What the Heck is “Core Retirement Income?”

Core Retirement Income

Millions of people put their core retirement income at risk. What’s “core retirement income”? Core retirement income is the money you need for the basic expenses necessary to live: household, meals, personal care, healthcare, transportation, and some leisure and hobbies.

It may be $35,000/yr., $120,000/yr., or $250,000/yr. Once you determine that amount, wouldn’t it be nice to have confidence that you’ve created a predictable retirement income stream, with inflation protection, tax advantages, arriving on a monthly basis, and accessible?

Millions of people put their core retirement income at risk.

They don’t set up a predictable income stream; in fact, they don’t even know the opportunity exists. Many view Social Security as a guaranteed income stream, but rarely does it cover all expenses.

Isn’t it time to start thinking about creating a core retirement income without risk?

Unfortunately, 401(k)s and IRAs are the financial vehicles most people use to save. These are cursed with fees, taxes, risk, and volatility. They will not provide you with a certain income stream.

Why? You don’t know what future tax rates will be, and you don’t know what the value of the investments will be at any given time. Remember, volatility is not your friend.

What can provide the assurance of retirement income you need? A specific type of Whole life insurance and annuities, of course. But only certain types of each. This strategy has been used successfully for over 160 years…Why haven’t you been participating?

The Finance Fixer Team is uniquely focused on strategies to provide certainty and guarantees for your financial well-being.  Start thinking differently; get past the conventional wisdom and marketing hype!  

Get started…take our Two Minute Finance Fixer Survey!

 

All whole life insurance guarantees are based on the claims-paying ability of the insurer. Excess policy loans can result in termination of a policy. A policy that lapses or is surrendered can potentially result in tax consequences. Dividends reflect profits and are not guaranteed.

 

Dollars and Averages are Misunderstood

averages

Fred wanted to invest some money and decided that an “average” return of 5% over time would be a reasonable expectation. After all, he was told that the “average” returns over the last 25 years was 6%, and he wanted to be conservative in his expectations.

So, when Fred thought about how $100 would average a 5% return over 3 years, he imagined:

          $100, $105, $110.25, $115.76…perfectly compounding at 5%

Fred invested his $100.  After 3 years his investment advisor told him he averaged a 5% return.  Fred thought, “Great, right on target!  That means I have $115.76, right?”  “Well,” his advisor squeamishly said, “Not quite.”  When Fred asked to see his annual numbers, he was shown these:

          $100, $160, $80, $84

‘WHAT?!?,” Fred gasped.  “You said I averaged 5%.  Where’s my $115.76?” 

“Uh,” his investment advisor said as he slithered out of his chair, “My secretary is calling me, hold on.”    

Well, Fred DID “average” 5%.  Here’s how:

          $100 went up 60% = $160

          $160 went down 50% = $80

          $80 went up 5% = $84

                    So, +60% – 50% + 5% = +15%, divided by 3 years = +5%.

                    There you have it:  5%!

And further, Fred learned a very important lesson: Averages” do not translate into actual dollar values.  However, they are regularly used by financial advisors to discuss historic performance and, in turn, calculate future projections.

Game over.  Whenever anyone tells you they average 5%, 10%, etc., it means absolutely nothing.  Nothing!  “Averages” are wildly misleading, disguise historic volatility, and ignore future volatility.

As a side note, what the financial advisor used as “returns” was actually “change”. And that, boys and girls, is standard practice.

All whole life insurance guarantees are based on the claims-paying ability of the insurer. Excess policy loans can result in termination of a policy. A policy that lapses or is surrendered can potentially result in tax consequences. Dividends reflect profits and are not guaranteed.