[Continued] …Annuities do not **guarantee the highest income levels; they **guarantee a lifetime of income regardless of stock market results which may result in the highest income level, if the stock market performs poorly. In a prior video, we highlighted the study done by Wade Pfau, a professor at American College, where he determined that retirees greatest chance for a successful income in retirement came from a blend of annuities and equities. He has been cited as emphasizing the strength that annuities provide in their ability to safely cover the foundational income need for retirees. As Annuity Guys®, we know firsthand the benefits and peace of mind that clients enjoy when they know that their foundational income need is **guaranteed. Structuring a retirement portfolio to provide the highest level of secure and **guaranteed success should be goal number one for both clients and advisors. Two choices: Probability-based or safety-first and both require open-mindedness from advisers In the debate over whether it is better to base a retirement income withdrawal rate on predictable historical returns or one that focuses on basic retirement needs, it appears that the jury is still out. “Do you want to focus on the probability of failure or the magnitude of failure?” said Wade Pfau, associate professor of economics at the National Graduate Institute for Policy Studies. Mr. Pfau, who has championed the conversation over new ways to manage a retirement income portfolio, presented his food for thought yesterday in Chicago at the InvestmentNews Retirement Income Summit. The two schools of thought, as he explained them, include a “probability-based” approach of establishing a 4% withdrawal rate, and the “safety-first” approach that involves taking defensive measures to ensure that basic retirement needs are met. The investment approach for the probability-based approach, for example, relies on systematic withdrawals and typically applies a total-return perspective. In the safety-first approach, by contrast, the portfolio assets are matched to goals, and lifetime spending potential is the focus, as opposed to maximizing wealth.

[Continued] …Annuities do not **guarantee the highest income levels; they **guarantee a lifetime of income regardless of stock market results which may result in the highest income level, if the stock market performs poorly. In a prior video, we highlighted the study done by Wade Pfau, a professor at American College, where he determined that retirees greatest chance for a successful income in retirement came from a blend of annuities and equities. He has been cited as emphasizing the strength that annuities provide in their ability to safely cover the foundational income need for retirees. As Annuity Guys®, we know firsthand the benefits and peace of mind that clients enjoy when they know that their foundational income need is **guaranteed. Structuring a retirement portfolio to provide the highest level of secure and **guaranteed success should be goal number one for both clients and advisors. Two choices: Probability-based or safety-first and both require open-mindedness from advisers In the debate over whether it is better to base a retirement income withdrawal rate on predictable historical returns or one that focuses on basic retirement needs, it appears that the jury is still out. “Do you want to focus on the probability of failure or the magnitude of failure?” said Wade Pfau, associate professor of economics at the National Graduate Institute for Policy Studies. Mr. Pfau, who has championed the conversation over new ways to manage a retirement income portfolio, presented his food for thought yesterday in Chicago at the InvestmentNews Retirement Income Summit. The two schools of thought, as he explained them, include a “probability-based” approach of establishing a 4% withdrawal rate, and the “safety-first” approach that involves taking defensive measures to ensure that basic retirement needs are met. The investment approach for the probability-based approach, for example, relies on systematic withdrawals and typically applies a total-return perspective. In the safety-first approach, by contrast, the portfolio assets are matched to goals, and lifetime spending potential is the focus, as opposed to maximizing wealth. In a model arranged as a pyramid, the bottom layer in the safety-first approach is dedicated to essential needs, followed by a contingency-fund layer, discretionary-expenses layer and finally a legacy fund at the top…. Investment News

[continued] …grow at a level commensurate with the level of return required to meet the growth and income objectives of the retiree. The key element to this equation is not one we often discuss with fixed annuities and that is the element of growth potential verses **guarantees. Before we go too much further in discussing growth potential with fixed and fixed index annuities, we are not comparing the returns or risks to those associated with the purchase of equities. We are looking at MarketFree® Annuities for safer options where one gives up some upside potential for the elimination of investment losses in a down market. Since the time period when the Federal Reserve “cratered” the prime rate, it has been tough to find **guaranteed rates from banks or insurance companies with yields even approaching 4%. Unfortunately, when returns are this low in **guaranteed products, many retirees have been forced to withdraw portions of principal to sustain their lifestyles or forced to take investment risk with their portfolio in order to achieve their desired growth, however, today’s higher rates make it easier to achieve retirement income needs while maintaining principal.  Despite the tough economic environment, annuity companies have continued to innovate and develop products that truly offer unique benefits and **guarantees especially in the areas of growth and income. The proliferation of insurance companies working with investment companies to offer clients access to a variety of indexing strategies has really put growth back into the discussion when evaluating the hybrid style fixed index annuities. This innovation has created annuities with higher interest rate potential for people looking to take realistic withdrawals while having the potential to maintain their principal balance without having to take any market risk. Many financial advisors have started utilizing this new class of annuities as a core allocation for their clients portfolios. It solves the issue for many retirees who need real growth but cannot afford to enter or remain in the securities market and suffer debilitating losses, negatively impacting their retirement lifestyle. These are not your grandfathers annuities. This is a new class of annuities aimed at offering growth potential and income – all while protecting one’s core retirement dollars from loss. If you have not heard much about these financial instruments, it might be time to ask some questions about what you can do for **guaranteed income while safely growing your retirement portfolio.

[continued]…What we want to impress upon you is that most bias is not necessarily bad; however, by knowing the type of advisor you are working with you can more readily pin-point their bias as acceptable or unacceptable, being wary if necessary. Within the industry we have two primary types of advisors – 1) commission driven insurance agents and securities brokers – working under a sales oriented Suitability Legal Standard, 2) fee-only advisors and fee-based advisors – working under a best interest of the client Fiduciary Legal Standard. Each advisor type has its share of good and unfortunately some bad advisors. Ultimately, you should choose an advisor based upon their ability to assist you in accomplishing your financial goals and do so in the most economical and efficient way possible, which does not always translate to the cheapest or the most expensive.  There are times when paying a fee for genuine financial planning can open the door to more possibilities than just the free advice that is often offered by competing commission based sales people who may each claim their solution is best. It is also possible to work with a series 65 licensed financial planner who exercises full and open disclosure who also willingly accepts a commission, in place of fees from their client, as fair compensation for in-depth financial planning (identifying and minimizing conflicts of interest are the keys to success in this type of no fee arrangement). Remember genuine referrals can be your best friend when choosing any advisor (warning; disregard written internet testimonials about advisors, many are fake).

[continued] …deplete my principal.” Well, unfortunately there is not one annuity or fixed index annuity that can accomplish all retirement goals. However, you might be able to achieve all of your goals more effectively with a combination of annuities – typically a combination of immediate, fixed and specific variations of fixed index annuities.”

Since then you may have searched the internet high and low, or talked with some annuity advisors who all offer the perfect solution for your retirement concerns; and yet under closer scrutiny what you have been shown comes up short of the annuity sales pitch. You know the volatility of the market for most retirement assets is hard to stomach and you want **guarantees. You need pension-style income for life and the opportunity to have an increasing income to help protect against inflation. You also want an allocation that will allow your money to grow without risk; and ideally you’d like to maintain your assets, if possible, to pass to the next generation. So you’ve been looking at annuities. You talk with agent after agent and each of them has just the answer; they present the best annuity on the market — until you get to the next agent’s office. Each new agent tells you why his annuity is better than what the last guy just showed you. By this time, you are ready to pull your hair out. You’re not afraid to make a decision yet you just don’t want to make the wrong one. This is your retirement. You have saved your whole life for this opportunity. Many of you have now come to the conclusion that you wish these annuity pushers would admit – there is not one perfect annuity! If you are seeking income, growth and principal preservation combined with safety and **guarantees, it is likely that you are going to need more than just one annuity. Video Questions Answered About Annuity Income & Growth to Maintain Principal Are Annuities just for income? Should growth from annuities be part of sound retirement planning? How can folks build an annuity portfolio that creates Income & Growth while Maintaining Principal? Is laddering annuities a must? Is there a silver bullet such as the one or two perfect annuities? Are annuities built for different purposes and individual needs? What different types of annuities might be used in laddering? Should an annuity portfolio be part of a larger retirement portfolio with other investments? What are the key components that make up a balanced annuity portfolio? Safety, High rated Carriers. Initial income with future step-ups as a hedge for inflation Growth oriented annuities with a minimum floor and a probability of reasonable growth. Tax efficiency Efficient Wealth transfer Where, when and how?

Since then you may have searched the internet high and low, or talked with some annuity advisors who all offer the perfect solution for your retirement concerns; and yet under closer scrutiny what you have been shown comes up short of the annuity sales pitch. You know the volatility of the market for most retirement assets is hard to stomach and you want **guarantees. You need pension-style income for life and the opportunity to have an increasing income to help protect against inflation. You also want an allocation that will allow your money to grow without risk; and ideally you’d like to maintain your assets, if possible, to pass to the next generation. So you’ve been looking at annuities. You talk with agent after agent and each of them has just the answer; they present the best annuity on the market — until you get to the next agent’s office. Each new agent tells you why his annuity is better than what the last guy just showed you. By this time, you are ready to pull your hair out. You’re not afraid to make a decision yet you just don’t want to make the wrong one. This is your retirement. You have saved your whole life for this opportunity. Many of you have now come to the conclusion that you wish these annuity pushers would admit – there is not one perfect annuity! If you are seeking income, growth and principal preservation combined with safety and **guarantees, it is likely that you are going to need more than just one annuity. Video Questions Answered About Annuity Income & Growth to Maintain Principal Are Annuities just for income? Should growth from annuities be part of sound retirement planning? How can folks build an annuity portfolio that creates Income & Growth while Maintaining Principal? Is laddering annuities a must? Is there a silver bullet such as the one or two perfect annuities? Are annuities built for different purposes and individual needs? What different types of annuities might be used in laddering? Should an annuity portfolio be part of a larger retirement portfolio with other investments? What are the key components that make up a balanced annuity portfolio? Safety, High rated Carriers. Initial income with future step-ups as a hedge for inflation Growth oriented annuities with a minimum floor and a probability of reasonable growth. Tax efficiency Efficient Wealth transfer Where, when and how?

[continued] …that replacing your typical bond allocations in retirement with annuities can increase your likelihood of not running out of money in retirement dramatically. Annuities are like bonds – with benefits, they add the insurance component of lifetime income even if the principal account has been depleted. Everyone needs lifetime income whether that be from Social Security, pensions, or supplemented with some additional sources. Research done by the Society of Actuaries has shown that we are living longer than ever. In fact, on average 2 years longer than we were just 10 years ago – which is great news, right? Purchasing an annuity allows retirees to pool the risk of living too long across all annuity purchasers so they don’t have to save and invest as if they were going to live to 100; and they also don’t have to pay for an annuity designed for someone who will live to 100. They can purchase an annuity that is designed for their pooled life expectancy. Emotionally, most of us are attached to our savings and investment accounts. Not surprising since we have spent our whole lives building these accounts up and the thought of using any portion of those dollars to purchase an income stream seems distasteful, at best. However, studies indicate that most annuity owners soon lose their emotional attachment once their income payments begin. Knowing the type of annuity that can best reduce the fear of running out of money in retirement for each person is specific to each individual, and situation, and sometimes the correct answer is no annuity – while for others, it can be a combinations of annuities. If you are retired or nearing retirement, you would be doing yourself a disservice if you did not at least examine annuities for what they can do to secure your retirement.

[continued] …Brokers want to make a commission from selling you mutual funds or variable annuities and then collect trail fees from their assets under management. Insurance agents typically make one commission from an insurance sale including annuities. There’s not really that much difference, so why is there so much animosity? They all want your money! That is how they get paid. Brokers and insurance agents want to get your money for their products or management since they are in serious competition for your assets. Let’s face it, as the baby boomer generation enters retirement, more and more assets are moving from aggressive growth allocations into safer money options like annuities. Retirees face the challenge of turning their savings into lifetime income and they have to protect every dollar they can from the potential of market loss – yet many brokers don’t understand that mode of thinking. They surmise that even if you lose 30% this year, you’ll hopefully be able to get it back in the next three to four years because that is how markets should work. Most brokers are accumulation specialists. They try to tell you the hot stocks and funds to buy but they don’t really know how to properly create a balanced portfolio that protects and grows assets while **guaranteeing a retirement income that you cannot outlive. That being said, fixed index annuities are not the panacea for all your financial needs. They are wonderful for creating a secure income or providing reasonable safer growth – but they are not securities and they should not be compared unfairly to them. Unfortunately, most consumers that are transitioning into retirement have been conditioned to think in terms of accumulation, so they are more comfortable using terms from what they have learned throughout years of “investing”. The transition into annuities for income, limited growth, and safety typically means learning to talk more about the safer return OF your money with reasonable growth – not the sizable returns ON your money that is left at risk. Too many insurance agents try to talk like brokers and show off the “sizzle” of the 8% income rider growth formulas – even though it may not be the right annuity, it’s the easier “sell” because consumers can relate to the “growth guarantees”. So annuities get the occasional black eye when they are represented incorrectly by miss-informed or at times bad advisors who don’t really understand the value of educating themselves or their clients about the proper use of annuities. They are definitely not the White Hat Good-Annuity Guys®, they pretend to be! In our humble opinion, your best advisor choice is to work with a Fiduciary Registered Investment Advisor having extensive experience with securities and annuities, who takes a balanced, holistic approach to retirement planning.