By Allie Barkhordar

When it comes to your retirement planning, it’s important to understand that your income will generally come from three sources: Social Security, retirement plans and individual savings. Social Security is guaranteed; you will get your check each month. Formal retirement plans that come from your pension are pretty much guaranteed as well. It’s your individual savings or nest egg that is the thing you need to monitor.

You do this by making sure you avoid or manage certain inherent risks. What are some of the main risks? You have longevity risk which is the risk of living longer than expected. This is a risk because if a person lives even one day after spending their last dollar, they are now subject to drastic downward changes in their standard of living. You also have mortality risk, which is the risk of living shorter than expected. Unfortunately, many people will spend their lives working and saving for a retirement that they will never experience. If a person knew how long they would live, easy decisions could be made concerning work, spending and life dreams. But that’s not the case.

While these are the two main risks we face, there are others we also need to be concerned with, such as inflation risk, which is the continual loss of purchasing power from your nest egg, and investment risk, which is the risk of an investment or portfolio not achieving the return necessary to fund your standard of living or, in a worst-case scenario, losing it due to market forces or some sort of fraudulent activity.

How do professionals in the retirement income community determine how much income can be safely withdrawn from your nest egg on a regular basis without an undue risk of running out of money or reducing your future standard of living? Some advisors use what is called "asset allocation," which is generally increasing the percentage of your savings which produces income and decreasing the amount of longer term non-producing income products in your portfolio as you get older. Other advisors use predictable solutions for retirees, such as annuities.

Why do these advisors recommend annuities? Because of the ability to manage or eliminate the aforementioned risks and to provide income for life. Annuities provide peace of mind for both the consumer and the advisor who recommends them. Despite bad press and misunderstandings associated with this very valuable tool, the risk-management features of annuities have tremendous value.

There are three main categories of annuities: Fixed annuities, which have a fixed rate of return and payout for a fixed number of years or for a fixed amount, or some combination. Indexed annuities, which are a variation of your standard fixed annuity, are linked to some type of stock market index in addition to your fixed return. If the stock market index you selected goes up, you get additional interest deposited into your annuity. If the stock market index goes down, you do not get any extra interest that year, however nothing is deducted from your annuity. Thus you participate in the market on the upside not the downside. Third, you have variable annuities, which are annuities with mutual funds inside them. They tend to have much higher fees than the other annuities and their values can fluctuate wildly with the stock market's ups and downs.

Annuities have advantages and disadvantages that you need to be aware of. Some significant advantages are you that can receive income for life with no chance of outliving your savings. Annuities also provide some income tax deferral and reduce or eliminate investment risk depending on what you purchase. Some of the main disadvantages are surrender charges, which come into play if you fully liquidate prior to maturity. Depending on the fees, an annuity may not keep up with inflation and with a variable annuity, much of the investment risk is assumed by the annuity owner.

Another important thing to watch for is what is called an income rider. An income rider is an additional guarantee that is added to a lot of annuities. It essentially guarantees that an annuity will grow at a certain percentage every year for income purposes. It is important to understand that if you elect to have one of these, you will receive paid income out of your own principal first. Only after you have fully depleted your principal will you start to draw off the insurance company’s money. I have seen a lot of agents touting the roll-up rate, which is the growth of the income rider, but not telling the client it is only for income calculation purposes; the income account value is not your money.

Annuities truly have their place for savers and investors who want to eliminate risk as much as possible and guarantee income for life. Over my many years in the business, I have seen them sever many clients well.

Allie Barkhordar is an insurance agent specializing in both tax-free and tax-deferred solutions with Asset Intelligence. This article is a brief summary of the “Retirement Income Planning” booklet. For a free copy of this valuable booklet, please contact (800) 968-8021 or click on www.assetintelligence.com

“LIFE AFTER 50” BOOMER AND BEYOND FINANCIAL SERVICES DIRECTORY

THE JEWISH FREE LOAN ASSOCIATION OF LOS ANGELES

The Jewish Free Loan Association of Los Angeles (JFLA) is a nonprofit agency offering interest-free loans to people of all faiths in the Greater Los Angeles area for emergencies, education, healthcare, small-business development and life-cycle events. JFLA loan programs change lives and save lives and work to promote self-sufficiency with dignity. For more information, please call (323)761-8830 or (818) 464-3331 (valley office) or click on www.JFLA.org.

WILLIAM JORDAN ASSOCIATES

William Jordan is a nationally recognized financial advisor specializing in the unique financial needs of seniors. William’s advice to seniors has helped them pay less in taxes and increase their income while reducing the risk they take in their investments. Most financial planners briefly discuss and identify goals, set asset allocation, search for high returns and monitor performance. William Jordan Associates goes a step further – they build relationships and design a financial road map for each client based on his or her collective dreams and goals. They audit the plan’s probability, customizing and monitoring it for changes in goals. Then they continually communicate with their clients on the plan’s performance – ensuring it stays on the road mapped for success. Whether you are 41 or 71, you have goals, and nearly all of them involve money. Don’t let that stand in your way. William Jordan Associates will help you get there, wherever your “there” may be. Call (949) 380-8600 or click on www.williamjordanassociates.com

THE LAW OFFICES OF JONATHAN W. EVANS & ASSOCIATES

Jonathan W. Evans & Associates specializes in helping customers who have been burned by their stockbroker, and sustained investment losses as a result of broker misconduct. With 34 years of experience and named four times as a “Super Lawyer,” Evans offers free initial consultation and no-recovery, no-fee services. Call now at (800) 699-1881 or click on www.www.stocklaw.com

GENERATION MORTGAGE COMPANY

Can you afford retirement? A reverse mortgage could be an option. With the aging of our population and the anticipated financial needs of American homeowners 62-plus, it’s understandable why a reverse mortgage from Generation Mortgage is a retirement option whose time has come.

“Reverse mortgages are a critically important financial tool for seniors seeking financial security and independence,” states Phil Goss, reverse-mortgage professional. “With healthcare and other living expenses on the rise and income and retirement assets limited, seniors need as many financial options as possible to maintain their financial independence. At Generation Mortgage, we will continue to offer seniors financial products that help them live in their homes longer and give them financial flexibility. And our goal is to always provide A-plus customer service.”

Phil Goss, NMLS#162804, and the Generation Mortgage Company Southern California office is located in Glendora at 146 N. Glendora Ave, Suite 105. For more information with a free DVD, call (866) 359-1592 or click online for a free estimate and customer testimonials at www.generationmortgage.com/philgoss.

Better Business Bureau A-Plus accredited. Equal Housing Lender. Licensed by the Department of Corporations under the California Residential Mortgage Lending Act; NMLS# 1319; © 2011 Generation Mortgage Company. All Rights Reserved.

ASSET INTELLIGENCE

Asset Intelligence is your trusted guide to a safer and richer retirement. At Asset Intelligence, they believe in one absolute and that is that they do not have the right to lose their clients' money. Unlike other firms, they never recommend any accounts that place your hard-earned money at any type of stock-market risk. That doesn’t mean your money will not grow – it just means it will grow without risk. They provide their clients with guarantees – guarantees of principal, guarantees of interest gains, and guarantees of lifelong income to name just a few. They also show their clients how to eliminate and reduce taxes through the use of tax-deferred and tax-free accounts especially effective for any money being passed on to beneficiaries. Asset Intelligence is a firm that believes in guarantees and stands by their motto: “We do not have the right to lose our clients' money.” Please contact them at (800) 968-8021 or click on www.assetintelligence.com for more information.

DA/CA FINANCIAL GROUP

DA/CA Financial Group was established to provide individuals, families and companies with a single source of financial guidance. For financial planning, tax services, real estate and mortgages they can help you achieve your financial goals. Call today for a free consultation with one of their experienced professionals at (877) 560-DACA or (858) 560-0366. You can also click on to the Web site at www.dacafg.com for more information.

ARAMCO MORTGAGE, INC.

If you’re a homeowner, your greatest financial asset is the equity in your home, and thanks to the new Home Equity Conversion Mortgage (HECM), homeowners aged 62 and older can withdraw some of their home’s equity as a government-insured reverse mortgage. With a reverse mortgage, you can tap directly into that resource to live a more worry-free life. If you’re approved, you can get rid of your mortgage payment for as long as you live in your home. You can use the funds you get from your HECM reverse mortgage to remodel your home, or help defer the cost of healthcare. You may also receive additional cash to hold in reserve or spend however you wish. You also choose how you want to withdraw your funds — as a fixed monthly sum, a line of credit, or a combination of both. And there’s no need to pay back your loan until you move, sell your home, or your estate is settled. Aramco’s team of financial counselors is trained to discuss your specific eligibility and give you the knowledge you need to make an informed decision about whether a reverse mortgage is right for you. Reverse mortgages have improved the quality of life for hundreds of thousands of homeowners. For more information, click on www.AramcoReverse.com or call (888) 600-1130.

STASSI & ASSOCIATES

When you purchase insurance, what you are really purchasing is peace of mind and assurance. At Stassi & Associates, that is what you will get – along with an open channel of communication. Established in 1974, Stassi & Associates is an independent insurance agency that functions as a broker and consultant. Representing most major insurance companies, they promote the concept of old-fashioned integrity combined with today’s technology.

Providing quality coverage programs for health, disability, dental, vision, life insurance and specialty markets, as well as Long-Term care and Medicare supplements, Stassi & Associates employs a defined approach to the current market by which all options are refined and reduced to only the best values.

With persistence and dedication, Stassi & Associates maintains constant contact with their clients to provide peace of mind and assurance that the programs they have selected perform as represented. During the course of each year, their customer service representative will contact their clients on an average of six times and they encourage you and your employees to look to them when a question or concern arises. Their customer-service representative is specifically trained to monitor your needs after the sale.

For more information on finding peace of mind and solid assurance in all your insurance needs, call Sal Stassi at (818) 436-7540 or click on www.stassiinsurance@wgn.net