 50. The rider might expire before you need to start taking the income. You will have paid the fee for 7, 10, 15 years without using the benefit. Think twice before paying for something that you may not need or know how it works.
The guaranteed lifetime income is a wonderful option for some older retirees. We have met with several younger retirees who were still working when they purchased a product with this rider. Watch out for any added benefits in a financial product that won’t particularly help your situation.
Would you buy a car then never listen to the radio or use the air conditioner? Or put the batteries in the electronic but never turn it on? Probably not. Be wise and get a objective opinion on your entire retirement plan, not just one snazzy feature. For more information visit us here or call 417-882-1800 for a personalized appointment. Catch Bruce Porter’s show Dollars & $ense Tuesdays at 3pm on KOLR’s Ozarks Live
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We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.
We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. Our firm is not affiliated with the U. S. government or any governmental agency. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center are not affiliated companies. 300090