Create Your Own Pension Transcript

Hello again.  I’m David Hovis, financial advisor at Hovis & Associates.  Today I want to talk about retirement income.  Have you ever noticed that people with pensions often tend to be the happiest retirees?  I call this the sleep well at night factor.  They can sleep well knowing that regardless of what their investments do or how the stock market performs, they have guaranteed income each and every month.

Sadly, the number of companies still offering a pension benefit continues to drop.  According to the Department of Labor’s Employee Benefits Security Administration, the number of pension plans offering defined benefits – which means the payouts are guaranteed – plummeted by about 73% from 1986 to 2016.  While pensions are a great benefit for employees, they are a huge liability for companies – which is why we’re seeing them decline.  Instead, companies are continuing to shift the responsibility of saving for retirement onto the employees by replacing pension plans with 401(k) plans.  Some people rise to the challenge and max out their 401(k)’s, while others ignore this opportunity thinking there’s always next year.

But let’s say you’ve been diligent and have a sizable 401(k) balance and are now ready to retire.  Ironically, as that retirement date gets closer, people become more hesitant and nervous.  After all, retirement means an end to your steady income.  It has to be unnerving to walk out that door knowing you won’t be receiving any more paychecks.  You would give anything at this point to have a pension in your back pocket, knowing you will always have some guaranteed income.

Well, you can have guaranteed lifetime income by purchasing an annuity.  An annuity is similar to a pension; it’s like creating a pension for yourself.  There are many types of annuities on the market – and all have different features.  Some even allow you to guarantee a lifetime income without giving up the assets you invest.  Others have enhanced death benefits, making sure your beneficiaries inherit something after you are gone.  You don’t have to give up the possible upside of the market when you retire.  With a variable annuity you can have the best of both worlds:

You can participate in the possible upside of the market while protecting your retirement income stream with a guaranteed lifetime income benefit.

It’s important to understand just how annuities work, as well as the fees, the risks, and the possible rewards.  If you want to learn more about annuities to see if they might be a good fit for you, we are here to help.  Call Hovis & Associates to schedule a meeting.