Thought for the Day:

This life we lead was made possible by men and women who paid the ultimate price for their country. Whether we agree with the recent wars or not, please take a moment on Veterans Day to thank God for this wonderful life we have with all of its many opportunities.

He gave his life for our country but she will never let him go. Nor will we. God bless them both. 

If you will read no further:

Think about this. You’re managing money for a retired couple.  They have given you $1million to invest and the market is doing fine; you have their money in the best performing stocks and funds to get them the best results possible.  All of a sudden the market takes a dump and you stand by and do nothing while they lose $350,000 before the bleeding stops on its own.

Of course you would never do that would you?  But think about it.  They could afford it, couldn’t they?

I mean, they still have $650,000.  That’s a lot more than most people have.  I wonder if they would still keep you on as their advisor.

That happened a while back to some friends of mine.  The market was coming back from the 2008 debacle in which they did not get hurt badly at all.  Everything was going fine until Jeff was diagnosed with Parkinson’s and shortly thereafter he had a few strokes.  He recently died after being cared for at home for almost three years and $362,000.   The market was still doing fine, but they lost over $1/3million because his advisor never suggested they do anything about long-term care, “they could afford to self-insure”.  Funny!  He was able to save them from a down market by proper money management.  But he didn’t employ any risk management and encourage them to hedge against the 50/50 chance they would deplete their portfolio with home care costs someday.  Apparently they could afford it.

NOVEMBER IS LONG-TERM CARE AWARENESS MONTH… a good time to encourage your clients to protect their portfolio from the devastation that a future long-term care event can impart.

 

Thought for the week:

We are beginning to see signs of an awaking in the financial planning community as more and more planners and money managers are beginning to suggest that their retired clients include fixed immediate annuities (SPIAs) in their portfolios so they can receive a secure 6-8% tax-favored income; then invest the rest in a managed portfolio for growth and additional income needs.

There is an excellent paper written by a renowned NYC-based consulting firm that you should read.  It is based on the Health and Retirement Survey launched in 1992 by the University of Michigan.  It queries  approximately 26,000 Americans over age 50 on retirement issues, such as wealth, income, job history, health and cognition to determine their “happiness quotient”.  The results show that at every age through retirement, those with annuity income were measurably happier than those without.

Key findings

• Retirement satisfaction has steadily declined over the last decade.
• Satisfaction is highest among those with high levels of wealth and income who are very healthy and annuitize their income.

• Among retirees with similar wealth and health characteristics, those with annuitized incomes are happiest.

• Annuities provide the biggest satisfaction boost to retirees with less wealth and those in poor health.

No matter how much money they have, there is always a certain fear of losing it.  And for most people there is nothing more reassuring than a steady, dependable income.  It is your job to make that come true for your clients for the rest of their lives.  The uncertainty that exists today that will be exacerbated by the next market crash is what makes this job so ominous, but vital.

Go here to download the report and perhaps give to your clients when you make an annuity recommendation.