Scott L. Olson: Congress Promotes New Level of Protection for 401k’s and Other Retirement Plans
By Scott L. Olson, President, Atlantic Financial Advisors, LLC // June 29, 2019
It’s about Time to Guarantee Your Lifetime of Retirement Income
RMD (Required Minimum Distribution) rules may allow later start date to age 72 (up from age 70 ½)
Last year I wrote about the U.S. House and Senate agreeing that they wanted to help retirees. Amazingly, they agree on one thing – that retirees need safeguards.
If retirees lose a significant portion of their life savings just as they retire – they could end up without enough income to retire or retire comfortably. These retirement reform Bills are designed to encourage employers to offer guaranteed retiree income, to help assure retirees income will not go down with any stock market collapse.
Investors forget the pain and anguish of the 50% Crash of 2000-2002 and the 57% Crash of 2007-2009 (1).
“The House Ways and Means Committee on April 2nd passed H.R. 1994, the “Setting Every Community Up for Retirement Enhancement” (SECURE) Act of 2019, which makes it easier to offer annuities in 401(k) and 403(b) plans, raises the age for taking required minimum distributions from 70 1/2 to 72, and expands 529 plan use to homeschooling.”
Committee Chairman Richard Neal, D-Mass., stated that one of his “top priorities” as chairman “is to help workers of all ages prepare for a financially secure retirement.”
Americans, he continued, “currently face a retirement income crisis, with too many people in danger of not having enough savings to maintain their standard of living and avoid sliding into poverty.
The SECURE Act goes a long way in addressing this problem by making it easier for Americans to save. Passage of this bill is a tremendous bipartisan accomplishment, and I hope to see the measure move through Congress and be signed into law in short order.” (1)
Congress is promoting retirees to invest their retirement into annuities which may offer guaranteed growth on their retirement income. Certain annuities offer guaranteed income for life, and you, your spouses’ life, and additional fees offer various death benefit riders to protect your spouse and beneficiaries, for an additional fee.
The type of annuity being promoted by Congress offers the benefit of locking in the greater of; a certain percentage per year guaranteed annual growth, or the actual market growth of many well-known funds such as income, growth, technology, etc (called segregated accounts in annuities).
What other investment can GUARANTEE that your income (called Benefit Base) is guaranteed for life, or that your future income will increase annually until you decide to start withdrawals – even in down markets?
What investments lock-in, or rachet, stock market gains annually, quarterly, monthly and even daily for future income? Yes, this means exactly what I said: “Lock-in market gains Monthly and Daily.”
Many top annuities lock-in your gains periodically, then guarantee your income will never go down, even in the next market crash, assuming income distribution within contract provisions, with some contracts requiring investment restrictions.
While a few advisors claim annuities are no good, we beg to differ.
There are many features and benefits that annuities can offer, and we would love to sit down one on one and discuss how an annuity may be a good addition to your portfolio.’… This way you avoid entering ground that requires extensive sourcing, context, and disclosure. It also gives the reader a call to action.
A Cautionary Note: There are huge differences between Fixed Indexed Annuities and Variable Annuities. Fixed Indexed Annuities, in general, are designed to offer growth, but often 3-4% annually.
More importantly, Fixed Indexed Annuities may “Cap” or limit your performance to as little as 2-3% annually, regardless of how well the stock markets have done. Many of these annuities may not “Cap” your earnings in this way, however, they use “Volatility Controlled Indexes” many of which did not exist a few years ago and have short track-record.
Many show graphs of their “Index” going back 20 years, may only have been available only a short time.
Volatility-controlled indexes, instead of consisting entirely of stocks, is only partially made up of stocks. During times that stock volatility is high, a volatility-controlled index adjusts its mix of assets to use more cash and less stock.
It’s about Time to Guarantee Your Lifetime of Retirement Income!
Let your Senators and Congress-person know that you support this bill. It may reduce your legal exposure and promote more goodwill with your valued employees. Being one of your own employees, and retirement plan participants, wouldn’t you like your retirement income to be Guaranteed for Life?
ABOUT THE AUTHOR
Scott L. Olson has 38 years’ experience in Financial and Estate-Planning, Wealth Preservation and Wealth Transfer. He has provided required Continuing Education courses to Attorneys, and CPAs in Florida, as wells to financial advisors in all 50 states. His experience includes helping clients explore tax-favored income, estate tax reduction and wealth transfer techniques. Scott has provided CLE (Continuing Legal Education) to attorneys and CPE (Continuing Professional Education) to CPA’s at the Florida Bar Tax-Section October 2014 conference, and at their 1-hour CLE teleconference in March 2015.
All investing is subject to risk, including possible loss of principal. All contract guarantees and payout rates are subject to the claims-paying ability and financial strength of the issuing insurance company. Registered Principal offering advisory services through Atlantic Financial Advisors, a Registered Investment Adviser. Securities and additional advisory services offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and a registered investment adviser. Member FINRA/SIPC. Atlantic Financial Advisors and IFG are unaffiliated entities.
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