A message from Bruce J. Cumby, CLU, ChFC, MSFS, RICP, President of Cumby, Spencer & Associates Financial Group:
A recent study revealed that 79% of Americans plan to continue working once they’re “retired.” Why do so many expect to postpone a typical, leisure-filled retirement? One theory points to the decline of pensions and the need to replace the income stream that used to come—guaranteed—from a past employer. Today, only 48% of private sector employers offer defined contribution or traditional defined benefit pension plans. And traditional defined benefit plans are disappearing. In 2015, just 20% of Fortune 500 companies offered defined benefit pensions to new employees.
With private pensions becoming rarer, guarantees in retirement may be few and far between, but it doesn’t make them any less important.
For starters, guarantees might make you happier. Research suggests that retirees get more satisfaction from each dollar of Social Security and pension income than they do from any other source of income. That’s because you’re more likely to be confident spending money when you know another check is right around the corner.
Guarantees can also help you be a more confident investor through market ups and downs. Guarantees can be the guardrails you need to stay the course when investing, knowing that you have some protection built into your portfolio. And, with Americans living longer than ever before, guarantees in your overall retirement plan, which can be provided by annuities, may help assure that your money lasts as long as you do. (Guarantees are based on the claims-paying ability of the issuer.)
Just as no two retirements are alike, not all guarantees are alike, so it’s important to understand the options available to you and to identify what, in your own retirement, you want to guarantee.
