Retirement Income and the New Normal

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woods_smThere were three ways to look at how to generate retirement income.  The Bank Way, the Wall Street Way and the Insured Way. Two of the three, the Bank Way and the Wall Street Way, both had their time in the sun but now, because of economic conditions and market volatility, have become irrelevant.

The banks had us putting our retirement dollars into CD’s and taking the earned interest out annually for living expenses.  Worked great as long as interest rates were able to sustain your lifestyle. And there is an FDIC safety net. Folks in the early 70’s and early 80’s were ecstatic when interest rates shot up to double digit highs. They weren’t so happy about the accompanying inflation or the sticker shock experienced when it came time for renewal!  In reality, the average interest rates historically hover around 4- 5%. But how long has it been since we’ve seen those rates?  How long will it be before we see them again?  Unless you are willing (or able) to reduce your standard of living you’ll understand the irrelevance of this strategy today.

Then came Wall Street’s way… put  your hard earned retirement dollars into stocks, bonds, mutual funds, variable contracts and brokerage accounts for the growth needed to sustain us throughout our now extended lifespans and longer retirements. This worked well as long as the markets’ horsepower and returns were positive.  What they didn’t talk a lot about was the risk…the possibility of market corrections or just downright market disintegrations.  There are no Legal Reserve safety net programs in equity accounts. Do 2001 and 2008 bring back any memories for those who had money in the markets at that time? For those who were there and facing retirement or just needing to access some of their funds at that time, I apologize for bringing up a very sore subject. Some have had to return to the workforce… some have had to postpone retirement plans.

So what is this NEW NORMAL? What makes it so appropriate these days? It’s the Insured Way, using life insurance industry strategies and their guarantees.   First of all it incorporates the safety of a legal reserve system with the horsepower and return potential of our markets…the features we want and need in a plan…and eliminates the potential for loss of capital that we don’t.  It has built in industry, State and Federal safety regulations that aren’t available with the other plans. It relies on the same markets we look to for growth potential on our accounts but stops short if there is a market correction or collapse. In other words, there can be no losses due to market gyrations! And it can insure one thing that no other strategy in the country can…guaranteed, contractual, lifetime income. A virtual Personal Pension Plan!  Opportunity and safe growth on the same dollar at the same time. Insured. It’s the New Normal and it’s one of the strategies we use at Woods Financial.  Let us show you how it will work for you.

As always, I wish you Good Fortune.

Bob Woods

Woods Financial   482-0291

www.chesapeakewoodsfinancial.com

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