Locking in your gains for lifetime incomeArticle added by Cal Burgess on June 2, 2014
Cal Burgess

Cal Burgess

Austin, TX

Joined: August 24, 2011

In September of 2008, the federal deficit just barely crossed the $10 trillion mark. Today, the deficit stands at more than $17 trillion. This is an increase of more than 70 percent in less than six years. This debt is not going to pay itself off. The writing is on the wall: Federal income tax rates have nowhere to go but up.

Today, the top federal tax bracket is just over 35 percent, almost half the historical average since 1913. What do you think the highest federal bracket will be in 2024?

When you take into account that the vast majority of all deferred compensation plans (401(k), IRA, TSA, etc.) are all taxable upon withdrawal, it goes without saying that every dollar you save for retirement needs to be working in your favor. This means you will need to have solid percentages in order to offset the additional income you stand to lose to Uncle Sam.

Unfortunately, the last 13 years have been anything but solid. In fact, most investors have just been able to recoup the losses they incurred over the last several years. There has been extreme volatility due to a domestic terrorist attack and a global recession, just to a name a few. The market has endured, with the assistance of federal stimulus, but not without consequence. This is a long-term problem we have to endure with no history lesson as a guide.

I believe the only way to plan for retirement today is consistency; a steady return that can achieve the desired income results over a specific time period. There is no way to give a guaranteed return of 7 percent per year on your cash. However, you can add 7 percent to a non-cash value to determine what income you will be eligible for while exempting your cash value from volatility; an income stream you can count on for life regardless of future market performance. Furthermore, an income stream that can be stopped and started at your discretion while you still have access to the cash value.

Lifetime income is aggressively being pursued by both retirees and future retirees through an income stream that is guaranteed for life, no matter what may lie ahead. These are guarantees that many Americans are seeking instead of rolling the dice in the market.
About a year ago, I met with a prospect (now a client) who said, "I don’t know what I have in my 401k (the current balance) because I don’t need that to live. That money is bonus money that is off limits today. All I want is to know that I can keep the lights on and enjoy the little things in life without having to go to work every day."

The fear of not having enough money in retirement is a common concern that I hear on a regular basis, especially with the terrible state that Social Security is in. The average American wants relaxation and comfort in retirement without having to worry about where their check is coming from. Lifetime income provides all of this and more.

Make no mistake about it; rising taxes are just around the corner. The federal deficit has increased by 70 percent over the last few years. The federal government is still purchasing government bonds today at $45 billion per month with the third round of quantitative easing (QEIII) to help the economy along. Without financial guarantees of lifetime income, what solution can you rely on to give you the comfort in retirement you deserve? How else can you ensure that money will be there when you need it down the road? We have all been exposed to how much money you can realistically lose in the market. Granted, the market is on a rebound; but for how long is anyone’s guess.

There may not be a more perfect time to lock in your gains for a guaranteed check for life.
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