Life & Retirement Planning - The Big IF in Life

I usually tell people that there’s a big IF right in the middle of life. Just as you never know what may happen in the game of Life, there are many “what ifs” when retirees begin to plan for their retirement. For retirees and soon to be retirees, there are many ifs running through their minds.  One of the biggest retirement planning concerns is if they will outlive their income.  The good news is that there are products, processes and plans available to help mitigate longevity risk (outliving one’s income).

We typically address 3 core retirement planning scenarios with our clients:

The Handy Adder – A Blast from the Past

In the Kemp household, whenever we have a lively dinner table conversation, inevitably, my work as a financial planner comes into play. Recently, my son asked me about these red mechanisms with buttons he’s been observing at his job at the local grocery store. After some discussion, we determined that it was a Handy Adder - a true blast from the past.

After that, everyone was very interested in what the Handy Adder is and why my son was seeing people use it.  The Handy Adder is a small handheld adding machine.  I explained that it wasn't long ago that people used cash or personal checks at the grocery store instead of credit cards.  They had to make sure they had enough cash in their wallet or money in their checking account to cover the bill, so every dollar and cent mattered.  The Handy Adder is an effective way to track each item you plan on purchasing to keep your budget under control.

Mortality Credits and Period Certain

Mortality credits and period certain are two important concepts not to overlook when discussing the features of a life annuity product.  Many people aren’t familiar with these essential terms.   

Consider this: Doug and Helen walk into a bank. Doug is 20 years old and Helen is 70 years old. They both tell the bank officer that they have $100,000 to invest and want to take the most interest they can get for the rest of their lifetimes.

Because of her age, Helen has a distinct advantage in her number of choices.  Helen could simply put $100,000 in a bank CD and take the current interest rate of 2% on a five-year CD.