Art Glasgow, Peck-Glasgow Insurance
Recently I was reading an article entitles “Say Goodbye To the 4% Rule”. This article referenced a financial rule devised in the 1990’s a well know financial planner. It basically inferred that you can take out 4% from your savings the first year of retirement, and then that amount plus more to account for inflation each year, without running out of money for a least three decades.
That was a good rule and worked well, while it lasted. In recent years the 4% rule has been thrown into doubt due to a stock market rout, and low returns on both bonds and CD’s. With such low returns, going 3-5 years with a net reduction of 4%+ can have a negative impact of over 25%. This would great reduce your ability to maintain your retirement income goals for your expected life time.
Given the market risks of today, along with the continued low returns on fixed income investments, it may be time to look at another alternative.
Use Annuities instead of Bonds and CD’s.
The most common income annuity is called a single premium immediate annuity. With an Annuity, retirees can generate a safe, reliable income. Annuities have a promise of income for life, guaranteed by the life insurance company. They are similar to bonds, but there are no maturity’s. You simply cannot out live your income source. As with all investment vehicles, you want to investigate the financial security of the insurance company before purchasing an annuity.
A good place to start if talk with an insurance agent that is well versed in annuities. For more information, call a Peck-Glasgow Insurance professional agent to discuss your needs.