@herudin153: #CapCut

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Friday 08 December 2023 18:18:55 GMT
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The OPTIMAL approach to retirement income planning: Its called the flooring method, and it uses a guaranteed income annuity to replicate a pension, giving retirees a lifetime of guaranteed income.  Why are annuities often considered by many economists as the most optimal ways to retire? Because it uses ACTUARIAL SCIENCE - not some advisor's
The OPTIMAL approach to retirement income planning: Its called the flooring method, and it uses a guaranteed income annuity to replicate a pension, giving retirees a lifetime of guaranteed income. Why are annuities often considered by many economists as the most optimal ways to retire? Because it uses ACTUARIAL SCIENCE - not some advisor's "opinion" - to provide a higher, more stable, predictable income stream Here’s why it’s advantageous: 1. Guaranteed Lifetime Income • GIAs, such as single-premium immediate annuities (SPIAs) or deferred income annuities (DIAs), provide regular income that lasts as long as you live. • This ensures that basic living expenses (housing, food, healthcare) are covered, even if markets crash or you outlive your savings. 2. Reduces Market and Sequence-of-Return Risk • Unlike stocks and bonds, annuities aren't subject to market volatility. • A retiree who depends solely on investments could experience sequence-of-return risk, where early losses in retirement severely impact their portfolio. • GIAs mitigate this risk by ensuring a steady income regardless of market performance. 3. Psychological and Behavioral Benefits • Predictable income reduces financial stress and eliminates the fear of running out of money. • This enables a retiree to confidently spend on discretionary expenses (travel, hobbies) without worrying about depleting savings. 4. Higher Spending Potential • Studies show retirees with guaranteed income streams feel more comfortable spending their money rather than hoarding it out of fear. • The flooring strategy lets retirees use their remaining assets more freely for growth or legacy purposes. Balancing Growth and Security: The flooring method doesn’t mean putting all assets into annuities. It means: • Using GIAs to cover fixed expenses (floor). • Keeping a growth portfolio (stocks, real estate) for discretionary spending, inflation protection, and legacy goals. Bottom Line: The flooring method using guaranteed income annuities ensures financial security, minimizes risk, and optimizes spending, making it one of the most effective and stress-free retirement strategies available. #FinancialFreedom #WealthManagement #RetirementSuccess #RetirementIncome #retirementsecurity #onthisday

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