What is a SAFE Withdrawal Rate in Retirement?

This question comes up a lot.  It is critically important for 2 primary reasons. First if you take out too much you will run out of assets before you run out of Life. Second if you don't know what you  can  spend  each year how do you know what income you will have in retirement!

Many people and most Financial Advisors are familiar with "The 4% Rule."  Everyone should be!
It states that you should be able to  withdraw 4% of your assets  each year in  retirement and Usually have your assets last as long as you live.  Note that I said usually!  You do not  want to be an  outlier who falls into the  category of retirees who fail to have their assets last!  What can you  do to  prevent it?  I encourage my clients to use a withdrawal rate of less than 4% when working  with their  self managed money.  There are products that offer a  guaranteed rate of withdrawal higher than 4% and  we can  discuss those later.

A recent article published in Financial Planning was titled " A Safer withdrawal rate using various returns distributions"  The  conclusions stated that a safer withdrawal rate for todays environment is only 2.52%.  Their work indicated that the more common 4% number fails almost 18% of the time.  That  conclusion says that 1 in 5 will die destitute if they don't adjust there spending or use other strategies besides self managing their  retirement  assets. Protection from that  risk requires the use of some SAFE Money Strategies for some significant portion of your assets.

Only 3 thing can guarantee you a lifetime of income. Social Security (if the government stops stealing from SS funds), an ADEQUATELY funded private pension, or a properly funded designed   and guaranteed life insurance product. Notice Stocks bonds mutual funds are not on this list because of Market Risk. They cannot  guarantee you a value tomorrow never mind a value 20-30 years from now.  Never Forget 2001, 2008-2009!  It can  happen again!  On  average you  get  negative  returns 2-3 year out of 10. Look at the  graphs  for  Stock Market Historical performance.   If  you  doubt there is  risk  answer these questions.
What is the true unemployment  rate today?  You need to  adjust the official numbers for those who quit looking! A more meaningful number is the % of working age adults  actually working!

Is  the Federal and  state government controlling their  spending?
Is the Deficit increasing?
Is Obamacare inflationary?
Is  the  real  cost of  goods and  services you need to  live on increasing?

If you live in Ohio or Indiana and need Obamacare Health Insurance, check this out

I have completed  OBAMACARE training and can offer the best products available from the Federally Facilitated Marketplace (FFM) or Exchange, or from the companies directly.
visit this website for help or information
http://hemahelp.com/broker/grainger/contact.html

Savvy US individuals purchased over $17 Billion in 2013. What do they Know, that you don't?

Savvy individuals and investors purchased $17 B of one type of product this year. That represents almost 7% increase over last year. The investors did it to control risk, earn a decent rate of return and in many cases to guarantee lifetime income or at least guarantee income for a fixed period of time. How does that sound to you?  How about Zero market risk! Is that important to you?

These products are offered by some of the strongest financial companies in the world. The companies I recommend did not lose money in 2001, 2008 or 2009. They did not require any government bailout!  They actually made money in 2008-9. They are well positioned to weather the next market downturn which we all know  will happen! We just can  not say when.

These products work with both qualified and non qualified money. They work in  ROTH and Traditional IRA accounts, SIMPLE Plans, SEP Plans or even within ROTH or Traditional 401K Plans that I run for my clients. They can be used in Trusts, can fund charitable contributions or work within estate plans.

Did you know November is Long Term Care Month?

Yes, November is Long Term Care Month!
If you are in a room with only 4 adults how many of them will end up need Long Term Care (LTC)?

The answer is at least 2!  I don't know who is going to need it but I know what percentage will need
it! That's over a 50% chance of needing LTC!

Do you  own a house? Do you have homeowners insurance? Of course you do! Do you know that you only have about a 1 in 1200 chance of having a house fire? That's less than a 0.1% chance of a fire but you  have protection against that risk.

Do you have auto insurance? About 98% of people have auto insurance. The risk of being in an accident is about 1 in 200 or 0.5%. But even with the low risk almost everyone insures the risk.

Why is that? It is because the risk of an event without the coverage is devastating to your financial health!

The risk of an uninsured LTC event is far more devastating than either of the two examples shown above. The average cost of a LTC event far exceeds the cost of replacing the average house! The average cost of a LTC event is 20 times the cost of a typical auto accident.

There are even products that protect those who are convinced it will not happen to  them.  If you  never need it you  get your money back!

Why would anyone ever put up with earning only1.9%?

I was just reviewing Bank Rate.com  and it showed  a National Average 5 year CD rate of only 1.9%.
Why in the world would anyone want to park funds at a bank with a rate of 1.9%?  Just think about it the average  inflation rate over the last 5-10 years has been over 2.5-2.9%.  That means in December you  have lost money every year for parking money with your bank! Ouch! Your bank doesn't loose money they lend it out for anywhere between 3.9 - 19+%. Why should you loose money so the bank can make as much as17% per year on your assets.

Did you know that solid alternatives  exist?
How about the following examples.  I am going to mention just a few.
The only problem is that these rates might not last for ever.  Don't Delay!

1)  5 year fixed rate guaranteed 3.25- 3.5% per year.

2) 8 year monthly income stream paying 6%

3) Insured High yield but variable rate 7 year  product. Contractual low rate of 1.25% with an annual upside potential of up to 7 - 7.25%. If you get the maximum only  2 years out of 7 you get almost 2.8%, if you get the max 3 years out of 7 you earn almost 3.7% and if you earner the higher rate 6 years out of 7 you would earn over 44%.  Compare that to the Bankrate.com national CD  rate of 1.9% with a 5 year return of under10%.  Which should you choose?

Call or email to learn more or to determine if these strategies makes sense for some of your assets!

Congratulation the Award for the Worst Website Launch in Internet History is Awarded To ...

I can think of several world class awards we could give out. I'm trying to  decide between an Academy Award and the Time Magazine Internet Man Of The Year. Unfortunately they  would both be awarded to the same team. Five days into the  OBAMACARE launch the stats looked like this 9.7 M attempted sign-ons to the website, followed by a whopping 36,000 American who managed to buy Obamacare  insurance. Since then the government has not even been releasing statistics! Why not? So much for open government and public disclosure.  I believe it  was  CBS that did a story on the fact that 2,000,000 Americans lost health insurance coverage either because their employers cut their hours for employees or just plain stopped offering insurance altogether!

Any half decent manager knows that if the product does not begin to be ready to release you Delay the launch. So why the disconnect? 

Look at the numbers.
Admitted government spending on Obamacare website $300 Million
Probable real spending before rollout estimates              $600 Million
Estimate for the total cost to write, correct  and repair        $1 Billion
What did we get for that $1 Billion?

Insurance , Where Does It Fit In?

Did you know that approximately 30% of Americans do not have  Life insurance!
Did you also know that 50% of Americans know that they need to  buy more life insurance!
Everyone should think about the following questions. I would love to see some replies or comments on line here on the blog or offline! Help for most of you  is available!

1) What is your personal situation?
2) Do you have life insurance?
3) Do you have Life Insurance that isn't tied to your Employment?
4) Why does that matter?
5) Do you  have enough insurance?
6) If you do not have life insurance what is your  excuse?

 If you have a spouse or dependents almost everyone needs to have life insurance!
People with a non working spouse or families with young children need the most death benefit. Even people nearing retirement often need insurance and Often buy it even though it is much more expensive at older ages! As we age sometimes we need different types of coverage or even different amounts.

Why does it matter if your insurance is tied to  work? See the comments in the Blog post from October 23, 2013 for a discussion of employee life insurance!

Do you have  enough life insurance? See the blog post from October 23, 2013 for a discussion about how to  determine  if you have  enough insurance. Use the worksheet or call to  discuss.

If  you are uninsured because you  waited to long to  buy protection there is still hope. Call to  discuss your specific situation.

Remember Life insurance  serves two primary functions it offers protection against the "What If ..." scenario, and it helps anticipate and cover the  "When I..." scenario. Can you figure out  the What if and When I scenario.