The 401(k) Rollover - Ask A Common Sense Question

At Income For Life, we often meet with near-retirees or retirees that have a 401(k) - or other form of Defined Contribution plan - that they are considering rolling into their own personal IRA.

What some do not realize, though, is that the decision of WHEN to move this asset is not nearly as important as the decision of WHERE to move this asset.

Here is what I mean:

• Let's say are are at retirement age and you have a 401(k) plan that has been accumulating (hopefully) for many years that you want to convert into a retirement income plan because you do not have a corporate pension plan to fall back on, so your retirement plan is now on your own shoulders. As you begin to research different firms to help you with this effort, you are 'wooed' by their gourmet dinner events, their mahogany desks and their ability to use fancy financial terms, charts & graphs.

But here is the 'common sense' question to ask them:

• "Is the plan you are offering me guaranteed against market losses - and is my income guaranteed to last my entire life?"

Common sense says this is an important question, correct?  If they cannot answer 'YES' to both - you should walk away.

When you retire, what will you no longer receive?  A paycheck - so it must be replaced.

Would you like it to be guaranteed for LIFE - and protected from stock market losses?  Absolutely.

Would you like to still be able to participate in the market gains, though?  You bet.

Guess what:  You can.  Call my office to discuss your 401(k) rollover - in a common sense way.


Matt Nelson, president and host of Income For Life Radio
877-284-8929 toll free
www.IncomeForLife.org

Investment Advisory Fees - The Cantaloupe Analogy

A fellow national affiliate of Income For Life was recently in my office and offered an analogy about how Investment Advisory fees are similar to paying someone to pick out a cantaloupe for you at a local grocery store.  Here is the story:

• Picture yourself at a local grocery store and you are in the produce section - and you want to purchase a good cantaloupe.  What do you do?  You do what we all do:  You pick one up and shake it a bit.  You smell it.  You maybe even 'knock' on it to try to determine if it is ripe or not.  You continue this process until you find that special cantaloupe that is right for you.

Sound about right?  Me too - every time.

Now, if you are like me, you understand completely that you have NO IDEA if that chosen cantaloupe is a good choice or not until you get home and cut it open.  It very well could be bad inside - but there was absolutely no way to tell while at the grocery store without cutting it open in the store.  Obviously, we do not do that!

Here is the analogy of the fees that an Investment Adviser charges you in your retirement accounts:

• What would you say if a person charged you a fee to pick out a cantaloupe for you at the grocery store?  They might tell you that they have 'expert melon-picking skills' and they might try to dazzle you with grocery produce 'jargon' that makes them look and sound as if they have all the abilities to pick the best melon for you - but do they REALLY have the ability to pick the best melon and know for sure it is a good one without actually cutting into it?

Nope.  They do not.  It is all just a guess.  Just like Investment Advisers do not have a crystal ball to predict the stock markets.  All they can do is dazzle you with financial 'jargon' and do their best to try to market themselves to the public that they have a crystal ball - and hope you will pay them for their 'guesses'.  

If you are currently paying an Investment Adviser to pick stocks for you - and this person could guarantee that they could predict the stock market AT LEAST 51 percent of the time - they would not be working for you.  They would be sitting at home doing it for themselves.  Sad, but true.

If you are over age 50 and you are doing this with your retirement accounts - you are playing with fire.  You wouldn't pay for a 'guess' with a cantaloupe - why pay for a 'guess' with your retirement livelihood?

Matt Nelson, president and host of Income For Life Radio

877-284-8929 toll free

www.IncomeForLife.org

Common Misconceptions About Annuities

At Income For Life LLC, we often hear retirees and near-retirees express their concerns about annuity products. When we dive in a bit deeper, it is typically determined rather quickly that the information they believe to be true is actually false - and they never knew it.  Sad, but true.

Here are a few misconceptions about annuity products that can put to rest some of your concerns - and what the facts actually are:

MYTH: Annuities are investments.
Wrong! Fixed annuities are insurance products which have the ability to guarantee an income stream throughout retirement; they are not investments.

MYTH: You can outlive fixed income annuity payments.
Wrong! Fixed annuities are the best way to solve for longevity risk and be guaranteed an income stream for life.

MYTH: Fixed annuities are not a safe asset class.
Wrong! Insurance companies are regulated by state regulations. Insurance companies must have sufficient assets to make good on their guarantees. There is no loss of principal even when markets decline or the economy falters.

MYTH: Fixed annuities cannot provide lasting income to a surviving spouse or other beneficiary.
Wrong! A spouse, survivor, or other named beneficiary can keep receiving a guaranteed income stream as elected.

MYTH: Annuities have no liquidity options. 

Wrong! Many annuity contracts allow for penalty-free withdrawals and have provisions for emergencies and other contingencies. After a certain point in time, you can receive the full accumulated value of the contract and walk away if plans or circumstances change.

MYTH: Annuities cannot provide a reasonable rate of return.
Wrong! Due to principal staying intact, interest, and the power of belonging to an insurance pool, there’s a solid rate of return in a fixed annuity.

MYTH: A substantial portion of retirement income should be longevity insured.

CORRECT! Up to 75% of total wealth can be justified, under a variety of methods, to be longevity insured, which implies 75% of desired retirement income.


Matt Nelson, president and host of Income For Life Radio

877-284-8929 Toll Free
www.IncomeForLife.org

The Math of Rebounds

What is the future of your retirement?  It just might shock you (or maybe not, unfortunately) that the stock market rebound needed to get back to even after a significant loss is much higher than the loss itself - and each of these market losses were all 100% out of our control.  These events were due to actions of others, yet each one greatly effected your investments.  

Here is what I mean:

• 2001:  Enron collapses; market falls -12.7%.  Rebound needed is 14.6%
• 2002:  WorldCom collapses;  market falls -10.0%.  Rebound needed is 11.1%
• 2003:  Martha Stewart indicted;  market falls -21.3%.  Rebound needed is 27.1%
• 2008:  Bernie Madoff arrested; market falls -35.6%.  Rebound needed is 55.3%.

These figures are based on the market values of the S&P 500 index and these figures represent amount of recovery needed after a downturn in the market.

Do you want your retirement to be subject to market downturns that you have absolutely no control over?  Neither do we.  Give our office a call to learn how to avoid this from happening again - because you and I both know it will.

Matt Nelson, president and host of Income For Life Radio

877-284-8929 toll free

www.IncomeForLife.org

Family Practice vs Specialist - A Medical Approach To Retirement

My wife is a very successful Registered Nurse specializing in Labor & Delivery of nearly seventeen years.  To say she has 'been there, done that' in her field is an understatement and she has had the opportunity to work with some of the top medical minds in the nation during her current tenure.

She came to me today and described how different a Family Practice physician is compared to a specialist, such as a Neuroligist, an ObGyn or a Cardiologist.  All are 'doctors' in the sense that they each have a medical degree, but their expertise cannot be more different.

This got me thinking:  It sounds very similar to the differences between an average stock broker and a retirement income planner.  Both have similar licenses and credentials, but their expertise cannot be more different at times.

The average stock broker is similar to the Family Practice doctor.  Their job is to do their best, given their capacities, and then determine if a referral to a specialist is needed or not.  If the condition being treated is out of the ability of the Family Practice doctor, they then send the patient to a specialist in that particular medical area.  

This is exactly what happens in the retirement world, as well.  There is no 'crystal ball' when it comes to picking stocks and it has even been determined by many third-party media studies - such as Forbes, Wall Street Journal and others - that animals (monkeys & cats, to be specific) are better stock-pickers than the average human stock broker.  Sad, but true.  The studies are enlightening, to say the least.  Accumulating assets can be based on best-case guesses, but retirement income planning must be based on facts.

The Retirement Income Planner is similar to the specialist.  Their job is to offer specific expertise that provide exact outcomes.  Retirement Income Planners cannot 'hope for the best' and then refer a person on to someone else that can do the job better.  Retirement Income Planners must provide contractual guarantees, they must consider inflation costs, they must take into account possible medical events that can hinder a retirement account and they must make sure the retirees have a steady, guaranteed income stream for life - and it all must be guaranteed for an entire retirement plan which could be 20-30 years.

That is hard work.  That is a specialist.  That is what we do at Income For Life LLC.  Contact our office today to learn more.


Matt Nelson, president and host of Income For Life Radio
Income For Life LLC
877-284-8929 toll free
www.IncomeForLife.org

The Sports Car vs The Mini Van

When we sit down with our Income For Life clients that are either close to retirement or are already in retirement, we like to describe annuity products vs the stock market products with an analogy of the Sports Car vs the Mini Van - and things tend to then become much more clear.  Here it is:

When you were younger, maybe you or someone you knew owned a sports car.  It was a fun car.  It was a two-seater, it had a fast 5-speed manual engine that could blow the doors off of any other car on the  street.  It looked great, you looked great in it and it was a lot of fun to drive.

But, once you met that special someone and you decide to settle down to start a family, one of the first things that is typically traded in is that sports car, normally for the mini-van or SUV.  Basically, something that is safer and can haul kids around in.  It has more room, offers better gas mileage, it is safety-rated - AND REALLY BORING.  

You know what I mean:  A decision was made that you now need something more practical, given the new changes in your lives.  The mini-van doesn't go 0 to 60 in 3.9 seconds and can't chirp the tires in second gear, but it will get a carload of kids to soccer practice safely and will get the family to grandma & grandma's house over in the next state comfortably without breaking the bank account in gas costs, the kids can watch a movie in the back and there is plenty of room for everyone.

It is important for you to know that this trade-in from the sports car to the mini-van does not make the sports car manufacturers BAD or WRONG - you just simply out-grew it.  You out-aged it.  You got to a new point in your life where the sports car benefits were simply no longer the best thing for you.

This is exactly why annuities are here for retirees.  Annuities are the 'mini-van' of the retirement world.  Annuities are the safe, dependable option for retirees because of the guarantees and the ability to provide lifetime income.  They are not fancy.  The are actually pretty dull (as Benjamin Franklin and Babe Ruth both said:  'Annuities are boring, just as we like them.').  But what they offer is dependability, safety and confidence - and they are the ONLY retirement product that can offer a lifetime income stream through retirement.  Neither the banks or Wall Street have this option available to you.  That is invaluable.  Peace of mind is priceless, agreed?

In our opinion, the stock market is the 'sports car'.  Enjoy it while you can.  It is great for younger ages when risk is furthest from your mind and you still have time on your side, but the markets are not as practical when the need for guarantees and safety are your primary goal - and when you are close to retirement age and time is no longer on your side.

With this said:  What would you say if you went into the auto dealer to trade in that sports car for the mini-van and you explain why you are doing it (eg: starting a family, need something more practical to haul kids around, etc) and the dealer tells you:  "No!  Don't do it.  You are crazy.  The sports car is perfect for what you now need."

How fast would you run out of there?  Me too.


Matt Nelson, president
Income For Life LLC
877-284-8929 toll free
www.IncomeForLife.org

Why It Matters

We insure everything we hold value to.  Our homes, our health and even sometimes our pets and jewelry.  If it has a value on it:  we insure it.  Why?  Because we do not want to have a large financial expense if something were to go wrong.

Think about this:  Your home is insured.  Your car is insured.  Your life is insured.  Makes sense, right?

Now, here are the facts and the odds per year of each on the above events happening to you inside a given year:

• 0.9% chance of loss of life - life insurance protects this.
• 1.2% chance of loss of car - auto insurance protects this.
• 1.3% chance of loss of home - homeowners insurance protects this.
• 28% CHANCE LOSS OF STOCK MARKET VALUE IN YOUR RETIREMENT PORTFOLIO

You insure everything you value - why not insure your retirement?

Watch my video to learn more and call my team at 877-284-8929 to discuss your options.

Matt Nelson, president

Income For Life LLC

877-284-8929 Toll Free

www.IncomeForLife.org