Personal Survival In An Unstable Economy - The Comparison That Might Save Your (financial) Life

It is important to know these differences. Many retirees who confuse investments with savings become concerned once they learn that their “secure” investment isn’t so safe after all; they usually learn this when their investment loses are substantial.

Let’s break it down and rank the priorities. We’re first going to start with investments:

• Growth/return of money: The first thing many people are concerned with when comes to investments is, “how can I get growth on my money?” and “what type of return will I make from this investment?” They want to know how much money they can potentially make.

• Safety/security: The second thing people want to know with investments is how secure their money is. They often ask, “Is there a return on my money?” or “do I get my money back?”

• Income on money/net cash flow: The third question people ask is, “what income does this investment produce?” Many people want to know the dividends and the net cash flow of the investment.

The people who want to live their retirement with confidence and financial security shift their focus from capital accumulation (that isn’t ever guaranteed) to Capital Preservation And Income Growth.

That being said, let’s shift our attention to the way these retirees think and the order of priorities for savings vehicles:

• Security: These retirees want to know, first and foremost, how secure the money is that they depend on to live when in retirement. The number one item of importance to these retirees is ensuring they get their money back no matter what.

The retirees with this mindset can get that peace of mind because savings vehicles, such as annuities, have a legally required reserves system in place. What does this mean? By state law, all insurance companies are required to keep dollar-for-dollar in reserves; this applies to immediate annuities, fixed annuities, fixed indexed annuities, hybrid annuities, etc.
This allows protection of the value of client accounts. Investments, such as stocks, do not have a reserve system.

• Income: The second priority for people concerned with savings vehicles is what income they will earn. They often ask, “How can I maximize my income?” What’s important here is that you receive a consistent and reliable income stream for as long as you live.

• Return/Growth: For the third priority, many people ask, “what is the return on my savings?” and “what is the growth I will get?”

If anything were to go wrong with your savings vehicle, the legally required reserves system would be your “superhero”. You will always be rescued with your assets protected no matter what.

These are the significant differences between and key concepts of investments and savings. Now, it’s time to look at why one approach may be more suitable for you than the other.

View the videos above to see what other clients just like you are saying.

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This is meant to be a general educational article on issues that many seniors, retirees, and pre-retirees consider in making the decision as to whether or not they should buy an annuity, and, if they do decide to buy, which type of annuity and which annuity benefits and additional riders might be most appropriate. This educational article is not designed to be a recommendation to buy any specific financial product or service.

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*Annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer.

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