Look what’s happening in the markets—Outsized gains are leading to people become financially independent much sooner than ever expected.
Many high-performers that I’m speaking with lately are preparing to make a change at 50 – 55 years old.
Financial independence doesn’t mean retired, it means options, it might mean work is optional.
All the while, people are living longer and making healthier decisions (trading excess alcohol and tobacco for consistent weights and 10,000 daily steps).
The crazy reality that’s beginning to hit is that we don’t have any real life data for people living four to five decades as work optional, financial independence, retirement…
We can back test data: This is what it might have historically looked like if you had done X, but there aren’t any significant studies of what 50 years of retirement might look like on a grand scale.
What do we think someone would need to fund that?
I am often reminded that people have been cited as being more afraid to run out of money than death.
In fact, I’ve had more people ask me about annuities than at any other time in my career outside of The Great Recession (2007-2009). And even then, those ‘recession’ annuity conversations were largely people afraid of losing more rather than completely running out.
Today, the annuity conversations are about securing a sliver of guaranteed lifetime income. At this point, pensions are all but extinct and people find comfort in the idea how a guaranteed income stream might fit into their overall portfolio.
Many may not be aware, but there are very few financial topics within the financial planning profession that are more controversial than annuities.
My personal belief: I don’t think they are neither good nor bad—simply a tool.
There have been many examples where they have been sold for unscrupulous reasons. However, many incredible great real-life cases of how they have provided invaluable benefits also exist.
So where does that leave us?
Nobody has run this experiment before. We’re the first generation asking a plan to hold up for 40 or 50 years instead of 20 or 25. There’s no back test, no historical precedent to lean on, actually just people (and advisors and teams like ours) trying to make the best plans to manage it.
If there was ever a time that I’d encourage to you reconsider DIYing this thing, and make sure you have someone unbiased in your corner to guide you and help you and your family figure it out—it’s now.
If this resonates with you or someone you love, reach out or encourage them to do so, so they’re not left trying to sort out this major next stage of life alone.
Any opinions are those of Nic Nielsen are not necessarily those of Raymond James. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. An annuity contains guarantees and protections that are subject to the issuing insurance company’s ability to pay for them. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
