Three Core Principles

Reasonable Rate of Return**

 What is a “reasonable rate of return**” in retirement, and how can you achieve it? 

What is a Reasonable Rate of Return?**

One important aspect of retirement is setting expectations. For example, the stock market is not a guarantee for growth. Sometimes its up, sometimes its down, and sometimes it remains basically flat. However, you are not limited to the stock market when it comes to retirement. Insurance products, such as certain fixed index annuities may provide protection of your money. In addition, some of these types of products can also give you some return on your money. So, what is a reasonable rate of return**? It’s the rate at which you can keep your money protected when the market is down, yet participate in some of the growth when the market is up. Importantly, these products do not directly invest in the market but instead use an index.

Protection and Reasonable Rates

To make decisions that are best for you, you need information. What you do now with your money may impact your future, especially in terms of retirement income. For example, sometimes retirees don’t think about how inflation may impact their nest egg. If you’re asking “what is a reasonable rate of return?”** you’ll need to include inflation rates. This is because inflation rates mean it may take more of your money in the future to buy the same things you do now.

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Certainly, our country has seen inflation impact us before. However, you can plan to have a return rate that takes inflation into account. Certain retirement products may help address this, such as fixed index annuities (FIAs) or indexed universal life policies (IULs).

Find out the answer to the question “what is a reasonable rate of return?”** Attend one of our upcoming seminar events or an informative online webinar.

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Reasonable Rate - Where Are You?

Once you reach retirement, your priorities may shift. One of these priority shifts is the willingness to risk all your money. For most retirees, it is a time to ask “what is a reasonable rate of return?” and “how do I achieve it?” One strategy is to determine the amount of money you will continue to risk versus the amount you now want to keep safe. In addition, consider the level of risk as well. Some options may provide more security of principal than others. Once you have that decision made, you can look for a reasonable rate of return.**

Typically, the amount of safety and the rate of return have an inverse relationship - but not always.

For example, certain fixed index annuities protect your principal by the claims-paying ability of the insurance company. Yet, some of these products still offer a reasonable rate of return** on your money. Be sure to connect with us to learn which options may be available for you.

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What About Other Savings Options?

You may feel like it is difficult to find conservative options for your money. Afterall, what is a reasonable rate of return** if your wealth could be lost? Of course, traditional savings bonds, certificates of deposit (CDs), and savings accounts may offer some insurance protection for your money. However, these accounts sometimes don’t seem to provide a return rate that is reasonable. In addition, you may have to pay taxes on the interest from these types of savings vehicles. This makes your actual return even less. To provide you with more options, we work with insurance companies that offer principal protection (using their claims-paying ability) as well as reasonable rates of return.**

Fixed Index Annuity (FIA) and Rates of Return

Without directly linking with the stock market, an FIA may provide some return on your money. How does this work? Here’s a few things to know. First, if an index or multiple indexes reach a certain level, you may receive a credit to your account. Next, the insurance company would calculate the rate of this credit. In fact, an FIA is a contract between you and an insurance company. Using certain factors outlined in this contract, the insurance company may provide you with “what is a reasonable rate of return” within your specific product contract. Some of the other factors within an FIA agreement that may impact this include: 

  1. How long you will have the annuity
  2. Other potential benefits of the policy
  3. Amount of money in the policy
  4. Potential options to increase income in the future (income riders)
  5. Conditions, terms, and explanations

Understanding Your Rate

Are your current accounts giving you the right balance of protection and rate of return? What is a reasonable rate of return for you and your specific retirement situation? Do you understand the fees you are paying? When you have answers to these questions (and more) you may feel more confident about your retirement. One way to do this is to meet with an advisor. Our meetings with clients include a review of your current assets and how they are performing for you now. If there are adjustments to be made, we talk about those as well. The good news is, there are reasonable rate of return** options available – especially if you value protection of your wealth. Let’s discover if one of these options may be right for you.

Balancing Risk Versus Potential Gain

If your return rate isn’t high enough, you may not keep up with inflation. However, some products with potentially higher rates also come with more risk of losing your principal. Thankfully, there are some retirement strategies that may help you do both. You may protect some of your money. Yet, you may also have a reasonable rate of return.

Some available retirement options, including certain FIAs, may be part of your overall strategy. We encourage you to look at your overall retirement. Does it have the balance you want? How about your risk versus potential gain? Find out ways to have a lifelong retirement income with balance.

Let's Explore Your Answer to: "What is a reasonable rate of return?"

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