The Melting Ice Cube Dilemma
Time goes on, and things change — things always change.
The impact of that change is completely subjective. What may benefit one person could hurt another. It's neither good nor bad — it just is. And we must plan for it.
WHO USES A TYPEWRITER ANYMORE?
Well — besides the sentimental novelists who yearn for the novelty and experience of punching keys. The typewriter in its day was a modern phenomenon, bringing the ability to communicate through the written word to the masses. But like all things, the typewriter has become obsolete.
With the rapid advancement of technology, we've seen iPods, Blackberries, and wired headphones go out of style in almost a blink of an eye. What gadgets you use and rely on today has a shelf life — it will lose its value.
AN ICE CUBE HAS ONE FATE — TURNING INTO A PUDDLE OF WATER
Picture your investment as an ice cube. The value of an ice cube is that it keeps things cold — with each melting drop, it begins to lose its value. It's a slow process but an inevitable one.
Your investments can fall victim to the same slow decline.
In 1993, an investment consultant named Bill Bergen created the 4% rule. He determined that if an individual withdrew 4% of their retirement investment each year, the retirement investment would create a never-ending cash flow. He believed you could remove the 4% annually and maintain your account's original value. Unfortunately — this concept has met the same fate as the typewriter and the ice cube.
YOUR INVESTMENT WILL FLUCTUATE AS THE STOCK MARKET FLUCTUATES
The 4% rule sounded nice, but the truth is that your investment is directly tied to what happens in the market—the ups and downs, world interest rates, and the fluctuation of those interest rates on US Treasuries. Retirees who followed this 4% rule began to see that the initial value of their retirement accounts wasn't maintaining its value, which led us to change how we approach investing.
PEOPLE ARE COMPLICATED
We can't be templatized, you can't predict us, and there's no formula that fits to define us—which is why a "rule" just was never going to work. Retirement for one person may look like a bike-packing trip throughout Europe, drinking wine and eating your weight in French bread, while retirement for another ends up looking like home health care due to an unforeseen stage 4 cancer diagnosis.
Both people had the same vision - both life paths unfolded differently.
If you work with a retirement specialist who encourages you to invest in a templatized and formulaic way with the promise of predictable outcomes — know that they didn't get the memo about the melting ice cube theory. Your retirement specialist needs to create a retirement plan that's as unique as your life has been and as audacious as your dreams are.
A plan that allows you to live a retirement life that addresses your needs and your wants.
YOU’VE GOT QUESTIONS — I’VE GOT ANSWERS
How can an insurance company help me with my retirement plan?
Insurance companies can sell you an income stream for any period you or your spouse want. This income stream is meant to support you throughout your life. As a retirement specialist, I can leverage annuities to guarantee you tax-free income for life — without concern over 4% changes, safety, and security, and worry that your monthly check may not arrive.
Insurance companies don't want your money — they want to hold it. The longer they can hold your money, the longer they can profit from it. In return, they offer you benefits like guaranteed income.
What happens to my money if I die prematurely?
If you die prematurely, the complete, unused account is inherited by your named beneficiary.
What happens to my money should the insurance company fail or go bankrupt?
No industry is more highly regulated and watched than the insurance industry. For over 100 years, no policyholders have lost their investment due to an insurance company's failure. Backing up the insurance regulators and the company's guarantee is the second guarantee — similar to the one that backs up your bank deposits. It is called the State Guarantee Fund. The amount it guarantees per person is based on your state of residence.
UNLIKE ICE CUBES — ANNUITIES DON’T MELT
Using an annuity as a guaranteed portion of your retirement income planning is a great way to protect yourself from market fluctuations.
Annuities aren't right for everyone — and there is only one way to find out.
SET UP YOUR COMPLIMENTARY CONSULTATION TO LEARN WHAT YOU NEED TO LIVE YOUR RETIREMENT DREAMS.
Hi — I'm Lori. I became a retirement specialist to help change the retirement narrative – freeing professionals to live a life of grandeur, thrills, and connection. A life that contrasts the life you live when you're caught up at work. A life you've been dreaming about since day one. Work with me to create guaranteed income that keeps rolling in until the day you kick it.
This article is intended to serve as a basis for further discussion with other professional advisors in legal, financial, and tax. I have made every effort to provide accurate numbers and explanations. The information in this report should only be used as basic information regarding the subject of probate. Always consult with your tax preparer and legal advisor regarding questions for your specific situation. This report does not purport to provide legal advice at any level and is only meant as general information.
