Don’t Let Your Retirement Nest Egg Fall into the Great Abyss

In today’s economy, many people are still losing 40 to 60 percent of their 401Ks and IRAs due to the market’s volatility. As a result, older Americans are delaying retirement, or they’re struggling to make ends meet in what was supposed to be their “golden years.”
For the millions of retirees or soon-to-be-retired folks who are feeling the pinch, their options for a financial rebound are limited. But if you’re younger (in the 35 to 54 age range), you can take steps today so you don’t relive your parent’s experience.

Avoid the Stock Market Game
If you have any sort of retirement accounts, the first step is to take a good look at them. In these investment vehicles, is your money “at risk”? When your money is “at risk” it means you can lose your principal because you’re primarily invested in the stock market or in variable annuities. Why are so many portfolios so heavily weighted in these two areas? Because these are the items that pay higher commissions for the brokers.
Realize that there are other options you can invest in—things that have much less risk yet that offer good returns. So look where your money is. If it’s all in stocks or other high risk investments, the money you think you have may not be there when you need it. Therefore, it’s time to move your money to a safer option.
If you haven’t started to save for your future yet, start the process now. Yes, the economy is still weak and many people are living paycheck to paycheck. But chances are you have a few dollars each month left over, especially if you forgo one or two designer coffee drinks per week. Even if you’re putting only $5 a month aside, that small amount, over time, will build. At the very least, it’ll put you into a savings mindset. And once you start saving a little bit of money, it’ll quickly become a good addiction—one you’ll want to keep doing and increasing.

Investigate an IUL (Indexed Universal Life Insurance Policy)
When you look into safer investments with less volatility, be sure to ask about IULs (Indexed Universal Life Insurance policies). Unlike traditional life insurance policies that only offer a death benefit, an IUL combines a cash growth account with the traditional life insurance policy. How? An IUL compounds market-linked interest on all cash values paid in that are greater than the term insurance premiums. This gives you access to your principal and profits during your lifetime—or an income stream during retirement.
Even better, since it’s a life insurance product, you don’t pay taxes on the money you withdraw. This is a huge advantage, because most people realize that taxes will go up in the future. Why have a large portion of your retirement income eaten up by taxes? You’ll need that money to live on, so a tax-free option is ideal.
An IUL also offers less volatility because the cash account portion of the IUL accrues interest based on the upside-returns-only of a market index, such as the Standard & Poor 500. In other words, when the market index drops, you don’t lose your principal. This is what makes them such a safe investment. When the market rises after a previous drop, you continue to accrue new growth without having to rebuild your principal amount.
While anyone can get an IUL, they are ideal for people in the 35-54 age bracket. This allows ample time for the money to grow (the average interest rate on an IUL is six to eight percent). And if you currently have a 401K or IRA, you can roll that money into an IUL.

It’s Your Future – Plan It
Whatever you do, don’t let your future be a repeat of what many older
Americans are going through today. If you have started saving for retirement, know where your money is and make sure it’s in a safe investment. Move your money if needed. If you have not yet begun building your nest egg, take the first step today. Investigate IULs and other low risk investments, and then take action.
Few people intentionally set out to work until they’re 90 or to live in their child’s basement when they retire. Those scenarios result from poor planning. That’s why, no matter how young you are, it’s time to start preparing for your golden years today. Even though retirement may seem like a lifetime away, it’s a reality you’ll face sooner than you think.