Saturday, April 23, 2016

Why Realtors Are Turning to Indexed Universal Life For Cash Accumulation

Every working realtor knows that their industry is unlike any other.  Each and every sale is dependent upon the functioning of several independent parties.  For example, once a prospect has decided to put an offer in on a new home; the bank must approve the credit and financing, the appraisal must come in at needed value, and the seller (listing agent) must agree to the terms of the sale.  Only when all of the stars are aligned can the sale be facilitated.  Without close attention to detail, it is unlikely for the close to happen.  

Since every real estate agent is commission based, most realtors look for 3 main components with respect to investing long term.  First, the product must be liquid.  Every commission based realtor knows first hand there can be down times from close to close.  Liquidity is precious during periods of stagnant sales, especially in off-season months.  Second, the product must be protected.  In cyclical volatile markets like we are experiencing today, the concern of losing your money can be quite the burden.  Third, the product must be flexible to accommodate sporadic funding throughout the year.  Its impossible to tell when all your closes will happen throughout the year, making flexibility of funding an important part.    

For these reasons, more realtors than ever before are turning to uncapped strategies within indexed universal life (IUL).  IUL strategies allow for flexible funding and uncapped earnings that are very attractive.  With a couple of strategies that exist today, there is no limit on how much interest can be earned through annual reset.  Annual reset allows for market upside while eliminating all of the market downside.  In fact, from 01/01/2001 to 12/31/2015 many IUL policies would have averaged an annual rate of return of over well over 8% before the cost of insurance is taken out.   Liquidity is also a vital component of an IUL policy.  Over 80% of the funds can be accessed at any time during the year for needed liquidity.  Every other tax deferred vehicle that's available comes with a penalty from the IRS if a withdrawal is made prior to 59 1/2 years of age.   Finally, and most important, is the capability to have your IUL policy structured to allow for withdrawals exempt from federal income tax.  Since all IUL policies come with an accelerated death benefit, if properly structured IUL policies can allow for a personal loan to be taken against the death benefit that will not have to be repaid until death.  Upon death, the loan is deducted from the face amount (death benefit) and the remainder is passed on to your beneficiary tax free.  Its no surprise that these “living benefits” have attracted several commission based employees as an avenue for long term growth strategies.

To learn more on how an IUL strategy can benefit your practice, please feel free to email me at  

Friday, April 22, 2016

Will This Election Set Back Your Financial Timeline?

Historically speaking, most presidential elections have resulted in market downturns, especially when a lame duck congress is present. If you don't believe that the market will feel the pain for a couple of months prior to the election in November, I suggest you take a second look. There are a couple of reasons why another recession lurks around the corner. First off, outside of the upcoming election, we are exceeding the 7 years historical average of market downturn/recessions. More importantly, this is one of the only times in history that the market has surged to its highest point (brought on by an overly-successful stimulus) with middle-class income levels at historic lows. Unfortunately, with the contrary logic that the stimulus has shown over the last 8 years, these facts are being written off as a pessimistic and shrugged off. For example, how many times did the market surge in 2009 and 2010 on rumors that the Federal Reserve was going to open the printing presses for another round of quantitative easing? Any other time in US history news of buying our way out of a recession would have sent panic throughout Wall Street, putting the market in a deep red. Our rules are set in opposition, something that we will have to contend with moving forward.

The question is, how hard will the market get hit? A better question, how long will it take for the market to rebound? When the market fell in September of 2008, the Dow Jones had just broken 14,000. It took 6 years to get back to that point. After the market recovered, and all the retirees exited the workforce in 2014, a mass hiring of college graduates (60% of the entire labor force!) replaced the seasoned workforce, driving middle-class salaries down to new lows. If history repeats, what do you think will happen to your projected retirement date? Will you be able to contribute more to your retirement or less than what you have been contributing? The good news is you can lock in your gains at one of the highest points, thanks to the artificial growth of the stimulus! Moving forward, instead of absorbing risk within securities, you can redirect your strategy to mirror index earnings like the S & P 500 or the Dow Jones, while protecting 100% of both principle and earnings. There are dozens of different indexes available to choose from, with some designed to capitalize during market downturns. In fact, if properly structured, some of these indexing strategies can be positioned to create non-taxable income sanctioned by the IRS (rules and procedures must comply with the IRS guidelines).

What do you think your portfolio would look like if you were able to bypass all the volatility from the 2008 recession, and capture all the upside? Some of these strategies, if implemented prior to the recession, would have allowed your portfolio to double in just a few years. I'd be willing to bet you'd be in a much better spot today if you had put this change into effect back then! I believe this opportunity is going to present itself again, starting in just a few months. It's simple math. If you lock your gains in at the highest point, while removing all downside market exposure, you'll likely position yourself for an early retirement. Otherwise, you risk waiting on the market (assuming it rebounds in a reasonable time) and delaying your retirement for several more years. It's not only the volatility that sets you back it’s also the detour. Truth be told, this opportunity may not present itself for many more decades. It's a statistical marvel that we happen to be approaching the same stage that was set in 2008, only now we have the right financial tools to benefit.

Making the right change can give you the cushion you need in moving forward. If the market takes a downturn and salary levels continue to drop, limiting expendable income, you can contribute less without disrupting your financial timeline. Using this plan with the right process is the key to success. These types of strategies are designed to protect your interests over several years, assuming the right process is in place. The ultimate goal is to move forward and free from funding disruptions. Without the risk of taking a step backward, forward momentum takes over, protecting your timeline from the unforeseen.

Once a decision is made for change, the right process has to be put into place. Making the change to mirror index returns and capitalize on long-term growth rarely works as a long-term strategy if the right process is absent. Life often happens unpredictably and without the right process to navigate you through critical financial events of your life, the odds can be stacked against you. Critical financial events can be as simple as retiring, purchasing a new home, or preparing for a loved one's college education. They can also be unpredictable, such as the death of a spouse, a serious illness, or a career change. Failing to have a process to properly guide you through these events can be as detrimental as exposing yourself to volatility. Once again, the opportunity to make a positive change exists today. However, if this change is not accompanied by a refined process, you may be spinning your wheels. This is why it's important to work with a professional who can implement the right process for your situation. If one thing remains certain in our future, it's unpredictability. It's how we approach this change that will determine how our financial future unfolds.

Whether or not, it’s Clinton vs. Trump or Sanders vs. Cruz (or any other combination), it is no secret that change is amongst us. I can't recall any time in the past where the extreme viewpoints of each party have surfaced from frustration and distrust towards our leaders. As we get closer to the election, the tension brought on by the anxiety of change is likely to weigh the market down. How bad it gets crushed remains to be seen. We are truly at a time of the unknown and how we move forward will determine how our financial future/legacy shapes itself. With the market being at an all-time high within a struggling economy, this may be the best opportunity within our lifetime to make the necessary changes with the right process.  

Thursday, March 24, 2016

Redefining Income Planning

It seems much longer than 8 years ago when income riders within Fixed Indexed Annuities (FIAs) provided guarantees never offered.  Historical income value roll up rates that were as high as 8% are now being outperformed by uncapped strategies.  To me, its amazing to see how the evolution of income planning has redefined itself, especially in under a decade.  Today, more financial professionals are redirecting retirement funds into FIAs that provide increasing income streams, as well as uncapped strategies, for life.   Depending on when you plan to retire will determine which increasing income strategy may be best equipped to meet your needs.  This is why it is important to work with a professional who specialization lies within income planning solutions.

The days of FIA annual point to point strategies that can only provide a return of 3.0% are well behind us, and good riddance.  Through many of today's specialized indexed strategies, policy owners within a FIA can now participate in 90% + of the market upside (within a predetermined indexed strategy) with absolutely zero downside.  This means that you can never lose your principle or earned interest moving forward, regardless of how the market performs.  As this past recession has shown, principle protection in down markets is key to making your retirement a reality.  These recent uncapped strategies are causing more financial professionals to redirect client funds into guarantees absent in a turbulent market.  Depending on what your individual circumstances (retirement time-line) are will depend on which strategy may best suit your needs.

Income payouts within FIAs can illustrate much higher than ever before.  Income Account Values (non cash values) used to determine income payouts can participate up to 250% of a selected index return while in deferral.   Additionally, annual income payouts can increase by up to 150% of the same selected index.  For example, one particular FIA that has a 6% annual return (of a selected index) would result in an income payout increase of 9%, never to decrease!   Furthermore, each year the selected index increases in value the income will continue to increase by 150% respectively. Within a couple of these strategies I have seen income payouts potentially double within a 15 year period, while continuing to increase for life!  These are income payouts that have never been seen before, specifically designed to protect retirees from absent pensions and a bankrupted social security system.

So how did this evolution happen?  Simple.  Over the last several years analysts have learned to maximize the upside potential within specified indexes, while protecting the profitability of the issuing company.   Because of the extreme market fluctuations we have seen since 2008 (the most volatility since the Great Depression) statisticians and actuaries have been able to capitalize on market profit points, passing on the gains to the policy owner.

Where the evolution of income planning ends up remains to be seen.   I can tell you from personal experience that today's potential income payouts and uncapped strategies were never contemplated 8 years ago.  FIAs today are replacing fears of inflation and market downturns with comfort and predictability.  Now, finally, retirement can be planned with a higher quality of life than ever before!

Wednesday, October 21, 2015

Navigating Through a Perfect Storm

Here we are starting the 4th quarter of 2015. Many of the gains have been erased for the year, with more volatility to follow. Yet, the market still stands near its highest point ever. All the result of over $5 trillion dollars (not including interest) being pumped into the market over the last 7 years, to offset the largest recession since the Great Depression. The question is, is the market's worst behind us, or is the reality of a struggling world economy going to correct an over inflated market? In other words, what does the big picture look like moving forward? In order to answer that question let's take a look at how we got to where we are today. The answer was simple, spend and spend. Through quantitative easing, the Federal Reserve has pumped trillions of dollars into the bond market in order to create a strong foundation, or safe haven, for investors from volatility. It was a part of an attempt to drive down interest rates while stabilizing a volatile market. Whether or not you are for or against government intervention to protect the market, it worked. The results of the Federal Stimulus was unimaginably successful. It was a game changer. It allowed the market to outrun the pace of the economy, which over the years was welcomed by investors with open arms.
[How many of you remember all the times from 2009 -2012 where the market significantly rose on the suggestion/speculation of the Feds involvement (anticipation of the Fed printing more money)? I remember discussing these huge market jumps on my radio show, almost in a state of disbelief. In fact, some of my earlier articles referenced this phenomenon.]
Federal spending pulled the market up at an alarming rate, well above the threshold of what the economy could realistically (naturally) support. An unnatural cash injection to prop the market up.
It was either that, or see how far the rabbit hole (market plummeting) went. When they announced the stimulus everyone knew there would be long term consequences to this action, just no one knew when. Additionally, everyone was well aware that you cannot buy off a recession in the long term. So fast forward the clock and here we are today. We have record levels in the market, a struggling economy unfit for a rate hike, all while knocking on the door of a volatile election year.
I see today's market as the best opportunity investors have had in the last 100 years. I sincerely do. An opportunity to lock in their gains at just under the highest point the market has ever been, optimizing long term performance. Let's face it, today the words "long term goals" are rarely ever heard. The market is still trying to figure out what is happening week to week, let alone month to month. It seems anything past a month out is too far for speculation. The truth is we are in uncharted waters trying to navigate forward. This is why the proper advice can create a huge opportunity for most investors, if the right picture is painted.
Think of it as the perfect storm. A rally of epic proportions that has capped out, causing what is arguably the highest market surge in US history.
Most investors saw a 300% increase in their portfolio from 2009 to 2015.
How could there be a more perfect time to help your clients re-position what they have accumulated from 2009? Since the Federal stimulus ceased a couple of years back, there is a grave concern with many financial analysts that the market is overly inflated, certainly not reflective of a struggling economy at near record market highs. Besides, what other alternatives are there? The only other option to locking in your gains is to try and wait out, or beat, the market. In order for the economy to support these market highs, oil would need to completely rebound, middle class incomes significantly rise, European markets take a turn for the best (eliminating any threat to the Euro), and that China overcomes all their woes, just to name a few. Unfortunately, those who decide to wait it out may disrupt their time horizon depending on how long it takes the market to overcome another market drop. Remember, it is very unlikely we will see another form of stimulus to pull any future bear markets out of the red. It's too damaging to long term interests. Just think about how far investors were set back from the recession in 2008 to the market highs of 2015. A significant market drop could easily take several years to get back to even. If this happens, the end result could be the client missing out on over $80,000 of income throughout retirement on just a $250,000 deposit or ending up with a much lower end account value; depending on how the market performs. Whereas, the investor could have locked their gains in at one of the highest points in history, essentially skipping over future market downturns. The truth is most investors would have made moves to protect against the volatility if given the chance in 2008. We know through multiple studies since the Great Recession that most investors prefer a moderate return with no downside over exposure to volatility.
Even among the perfect storm, most investors will not realize the significance to locking in their gains at this opportune point. This is especially true given the current financial climate. Their interests lie in their own careers and families causing many to be distracted from the rhetorical talking heads, focusing on insignificant minor details instead of the whole picture. Besides, traditionally speaking, gains are usually locked in at the end of a bull market when the economy is at its strongest, not the other way around like the market we are seeing. Others get trapped in the day to day, week to week progress of the market abandoning long term focus. Once again, you can't plan for, or see, the long term if your navigating through uncertain times. When the market is at an all time high amidst a struggling economy, all signs point to a bear market ahead. Not to mention an election year around the corner filled with significant change and fear of the unknown. The writing is on the wall.
When you take a look at the driving factors of today's market, sometimes it feels as if the rules are set in opposition. For example, just this week the market significantly rallied on the notion that the Fed was not going to raise rates for the rest of the year because the economy was too weak to sustain a rate hike. Does this sound like a legitimate reason for the market to rally? Is this statement conducive of a strong economy? This is a perfect example of why the market is not likely to hold as high as it is. This is the market looking to the Fed for growth. As mentioned earlier in the article, how many times did the market rally since 2009 on speculation that the Fed was going to print more quantitative easing? What do you think the result of the rally would have been without the stimulus? True market surges are lifted on the backs of a strong economy both domestically and internationally, not on scattered speculation within a struggling economy.
In summary, the market rally from 2009 to just recently, has been arguably the highest market surge in US history. Investors now have an unprecedented opportunity to lock in their gains at one of the highest points the market has ever climbed. Moving forward, investors can bypass all market downturns, ensuring their long term goals are not disrupted. Through proper planning dedicated to preservation and longevity, investors have the best opportunity of success to whatever the unforeseen throws our way.

Article Source:

Friday, January 9, 2015

How To Pick The Right Indexed Annuity

When it comes to lifetime income there are many options to consider within a fixed indexed annuity (FIA). Preferences may vary from hoping for upside market performance, to a more conservative approach with a fixed rate of return. It is important to assess each option to make sure you are picking the right FIA to meet your long term needs. Which way you decide to go can drastically effect the amount of income you can receive moving forward.

One FIA providing lifetime income will credit interest based on market performance. The better the market does, the better your income payout is down the road. In fact, there a few of these indexed annuities that provide increasing income in market up years that will not lose income down years. Typically, these kinds of annuities usually payout based on performances of a market index, like a spread on the Barclays Bond Index or a capped version of a like index. Choosing how your funds are allocated will determine what your future income looks like. Therefore, how your funds are allocated will dictate how much of a cap, or upside, you will make in a given year. The downside is that if the market performs poorly over a given time period, your starting income may be lower than anticipated. To help put it into perspective, insurance companies can provide detailed illustrations to show income performance based on the last 10, 20, and 30 year look backs. What this means is they show a period of time in the past as an example of how your annuity income may pay out moving forward. If you choose this type of payout for your annuity income within retirement, it is highly recommended that you use a diverse option with respect to allocation percentages to help balance unforeseen market events; which in turn can protect your payouts in the future.
The argument when choosing the best market based performance income annuity is in how to determine market performance moving forward. Factors such as domestic and global federal stimulus packages have deviated the market from its norm. It is evident that what caused market fluctuations over the last few years is completely different than what we have seen in the past 10, 20, or 30 years. So from a certain perspective, what we see moving forward may work in opposition to what we have seen in the past; especially given the state of our global economy.

Another option when considering lifetime income is the fixed option with the income account value (IAV). The IAV is a feature on some indexed annuities that is separate from the cash value, strictly used for income calculation purposes. Therefore your cash value and your IAV value will be of different values (the IAV value will likely be higher as time goes on) throughout the lifetime of your annuity. The IAV receives a predetermined rate of return each and every year until you start the income, guaranteeing a payout regardless of market performance. The risk being that extra income may be left on the table in the event of a strong market performance. Today, this rate of return will usually average 6 – 8% annually with a predetermined payout dependent upon age. The older you are, the higher the payout. Because this is more of a conservative approach, the insurance company may allow provisions within the IAV to allow increased income in the future when poor health follows in retirement. The purpose is to provide the retiree with additional income for external costs associated with long term care or the need of nursing assistance. Once again, this type of FIA is generally for the more cautious retiree who wishes to leave nothing at chance with his/her lifetime income. With this strategy the retiree can purchase this annuity and know exactly what income they will qualify for up to 10 plus years in the future.

One of the main dilemmas on choosing the right IAV within your FIA is both the income and interest crediting options your contract will come with. I always use the analogy: what you don't make on the popcorn you make on the peanuts; meaning you may sacrifice a lower rate of return on your cash value in exchange for a higher lifetime income payout within the IAV. Typically higher lifetime income payouts within the IAV come with lower caps on the cash value which can restrict the amount of interest you can earn. Remember, pretty much all FIAs today give the option of partial withdrawals to lifetime income (within the surrender period) as a liquidity feature. This gives the retiree the flexibility to stop and start his/her lifetime income at their discretion and instead take a partial withdrawal. The partial withdrawals are contingent upon the cash value, not the IAV, so how much interest you earn on the cash value can be detrimental to how much you can withdrawal over retirement (assuming the lifetime income is not elected). Furthermore, the cash value is usually passed on to the beneficiary in the event of death, not the IAV. This is why it is important to find a professional that can show you a perfect balance between your earned interest on your cash value and your IAV payout.

When choosing the right FIA for your income needs it is crucial to determine what your risk level is. The more aggressive, optimistic approach generally follows the direction of the lifetime income that can increase over time and is solely dependent upon market fluctuations. Whereas the more conservative approach will tend to lean towards the fixed rate of return with the IAV while adding long term protection, providing a guaranteed payout regardless of market performance. Whichever way you go on your lifetime income, it's crucial to know the facts to make the right decisions for retirement income.  

Monday, November 3, 2014

Why Investors Should Be Concerned About the Market

At the time of writing, the market has recently begun to nosedive in response to news of the Federal stimulus coming to an end, the troubled financial state in the EU, and other influences.
I am of the opinion that the market will continue to deteriorate to counter balance the unprecedented market surge brought on by the Federal Stimulus, especially as the market's correction was almost solely based upon quantitative easing.
How far the market will fall remains to be seen; however, I feel that it will be significantly greater than a 15% correction. In October 2014 the Federal stimulus, known as quantitative easing, is ending with a Federal balance of $4.4 trillion dollars (not including interest). If it took trillions of dollars to inflate the market, what do you think is going to happen when it is taken away?
In the wake of the 2008 financial meltdown, the Federal Government was forced to act with an initial bailout of $800 billion to prevent a “Financial Armageddon.” Now, six years later, we have trillions added to our deficit due to quantitative easing. Granted, the Federal stimulus did protect the market from imploding in the short term, pulling the market up to record-setting levels; however we are now walking into the long term consequences of this act of socialism.
This is because both investors and the market alike have become complacent about the Fed purchasing trillions of dollars of bonds to artificially create a solid foundation under the market.
Now, with the foundation likely to stop being laid out or maintained, the market will have to wean itself off of this government intervention. This could be a blessing or a curse depending on the moves you make during this time.
If the market does take a significant drop, no one can say they didn't see it coming. This was not the case in the latter part of 2007 at the start of the Great Recession. The difference being that you can lock in your gains to make sure you don't ever take a step backwards. What many fail to realize is that if a percentage loss is immediately followed by the same percentage gain you will still end up losing value.
Think of it this way...
If four quarters (one dollar) lose 50% of their value, you have two quarters left over. If you then immediately apply a 50% gain back to the two quarters, you only increase by a single quarter and still finish up one quarter short. This is why it is crucial to lock in your gains to ensure you never take a step backwards, especially if you are dependent upon that money to live on during retirement.
However, parking your portfolio in cash over the next couple of years to weather the storm will still set you back. This is because most money market accounts will pay less than .01% interest, which usually equates to pennies of interest earned in a year, basically pausing your momentum. Instead, it is important to look at your long term goals, making sure that your momentum is never disturbed by market downturns.
The more momentum you have moving forward, the better position you will be in the long term.
When the market crashed in 2008, the Dow Jones was just over 14,000. At the lowest point of the recession, on March 5th, 2009, the market hit 6,594. At that point investors were in a state of shock, realizing what they had lost in just over a year. Because of the $4.4 trillion the government added to our deficit, the market soared to new highs, breathing hope back into both investors and Wall Street.
And yet, even though the market reached record levels, investors distrusted the reality of the situation and they turned to the Fed as insurance from volatility, conveniently turning a blind eye to the reality that the Federal Stimulus would end one day.
Well, here we are, with the Federal Stimulus coming to an end. The NASDAQ has already been officially categorized as being in a correction with pretty much everyone expecting more losses. Many recent articles are saying “Don't panic, stay the course,” or “We are still way ahead and corrections are natural.” I could not disagree more. The writing is on the wall, meaning if the market does take a big hit there was plenty of warning.
If you do not have a pension, you are responsible for taking care of your own retirement instead of looking back and pointing fingers. Added to which, if the market does take a big hit, you may have to work for several more years to make retirement a reality. There are, however, several variations of safe money options to make sure that your financial interests are covered moving forward, regardless of the Texas two-step the Fed is playing with Wall Street.
One of the most viable safe money options falls within a strategy of “indexing,” where many top-rated insurance companies will absorb all market losses in exchange for a variety of capped interest options paid out monthly or annually. Many of these insurance companies are the same ones that serviced and backed the pensions of the past and have recently redirected their interests.
Now, instead of the insurance company backing an employer's pension (group annuities), they have shifted the benefits to the consumer in the form of fixed indexed annuities (FIA). These FIAs usually come equipped with lifetime income benefits that can easily be used as an alternative to the pensions of the past. These income payouts can be stopped and started at the owner's discretion while still allowing access to the cash value.
Over the last 15 years these strategies have performed stride-for-stride with the market without any Federal Government bailouts while having explicit guarantees. In fact, many of these lifetime income payouts can be structured to increase over the years as the market increases (while also never decreasing), showing impressive payouts.
Moving forward, investors can choose to stay the course, putting their money into cash or money markets with near zero returns, or they can look to other strategies to protect their long-term interests. Whatever choice they make, I believe they should be aware of the volatility coming around the corner from the weaning of the Federal Stimulus.
The bottom line? Our global economy is not in a position to perform anywhere close to that which our over-performing market suggests. Once again, the writing is on the wall and it is up to you to decide how to prepare for this.

Monday, October 13, 2014

How Lifetime Income Stemmed From Permanent Financial Changes

 Believe it or not, less than 20 years ago lifetime income did not exist; nor did the fixed indexed annuity (FIA). It wasn't until 1997 that the first FIA was launched, with lifetime income coming into the picture almost a decade later. Today these products are used for long term retirement planning, ensuring that your retirement income will not be dependent upon external market events. However, these products would have never come into the picture if it wasn't for the financial changes that started taking place in the late 1980's.

From the end of the Civil War to the late 1980's, pensions were the safety net that employees could rely on for their golden years. It was common for an employee to work for a firm for 20 plus years, get a gold watch, and enjoy a pension for life throughout retirement; a fair tradeoff to say the least. Then the inevitable happened. Through a combination of medical advancements and market turmoil from a deregulated financial system in the 1980's, retirees started living longer than expected and financial hardships started taking place for big business. The combination of these events caused the pension to vanish, giving birth to the deferred compensation plan. Now the obligation of retirement was placed on the employee, a burden that few ever saw coming. Because of the absence of these pensions, the insurance industry focused on the needs of the individual and brought forth a new hybrid product, the FIA.

The FIA gives all the flexibility that the traditional pension failed to provide. Now the employee can redirect a lump sum (401k, IRA, or non-qualified savings) of cash into a vehicle that will guarantee a lifetime income independent of market fluctuations, while still maintaining access to the cash value. The cash value in an FIA can earn interest through a variety of options while never losing value to market performance. This is a huge benefit compared to a pension. Pensions, in turn, were group annuities where employees would contribute gross monthly installments in exchange for an income stream after X amount of years. Once the income was activated there was no cash value and income usually stopped at death. Let's take a closer look at how the FIA can provide an income stream for life.

An FIA usually comes equipped with a lifetime income benefit rider (LIBR). Basically, an account known as an Income Account Value (IAV) grows within an LIBR at a set rate each and every year regardless of market performance. The IAV is a non-cash value used as a formula to calculate the income you will be eligible for in the future. This formula will tell you exactly what you can expect for an income stream up to 15 years down the road. For general purposes, the more you fund the FIA with the more guaranteed income you can have access to. For this reason alone, many investors are redirecting a portion of their nest egg into these products simply as a substitute to the pension.

Today, billions of dollars are being repositioned into FIAs each and every year for retirement income that is guaranteed for life. With the obligation falling now on the employee to prepare for retirement, a shift in annuity income planning moved from a group of participants (pensions) to the individual (FIAs). Change is inevitable in a growing and volatile market place, especially if you are in the 95% of working Americans that do not have a pension. This is why it is important to embrace these individual income planning tools. Understanding how these positive changes can help you achieve your retirement goals is monumental to your long term success. As always, I highly recommend that you explore these options with a trusted licensed professional to help understand how an FIA could be of benefit to you in your retirement years.