Retirement Planning is a Civic Responsibilty

I received this headline in my email today from a Financial News Subscription service: "75% of Baby Boomers aren't prepared for retirement." I get this sense that many folks now approaching retirement age are looking over the meltdown of the prior months with a kind of glassy-eyed wonder and disbelief. I also get the feeling that many of this number are in fact part of the group that the news subscription service identifies as not being prepared for retirement.

It is this group that has me worried. A recent study of American workers by the Employee Benefit Research Institute finds that only 13% of retired persons think they will be able to live comfortably on their retirement savings. The reverberative effects of such numbers can be staggering. Consider this:By 2030, spending for Social Security, Medicare and Medicaid will amount to almost 60% of the federal budget . This coverage is a good thing. But there is a tremendous risk that it will put future generations into a national debt and tax situation that is back-breaking. Strong individual investment strategies need to be hammered out now to prevent an untenable financial situation a few decades from now.

It is incumbent on all of us to be our own advocates in the face of difficult economic circumstances. It is important that we be stewards of our own financial security so that we are not simply transferring financial burden onto our heirs. There are sound and safe strategies that can be implemented today, and should be, to maximize retirement savings without sacrificing spending flexibility.

A large part of this discussion is to help people understand, they can still live comfortably throughout their retirement even though they have lost significant amounts of money due to the economic decline. The opportunities available for those approaching retirement have changed drastically over the years. Post and Pre retirees can continue to accumulate wealth for their estate and for themselves without having to experience any significant decrease in their retirement spending; with the correct application of guaranteed income riders available today.

An income rider pays out, without annuitization. This allows for more flexibility and access to emergency funds.

When you annuitize a contract you set a defined amount of income for a chosen duration of time without the ability of change. At the end of the chosen time period your funds have been completely withdrawal at a minimal interest rate. There for the trade-off for receiving this income is the loss of emergency liquidity and control. For instance, the amount of time you draw these funds cannot be adjusted. The amount of payment cannot be modified once annuitized.

Income riders allow you to exert more control over your income stream. You still have enough control to take more then the allotted income if needed. If you were to elect income from most income riders, the majority of your principal would still have the ability to be linked to a guarantee rate, an index or another form of growth potential unlike annuitization.

This alterative allows you to guarantee an income you can not out live as well as give you the opportunity for addition index linked or guaranteed interest rate gains.