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Featured Advisor

Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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I Dream of Guarantees

by Catherine McBreen

  We all want a guarantee.  It doesn’t matter how old or how rich we are….we want a guarantee.  And no one seems to be able to provide it.

We just completed research at Spectrem with investors of all wealth levels.  The one thing everyone had in common, regardless of how rich they might be….is that everyone wants a guaranteed income during retirement.  Over 80% of investors indicated they wanted a guaranteed income….this included households with over $5 million and up to $25 million of net worth.

The real challenge is that all of the products and scenarios provided by financial services providers just don’t resonate with investors.  One of the few products that actually could provide a guarantee is an annuity. (I know…there are multiple types and numerous exceptions).  But investors don’t like annuities…they have been pounded with information that says annuities have all kinds of hidden fees.

Another option is structuring a bond portfolio…..but let’s be honest.  Having all kinds of assets earning 1% or less is not that interesting to most people.

The other problem, however, is that none of us really understand how much we need to save in order to guarantee the amount that we want to have to live on each month.  Maybe it’s OK to say to a person with $5 million that they need to put away about $5,000 to $10,000 per month and invest it at X% to have the income they want in retirement.  When an annuity provider tells me I need to put away $5,000 per month, I laugh.   I need to use my $5,000 per month to pay my mortgage and buy my groceries.

What I really want….and what many of us want…is a genie in a bottle to come and say “Poof, I grant you $5,000 per month for life.  Anything you save on top of that is gravy.”

I guess for some Social Security is a magic “Poof”.  It certainly won’t meet the needs of my lifestyle….and it most likely won’t be around when I get to the age when I can  collect it.

If you know of any providers that are creating the product that investors can understand and that provides a guaranteed income throughout retirement, let me know.  Otherwise I am going to continue to look for my own genie in a bottle.