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Jim Lentini: Guaranteed IRA incomes

Business Commentary

Posted: September 27, 2010 5:57 p.m.
Updated: September 28, 2010 4:55 a.m.

If you are like many Americans, you may consider your IRA to be among your primary sources for funding your retirement. But, with our current economic issues, and 2008 decline in values of pension plans, you may still have questions about your retirement savings for the future. Some questions are:

- Will my money last?

- What if the market declines before, or during, my retirement?

- What if I need more income?

- What about taxes?

- Will I be able to leave a legacy to my beneficiaries?

You want a strategy that can help protect your retirement assets.

A variable annuity can help provide that protection. If you use a variable annuity with an optional guaranteed minimum withdrawal benefit for your IRA, this option could address questions about the future income of your IRA with more confidence.

A guaranteed withdrawal benefit is an optional benefit that is available with your annuity contract. It cannot be purchased separately.  When combined with a variable annuity, a guaranteed withdrawal benefit can provide both protection and flexibility.

A guaranteed withdrawal benefit allows you to maintain control over your money, and also provides you the opportunity to create predictable and sustainable withdrawals, even if your portfolio suffers market losses. Before you consider an annuity with a guaranteed withdrawal benefit rider, make sure that both the annuity and the rider are suitable for your financial goals and personal circumstances.

After the financial crisis of 2008 affected all retirement plans, an article in Wall Street Journal in July 2009 emphasized the guarantees and protection of the guaranteed withdrawal benefit more than justifies the annual fee charge. Based on our research and evaluation, no investment other than a variable annuity with a guaranteed withdrawal benefit can guarantee future values.  In the current financial circumstances, I recommend some portion of retirement assets be protected with an annuity with a guaranteed withdrawal benefit rider. 

Only a few of the top insurance companies offer these riders, as state and federal regulations require assets above the value of the guarantees of life insurance and annuities issued. As variable annuities with guaranteed withdrawal benefit riders vary in benefit and cost from company to company, always discuss your options with a financial advisor. 

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments, Inc. He can be reached at (661) 254-7633. His column reflects his own views and not necessarily those of The Signal.


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