| Many of you are in the red zone right before | | | | bank CDs and money market accounts? These are |
| retirement, or you've already retired. No doubt your | | | | rock-solid safe unless your greatest fear is outliving |
| number one fear is running out of money in | | | | your money. Since current fixed rates are lower than |
| retirement. You're part of a very large and growing | | | | inflation, you'll be losing purchasing power with these |
| demographic force: 35 million over age 65, 50 million | | | | choices. The potential loss of purchasing power will |
| drawing Social Security and 78 million baby boomers | | | | only add to the risk of outliving your money. What |
| now turning 62. This means the future demand for | | | | about real estate, collectibles and non-market |
| everything used by the "retirement set" will increase, | | | | investments? These are not only risky but generally |
| and "retirement prices" will rise dramatically. Many of | | | | illiquid. Before committing your retirement money, ask |
| you may have accumulated a retirement nest egg in | | | | yourself this question: "How will I handle the worse |
| a pension account, will draw a company pension and | | | | case outcome?" |
| or have other savings and investments earmarked | | | | There is one savings place that offers an |
| for retirement. Where should you keep your | | | | "opportunity" to make an above-market rate of |
| retirement money? | | | | return without the risk of loss if held to term. It is |
| If you're keeping up with economic and financial | | | | guaranteed by some of the world's oldest, strongest |
| developments, here's what you're seeing: sub-prime | | | | and largest financial companies. The rate of return is |
| credit meltdown that has destroyed housing and is | | | | determined by stock/bond market indexes with |
| now spilling over into automobile debt and credit | | | | owners sharing in the upside potential but avoiding |
| cards; highly volatile stock and bond markets; a weak | | | | downside losses. The worse case outcome is a |
| dollar fueling higher prices for oil and other goods; | | | | guaranteed positive rate of return. The earned |
| more unemployment and rising inflation; retail sales, | | | | interest is income tax deferred until actually |
| consumer confidence and new jobs creation in sharp | | | | withdrawn and there is no mandatory age when the |
| decline; drastic interest rate cuts by the Federal | | | | money must be used. Additionally, it can be turned |
| Reserve to avoid a recession; a money giveaway | | | | into a guaranteed lifetime income that can be |
| stimulus package from Washington to prop up the | | | | started, stopped and stored. What's more, it offers |
| lagging economy; widespread talk of recession and | | | | penalty-free partial liquidity for emergencies and |
| stagflation. These all add up to troubled economic | | | | bypasses probate if the owner names a beneficiary. |
| times which should prompt you to review where you | | | | It can be opened for a small or a large amount, and |
| have your retirement money. | | | | sometimes more money can be added later. There is |
| You're told the stock market is the best long term, | | | | no law which limits the amount of money that can be |
| but "long term" has a different meaning in retirement. | | | | placed in it. It is truly a safe place to keep retirement |
| Didn't the stock market meltdown in 2000-2002 send | | | | money. |
| many retirees back to work and prevent others | | | | It is maligned by Wall Street and bankers because it |
| from retiring? Aren't the current inflation-adjusted | | | | competes with their products. The financial press |
| stock market indexes below their previous peaks? | | | | doesn't like it either - primarily because they are |
| Regardless, the loud voices of Wall Street and | | | | uninformed, misinformed or just plain biased. I'm |
| investment companies are advising you to buy now | | | | talking about fixed index-linked annuities that are |
| at bargain prices. Are the markets headed higher or is | | | | offered by insurance companies: the same companies |
| their advice self-serving? Who can forecast the | | | | that insure your home, live, health, business and other |
| economy or the stock market? | | | | valuable assets. The worse case outcome is a |
| If the stock market craters as it did in 2000-02 and | | | | positive, albeit small, rate of return if held to maturity, |
| 1973-74, and you lose some of your retirement | | | | but there is an opportunity to do much better. Fixed |
| money, how will you replace it? Since there will be no | | | | index-linked annuities are not for everyone, but you |
| second chance, I encourage you to think carefully | | | | need to consider them as one of your safe options |
| before you commit your money. If you've been told | | | | for retirement money. Where are you keeping your |
| that you'll do just fine over the longer run (generally | | | | retirement money in today's uncertain and troubled |
| meaning ten years), make sure you can wait this long | | | | economic climate? If in risky places, now is a great |
| for a market rebound. Also remember that a rebound | | | | time to review your options. |
| is not certain! | | | | Shelby J. Smith, Ph.D. |
| What about fixed rate places like government bonds, | | | | |