Retiring the 4% Rule

Say Goodbye To The 4% Rule, Hello 2%!

Even William Bengen, the financial planner who is known as the creator of this rule, has since advised caution. When asked whether he followed the 4% Rule in his own retirement, Bengen replied, "I wouldn't do it." As Bengen put it, following this rule "is probably not wise - even dangerous - because there are very simple assumptions that I used to develop that rule." So Bengen won't trust it for his own retirement, but millions have been advised that it is a viable strategy? UNBELIEVABLE!

Journal of Financial Planning (July 2011) has shown the 4% percent rule in planning for retirement income has an 18% percent probability of failure due to market volatility and longer life expectancies.

Investment News (2/7/2013) the leading information source for Financial Advisors new study finds the magic withdrawal number in a low-interest-rate retirement is 2.8% percent.

A more recent study suggests "up to 57% of people would exhaust savings if they followed (the 4% rule) today." The Wall Street Journal wrote an article titled "Say Goodbye to the 4% Rule" and they suggested the safe withdrawal rate to be 2%.

"If you had retired January 1, 2000 with an initial 4% withdrawal rate and a portfolio of 55% stocks and 45% bonds rebalanced each month, with the first year's withdrawal amount increased by 3% a year for inflation, your portfolio would have fallen by a third through 2010, according to investment firm T. Rowe Price Group, and you would be left with only a 29% chance of making it through three decades, the firm estimates."

Income Asset Allocation?

Is the amount of money that you have saved and invested during your working years that are meant to generate income when you retire? Individual circumstances (age, health and lifestyle) will dictate how much you need to retire and live comfortably, without any earned income. 

  • Having your living expenses covered, no matter what happens in the financial markets or how long you live - isn't that what really counts in retirement today? 
  • How large is your dollar amount needed to retire? $ 100,000 or $ 500,000 or a $1,000,000 dollars?

Index Annuities can be a great choice for the conservative portion of a person's portfolio, as they are simply unbeatable when income is needed. This superiority is due to the unique feature of lifetime income annuities known as mortality credits.

A banker, stockbroker, bond salesman or any other promoter of financial products cannot provide mortality credits. Only annuities provided by life insurance companies are the only financial vehicle that has them. This makes annuities the most powerful income generating financial product available to help people deal with many of the challenges that they will face in the future.

What is interesting is that life insurance companies know exactly how much of a mortality credit to include in the payout rate of their lifetime income annuities. They can calculate the payout rate to the penny, because they can predict with a great deal of accuracy the average age at which a large group of people will die.

Because of the accuracy of this prediction, the life insurance company is able to include mortality credits in the payout of their lifetime income annuities. And because of mortality credits, people can be guaranteed a payout rate that's significantly higher than what any other investment or financial product can provide.

Taking off the Lid - The Power of an UNCAPPED STRATEGY!

You no longer have to choose between the two, standard or pathetic options: Stock market risk or anemic growth. Now you can have both the benefits of zero stock market risk and the potential for a robust, tax-deferred growth. You really can have your proverbial cake and eat it, too. But now you can ice that cake with the sweetest frosting you've ever tasted. The frosting of an Uncapped Strategy.

What is the basic definition of an Uncapped Strategy? It's the ability to have unlimited gains in the positive years while, at the same time, eliminating all of the losses in the negative years.

Crazy? Absolutely! But crazy good and completely achievable. So here's the million-dollar question. If you could receive unlimited upside potential without the fear of market loss, why would you want to accumulate money through any other method?  Seriously. Pause for a moment and think about that.

I 'm not saying you shouldn't accumulate money through other methods. Nor am I saying this is the only product you should own. Diversity can be good. (As long as you're not just diversifying losses.) I'm simply asking, why would you want to accumulate money anywhere else?

It's a question you might need to wrestle with for a few days before you realize that, maybe, the real obstacle to this incredible new opportunity has simply been misinformation or, possibly, a complete lack of knowledge that these strategies even exits. Luckily, through, that's no longer an issue.

Retirement Assets Growing Backwards?

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