Words from Woods – The Scarlet “A”

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Bob Woods resizedThe Scarlet “A”.  There was a time when that letter represented a word many considered a transgression, an unacceptable act, even – to some – a crime!  That was centuries ago.  Not so long ago there was another “A” word that folks found distasteful, perhaps some still do.  ANNUITY.   Why?  Several decades ago annuity contracts WERE distasteful.

An annuity is basically a contract whereby someone contributes a lump sum or periodic payments which, in time, begin to pay out a steady stream of income.  The bad news back then was if someone saved and contributed money to an annuity contract, then started to derive an income and died shortly thereafter, in many cases, the balance of the unpaid monies was forfeited (kept by the insurance company).  Leave a bad taste in your mouth?  You bet!  Especially if you were the supposed beneficiary of that balance.

That was then,  when the “norm” in retirement income planning revolved around taking interest only from a CD and preserving the principal, or investing in a portfolio of securities (stocks and bonds), taking 4% annually and then hoping the markets would make more gains than losses – or as my son Ian calls it,  “buy and hope!”

Today we find ourselves in a “new normal”.   In that new normal, we find a new annuity, the HYBRID ANNUITY, playing a significant role in today’s retirement planning.  That’s because today’s hybrid annuities are not your grandfather’s annuity.  They’ve evolved.  They have been redesigned.  They reflect our current economy and markets while still retaining an annuity’s premiere capability – that of providing a guaranteed, contractual, lifetime income.  A personal pension plan!  Moreover, the hybrid annuity, by design, makes money by participating in the horsepower of our markets when they are moving forward but will never lose even one penny if the market backslides…never.  Pair that with an available rider that guarantees a substantial annual increase in the contract’s income capability every year (just in case the markets don’t yield what you planned to save for your future income)

Opportunity and safety at the same time!  Oh, and that “balance of the account being forfeited” problem?  With the new hybrid annuities, all money not paid out as income is left to heirs.  Free of probate!  There is an “A” word for that…AWESOME!

As always, I wish you good fortune.

Bob Woods, President
Woods Financial
129 Hanbury Road Suite 103
Chesapeake, 23322

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