If there’s one thing Americans have learned from the financial crisis of 2008, it’s that they do not want to lose their money – again – especially for folks of a certain age, says financial advisor Philip Rousseaux, a member of the esteemed Million Dollar Round Table association’s exclusive Top of the Table forum for the world’s most successful financial services professionals.
“Losing nearly everything you’ve worked for throughout your entire
adult life is right up there with being diagnosed with a major medical
condition; it means the lifeblood of your future has been drained,” says
Rousseaux, founder and president of Everest Wealth Management, Inc.
“Aggressive investment strategies that offer potentially huge rewards
are fine for people younger than 40, but even they should have at least
a portion of their retirement portfolio in investments that will
provide a guaranteed income. The closer you get to your retirement age,
or if you’re already retired, the more important it becomes to change
the tools in your financial toolbox.”
Whether investors are decades or a just a few years away from
retirement, or are currently retired – and whether or not they lost
most, some or no money at all during the mass money meltdown – Rousseaux
offers tips and tools to help you stay retired:
• Look for the hidden fees in your employer-sponsored 401(k).
Last July 1, a new Department of Labor rule required all hidden fees
attached to retirement plans and mutual funds be disclosed to employers
and employees. By some estimates, up to 90 percent of fees attached to
retirement plans are hidden! Get an accounting of all fees and if you
can’t decipher the information, attend a financial workshop or talk to a
financial adviser. It may be time to roll some your money into a less
expensive plan. According to an AARP survey, 71 percent of those with a
401(k) had no idea they were paying fees for their retirement accounts.
• Explore fixed-rate indexed annuities: Investing
all of your retirement savings in Wall Street exposes you to a lot of
risk. That may be acceptable when you’re in the prime of your career,
but it’s important to find alternatives that provide for growth while
protecting savings. “Fixed-rate indexed annuities, where you loan an
insurance company money and it guarantees you payments over a specified
length of time, allows you to forecast the income you’ll generate,”
Rousseaux says. “While these annuities will have a ceiling on interest
rates, they’ll also have a floor. Your principal is safe and you can
ride an up market without the risk.”
• Turn your IRA or 401k into a joint account. For
many people this may sound like a new concept, but this is something
Everest Wealth Management has been using a planning tool for the last
decade. While it’s true the IRA, which stands for Individual Retirement
Account, is something only one person can own, many alternative
investments such as a fixed annuity offer benefits such as guaranteed
lifetime income. Within these plans the owners have the option to
guarantee income on both lives, thus creating a joint income for both
the husband and wife.
• How much you have isn’t as important as you think.
For years planners have touted finding your magical number so that you
can afford retirement. This is simply not an accurate measurement and
isn’t what matters, according to Rousseaux. “With interest rates at
60-year lows and people living longer due to health care advances, the
priority in planning is how much income can you generate and will that
income last for your lifetime.” The income your investments can generate
is the key to successful retirement planning in the second phase, which
Rousseaux calls the distribution phase.
Source: Philip Rousseaux,the founder and president of Everest Wealth
Management and Everest Investment Advisors money management firm.