My Comments: I’ve written about the risks of being alive. Not having enough money in retirement is one of them.
This article, featuring comments by Jana Greer, CEO of American International Group, a multinational finance and insurance corporation, can be interpreted as a sales pitch that you may or may not respond to. For me, it’s a heads up message to be better prepared for things over which you have no control.
It echoes the lessons learned over many years that even with my financial skill set, I cannot eliminate emotion from decisions I make about my money. For most people, financial decisions are inherently emotional since they typically involve future comfort levels, freedom, independence, and peace of mind.
Since none of us have a crystal ball, and all of us who retire will depend to some extent on financial reserves we’ve created so we can pay our bills as the years pass, there is a profound need to have some of our money protected against a loss.
by Tyler Clifford \ 26 OCT 2018
Greer cited a study that compared two people retiring just two years apart; the first one in a market downtown and the second in an upturn. She said the impact can be “huge.”
Fifteen years later, if you look back, “that person who retired and took withdraws during that early period can have two-thirds less” for the rest of their lives, Greer said on “Squawk Box.”
Greer also talked about the results of another study, conducted by AIG in January, saying 79 percent of investors are concerned about a stock market decline, with good reason.
The stock market hit records in late January but plunged shortly thereafter. It took until the summer to eclipse those all-time highs. But earlier this month, the market came under severe pressure on fears of rising interest rates. Trading has been highly volatile ever since.
The AIG data also showed 61 percent of those surveyed said their “greatest fear” is outliving retirement savings.
The best way to fight off that anxiety is to develop other sources of protected lifetime income like a pension or an annuity, “things that you can rely on that are stable that are going to give you a monthly check for life,” Greer said.
“You can cover your expenses and then you don’t have to do the withdraws,” she added. “Otherwise, you’re going to have to withdraw right at the wrong time.”
That’s important for the aging U.S. population where 1 in 4 adults will soon be of retiring age, Greer said.