People planning for retirement today face many risks. In fact, the risk is unavoidable. How you react to it can make all the difference. Let’s look at four risks that have recently merged potentially perilously: inflation, interest, income, and stock market unpredictability. Today we’re experiencing a combination of rising inflation and low-interest rates. This has the potential to turn your fixed income into risked income. Lower interest rates mean you receive less money from fixed income strategies that rely on interest payments.

At the same time, higher inflation can potentially eat away at the purchasing power, how much you can buy from those exact same returns. And for those people who are relying on bonds for fixed income, there’s another risk. When interest rates rise, bond values fall, so the amount you can sell your bond for goes down. That is a challenging combination. Finally, annual retirement income that depends on market-based investments can vary dramatically due to the fluctuations associated with stock market volatility. In addition, the timing of when you retire can have a significant impact on how much is available for you to withdraw and, therefore, how long your savings may last.

Certain types of annuities are designed to help you manage some risks. An annuity can help you build growth with no down market losses, cover your essential retirement expenses, pay for health-related costs and even leave behind money for those you love. Fixed and fixed index annuities can deliver fixed rates without the interest rate risk to the value that bonds present. Certain annuities can also offer additional optional benefits, often for a fee, such as for qualified long-term expenses and debt benefits to beneficiaries, which bonds and other fixed-income to strategies cannot. There are many types of annuities on the market, and not all of them will be right for you. Like to learn more?

Talk to The Annuity Expert to see if an annuity is appropriate for you and if you should incorporate an annuity into your overall retirement strategy….(read more)

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As people approach retirement, they often worry about the impact of inflation, low-interest rates, and stock market volatility on their savings. After all, retirement can last decades, and the cost of living, interest rates, and markets can fluctuate significantly over that time. Fortunately, there are several strategies retirees can use to protect against these risks and help ensure their financial security in retirement.

Inflation Protection

Inflation is a natural and expected occurrence in any economy. Over time, the cost of goods and services tends to increase, which can erode the purchasing power of your savings. This is particularly worrisome in retirement when you are no longer earning a regular income and must rely on your savings to fund your lifestyle.

One strategy to protect against inflation is to invest in assets that typically rise with inflation, such as stocks and real estate. These types of investments tend to perform well during inflationary periods, and they can help maintain the purchasing power of your savings over time.

Another approach is to consider purchasing inflation-protected securities, such as Treasury Inflation-Protected Securities (TIPS) or inflation-adjusted annuities. These investments are designed to adjust to inflation, ensuring that your returns keep pace with the rising cost of living.

Low-Interest Rates

In today’s low-interest-rate environment, retirees face a unique challenge. Many traditional income-producing investments, such as fixed-income securities and CDs, may not pay enough interest to keep up with inflation. This can leave retirees with the difficult choice of either spending down their savings or taking on more risk to earn higher returns.

One option to consider is investing in dividend-paying stocks or mutual funds. These investments tend to offer higher yields than many fixed-income securities, and they can provide a steady stream of income even when interest rates are low.

Another approach is to consider a retirement income annuity. Annuities can provide a guaranteed lifetime income stream, regardless of market conditions, which can help protect against the risk of outliving your savings.

Stock Market Volatility

Finally, retirees must be prepared for stock market volatility. While the stock market can provide attractive long-term returns, it can also experience significant short-term fluctuations that can be stressful for retirees who rely on their savings to fund their lifestyle.

One way to mitigate this risk is to diversify your portfolio across a range of asset classes, including stocks, bonds, and real estate. This can help protect against losses in any one area, while still providing the potential for solid returns over time.

Another approach is to consider purchasing a fixed-index annuity or a variable annuity with a guaranteed minimum withdrawal benefit. These annuities provide a level of protection against market downturns, helping to ensure that income is available even when the market is down.

In conclusion, protecting against inflation, low-interest rates, and stock market volatility is critical to ensuring a secure retirement. By diversifying your portfolio, investing in inflation-protected securities, considering an annuity, and taking other steps to manage your financial risk, you can help ensure that you have the income you need to enjoy your golden years.