pros and cons consI got an email today from a reader that perfectly illustrates the dilemma too many people face…. this reader just doesn’t know where to start.

This is unfortunately a very common issue we run into every day, but not to fear! Getting through this is easy with just a few simple questions.

They wrote:

Yes, I read your annuity report. I have a person telling me I should buy a variable annuity and also bonds.  I have another person who is retired from the business and says not to buy any annuities or bonds.  He says I should only buy no load mutual funds which have mostly natural gas and energy stocks.

We wrote back with the following:

You can listen to 20 people and get 20 opinions.  They are just opinions at this point- some people like Ford, others Chevy, and others Toyota.  It’s all opinion, and without knowing what you want or need, it’s all static and noise that hurts you much more than helps you.

You might want great gas mileage… but if you’re talking to a pickup truck guy, he’ll tell you you are nuts to want a Prius.

The only important opinion at this point is your own.  If you sit back and determine the outcome you desire, there are likely several ways to achieve that goal.  Each will have varying pros and cons, and until we – you and whoever you are talking with- know what you need, any discussion of bonds vs annuities vs mutual funds is also just static and noise.

The best way to find out what is right for you is to ask yourself a couple questions.  We’d be happy to help if you could give us a little info on your situation and desires.  Here are a few questions to get started:

  1. What is your current age and when do you plan to retire?
    1. ______________________________________________
  2. Are you looking for joint or single life coverage?
    1. ______________________________________________
    2. Spouse Age:______________________________
  3. What is your base level of income needed in retirement?
    1. ______________________________________________
  4. How much guaranteed income do you expect from other sources?
    1. ______________________________________________
    2. The difference between what you need and what you expect is the income gap that needs to be filled.
  5. Therefore, your Income Gap/ Minimum Guaranteed Income amount needed is:
    1. ______________________________________________
  6. How long does this income need to last?
    1. ______________________________________________
  7. You may be seeking appreciation or future lump sums, or want to leave an inheritance, and not need income.  If so, let us know what you are seeking here:
    1. ______________________________________________
  8. What is your State of residence?
    1. ______________________________________________

Now we have a starting point, or a Retirement Income Goal Statement.  It’s critical to get to this point, because everything falls into place once you know where you want to go.

Ready to set your retirement plans on the right track? We look forward to hearing from you!

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“For all time periods and for all portfolios, the addition of the annuity leads to a decline in the portfolio failure rates.”