Investment Products to Help Maximize Income in Retirement in 2024
One strategy Shunkwiler Financial prefers suggests our retirement investments should address three particular concerns: retirement income, income protection, and growth. This is easier said than done, however, as few investments can accomplish all three goals.
Dividend-producing stocks, for instance, have the potential to produce income and growth but offer little in the way of guarantees. Bonds can generate income with a lower level of volatility than equities, but they offer little potential for growth. Bank CDs are about as guaranteed as an investment can get, but their potential for both income and growth are extremely limited in today’s low-interest climate.
So, what’s a retirement investor to do when seeking growth as well as income and some degree of relative protection?
There are a number of financial products that offer the potential for both growth and income while protecting your principal from loss in value due to market volatility. Let’s look briefly at two retirement planning products.calculated.
THE FIXED INDEX ANNUITY (FIA)
A properly structured Fixed Index Annuity* offers the potential for growth through credited interest each year that is tied to an increase in whatever market index the insurance contract tracks. The annuitant receives a designated percentage of any interest created by the index hike, subject to limits set by the company.
An FIA also has a contractually obligated promise against loss of principal due to market performance, based on the financial strength and claims-paying ability of the issuing company. This is a risk taken on by the insurance company that issues the contract.
Finally, an FIA also is capable of producing income through systematic payments that are based on the contract’s account value. This contract value is a number that has the potential to last for many years even as income withdrawals are taken.
INDEXED UNIVERSAL LIFE INSURANCE (IUL**
The role of permanent life insurance in retirement is often overlooked by retirees in Nebraska and across the country. Sure, some will say, we needed life insurance when we were younger to guarantee income protection for our young family in the event of our untimely demise. But, life insurance in retirement? At this age? What’s the point?
“The point” is that there are permanent life policies that offer not only a death benefit for your heirs, but also the potential for tax-free growth of the policy’s cash value and income—in addition to protection against loss of principal due to market declines. As with all life insurance, the death benefit will be paid tax-free to your named beneficiaries, part of the legacy portion of our Pathway to Retirement™ plan.
Ready to hear more? Schedule a complimentary 15-minute meeting with one of our trusted Nebraska retirement advisors today.
*Fixed Annuities are long term insurance contacts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
**Indexed Universal Life Insurance is an insurance contract that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an indexed universal life insurance for its features, costs, risks, and how the variables are calculated.
