L&C Retirement Income Planners
4801 Lang St. NE
Albuquerque, New Mexico 87109
Retirement planning can be overwhelming as financial professionals have different opinions and methods of investing. An investor today has many more options than they did in the past. I create retirement plans that are consolidated and easy to understand by focusing on the color of their investments and not on the specific products within their investments.
Has a financial professional ever asked you the color of your money? Many investors are unfamiliar with this terminology. Most individuals have not heard of this because their financial advisers are more interested in discussing the specifics of a particular product rather than how you will benefit from that product. What I see is that focusing on product versus color can harm your retirement.
Let’s talk about the financial phases you’re going to go through, including the accumulation phase, the preservation phase, and the distribution phase.
I’ll give you tangible ways to understand your asset allocation and the logic behind why your allocation should always change with your financial phase, age, and investment time horizon. I often see clients who are confused about their investments, current allocation strategies, and retirement plans.
I find that many advisers and investors are more interested in their nest egg value. The logical reasoning behind this is that investors go through their accumulation phase looking at their account statements which only show the lump sum value. The common goal is for this VALUE is to create a financially secure retirement. Knowing where your income is coming from and maximizing income during retirement is your key to success.
Of course, green. The color of your money has positive effects and tradeoffs that must be considered.
RED MONEY consists of stocks, bonds, mutual funds, options, REITs, variable annuities, and any other investment that you need to use caution in the investment world. I also refer to this as MAYBE MONEY. Maybe you’ll make money, and perhaps you won’t. When you invest in RED MONEY, your ultimate goal is to grow your account value, but we all know the outcome is completely unknown with no guarantees.
The positive feature of red money is the possibility of upside market potential. These accounts are typically used during the accumulation phase of a retirement account. The tradeoff is they’re not safe, secure, or guaranteed.
These type of accounts, a lot of analysis, reasoning, and logic needs to be applied when considering a red money option.
Green money consists of safe investments such as CDs, money market, checking accounts, savings accounts, life insurance, and annuities. I refer to these investments as SAFE MONEY NOT, MAYBE MONEY. These are investments that protect your principal. Due to market volatility, fixed indexed annuities are safe, secure, guaranteed, stable, and insured with no market losses. Along with a guaranteed interest rate, market upside participation, tax deferral, liquidity features, guaranteed income, and probate avoidance. The tradeoffs are surrender provisions more than free withdrawals.
You decide to put your money in the market, hoping to create a more significant, more successful retirement in three years. Well, you go through the first year, and, of course, the market declines. You become a little nervous, but your adviser tells you to hold the suggested strategy as the market will recover. So you get two years down the road, and the market has declined in value. You could be facing a loss of as much as 50% of your original investment.
I’m sure you’ll agree; you are more than a little bit nervous at this time. Now you’re within one year of enjoying your retirement that you have dreamed of and planned so hard for. Now, what are your options? You’ll probably call your adviser and say, we’ve got to figure something else out, or you may hold your position for another year and hope and pray the market comes back. So now the amount of money you had in your account, which you were hoping would grow, is now in a market decline. This has a devastating effect because your account value has decreased by 50.00%.
Don’t let this happen to you. You seriously need to consider de-risking your important retirement money by outsourcing to a risk bearer, an insurance company. They offer numerous green money alternatives.
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