The loss of a spouse is a profoundly emotional experience, compounded by a myriad of financial and life issues that require immediate attention. In an era marked by economic uncertainty and rising living costs, surviving spouses face unique financial challenges. This article explores some common financial issues that surviving spouses may encounter and offers insights on how to manage them effectively.

Change in Social Security Benefits

One of the most significant financial changes for surviving spouses is the alteration in Social Security benefits. Couples typically receive two Social Security payments each month. However, after one spouse passes away, the survivor is left with either their own benefit or the survivor’s benefit, whichever is higher. This reduction in income can strain the surviving spouse’s budget, as many fixed expenses, such as mortgage or rent, utilities, and transportation costs, remain unchanged.

To mitigate the impact of this change, it’s crucial to have savings and other financial plans in place. Immediate actions include notifying the Social Security Administration of the death to ensure the timely adjustment of benefits. Surviving spouses should also consider whether the survivor’s benefit is larger than their own full benefit and plan accordingly. For those supporting minor children or disabled dependents, applying for survivor benefits promptly is essential since benefits are not retroactive to the date of death but start from the application date.

Drop in Overall Income

The death of a working spouse can lead to a significant drop in household income, potentially necessitating the surviving spouse to re-enter the workforce. This situation is particularly challenging for older adults who may have been out of the job market for years or have health issues. For example, if a corporate executive passes away, their spouse may struggle to find employment that matches the previous income level.

To prepare for this possibility, couples should consider building a robust emergency fund and exploring part-time work or freelance opportunities that align with the surviving spouse’s skills and health.

The Pension Factor

Pension benefits can provide financial stability during retirement, but the death of the pension recipient can reduce or eliminate these payments. Many pension plans offer survivor benefits, typically around half of the original benefit, but not all plans do. Surviving spouses need to understand their entitlements and adjust their financial plans accordingly. Reviewing pension plan details and considering life insurance to supplement lost income can provide additional security.

Income Taxes

Surviving spouses may experience changes in their tax liabilities. For instance, a widow might find that her reduced income places her in a lower tax bracket, or she may qualify for certain tax deductions that she didn’t before. However, the change in filing status—from joint to single or head of household—can result in a lower standard deduction and potentially higher tax rates.

Understanding the tax implications of widowhood is crucial. Surviving spouses should consider consulting a tax professional to optimize their tax situation and take advantage of any available deductions and credits.

Estate Planning Considerations

Efficient estate planning can ease the transition for surviving spouses. Having 15 to 20 certified copies of the death certificate can facilitate the retitling of accounts and the collection of life insurance benefits and retirement plan funds. Detailed records of communications with former employers, the Social Security Administration, and financial institutions ensure that all necessary steps are taken promptly.

Bill Payment and Financial Organization

If the deceased spouse managed the household bills, the surviving spouse must quickly become familiar with the financial responsibilities. Organizing bills, gaining access to online accounts, and setting up a reliable system for tracking payments are essential steps. Ensuring access to the deceased’s email and online accounts can prevent missed payments and additional financial stress.

Life Insurance

Life insurance proceeds can provide crucial financial support for surviving spouses. It’s important to contact the life insurance company promptly, providing the necessary documentation, such as the death certificate and policy number. While insurance companies may offer low-interest cash accounts for the proceeds, transferring the funds to a higher-yielding account may be more beneficial.

Be Alert for Scams

Surviving spouses are vulnerable to scams and fraudulent claims, especially during the probate process. Scammers may attempt to collect on non-existent debts or services. Reviewing debts and obligations with the deceased spouse and maintaining vigilance against fraud can protect survivors from financial exploitation.

Companionship and Loneliness

Beyond financial concerns, surviving spouses often face emotional challenges, including loneliness and isolation. This can lead to adverse health outcomes, such as depression or substance abuse. Support from family, friends, and professional counselors is vital. Group therapy and social activities can provide emotional support and help mitigate the loneliness that often accompanies the loss of a spouse.

Final Thoughts on Planning for Survivorship

Preparing for the financial impact of losing a spouse is an essential aspect of retirement planning. Creating a comprehensive financial plan, building a support network, and consulting with financial advisors can help surviving spouses navigate this difficult period. The steps taken today can make a significant difference in ensuring financial stability and emotional well-being in the future.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Common Financial Issues for Surviving Spouses first appeared on SafeMoney.com.

Retirement is a significant phase in life, often marked by mixed emotions: excitement for the years ahead and uncertainty about financial security. Many people have some form of retirement plan in place, whether through personal savings, an employer-sponsored plan, or a combination of both. But with changing market conditions, evolving retirement needs, and increasing lifespans, it’s critical to ensure your retirement plan is robust and aligned with your long-term goals. Seeking a second opinion on your retirement plan can be a prudent step to ensure you’re on the right track.

Common Retirement Planning Challenges

Retirement planning can be complicated, and even the most carefully considered strategies can have blind spots. Here are some common challenges:

• • Underestimating Longevity: Many people outlive their life expectancy predictions, and not having enough savings can lead to financial difficulties.
  • Healthcare Costs: Healthcare expenses tend to rise with age. Not accounting for unexpected medical bills can put a strain on your savings.
  • Inflation: A plan that doesn’t consider inflation might leave you with significantly less purchasing power.
  • Market Risks: Investment risks, particularly with volatile markets, can impact portfolios and retirement income.
  • Estate Planning: Many overlook estate planning, potentially leaving loved ones with complex and expensive inheritance issues.

Benefits of a Second Opinion

Getting a second opinion on your retirement plan offers numerous advantages:

• Uncovering Gaps: A different financial advisor can identify potential gaps or weaknesses in your current plan that you might have missed.
• Fresh Perspective: A second advisor may offer fresh ideas and strategies to optimize your savings, reduce risks, or take advantage of tax-saving opportunities.
• Validation: If you’re confident in your plan, a second opinion can provide validation that you’re on the right track.
• Enhancing Strategy: Recommendations from a new advisor might complement or enhance your existing strategy, ensuring better financial health.

When to Seek a Second Opinion

It’s a good idea to consider a second opinion in the following scenarios:

• Significant Life Changes: Major life events, like downsizing your home, starting a new business, or making a substantial investment, should prompt a review.
• Uncertain Recommendations: If your advisor’s suggestions seem unclear or inconsistent with your goals, it might be time to consult another professional.
• Lack of Confidence: If you’re not fully confident in your plan, a second opinion can provide reassurance or adjustments.

What to Expect from a Second Opinion

A second opinion typically involves a thorough review of your financial situation and retirement goals:

• Assessment Process: The advisor will evaluate your income streams, portfolio risk, insurance policies, estate plans, and other assets to identify gaps or risks.
• Personalized Recommendations: Based on the assessment, the advisor will recommend adjustments that better align your plan with your objectives.
• Actionable Strategies: The advisor may suggest specific strategies, like diversifying your investments or optimizing Social Security benefits.
• Risk Mitigation: They’ll help mitigate risks, such as market volatility or long-term care costs, that could affect your retirement.

Choosing the Right Financial Advisor for a Second Opinion

Selecting the right financial advisor is crucial. Here’s how to find one who aligns with your needs:

• Credentials and Experience: Verify the advisor’s credentials, ensuring they’re certified and experienced in retirement planning.
• Potential Conflicts of Interest: Advisors who don’t adhere to a fiduciary standard may not be obligated to prioritize your interests above their own. Look for advisors who are legally required to provide unbiased, client-focused advice.
• Transparent Fees: Understand their fee structure to avoid hidden costs that could eat into your savings.
• Communication Style: The advisor should communicate clearly and listen to your needs, providing personalized advice rather than one-size-fits-all solutions.

Conclusion
Seeking a second opinion on your retirement plan can be a game-changer in securing your financial future. With the complexities of retirement planning and the challenges that arise over time, a fresh perspective can uncover blind spots, validate your existing plan, or enhance it with new strategies. Make sure to choose a trustworthy advisor who will carefully analyze your financial situation and provide personalized guidance. Taking this proactive step can offer peace of mind and ensure a comfortable and secure retirement ahead.

If you’re seeking tailored guidance, consider consulting a financial professional. Visit our “Find a Financial Professional” section to connect directly. For a personal referral to an independent, licensed advisor, call us at 877.476.9723 or contact us here to book your first appointment.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Get a Second Opinion on Your Retirement Plan first appeared on SafeMoney.com.

Navigating the path to a secure retirement can seem daunting. With numerous investment options, economic volatility, and increasing life expectancies, understanding how to effectively manage your retirement accounts is crucial. Diversifying these accounts is not just wise—it’s necessary. It ensures financial stability and sets you up for a comfortable retirement.

Why Diversification Is Key

Diversification stands as the cornerstone of sound financial planning. It involves spreading your investments across various assets to minimize risk. In retirement planning, this means allocating your savings across different types of retirement accounts. Each type offers unique tax advantages and withdrawal implications. Through diversification, you reduce risk and enhance your potential financial returns.

Understanding Different Retirement Accounts

Effective diversification starts with knowing the different types of retirement accounts available:

• Traditional IRA and 401(k): These accounts feature tax-deferred growth. You pay taxes on withdrawals during retirement, potentially at a lower rate.
• Roth IRA and Roth 401(k): You make contributions with after-tax income. This setup provides tax-free withdrawals under certain conditions, benefiting those expecting higher tax rates in retirement.
• SEP IRA and Solo 401(k): Best for self-employed individuals or small business owners, these accounts allow for larger contributions, ideal for those who may start saving for retirement later or who have fluctuating incomes.

Recognizing the specifics of each account type is the first step in crafting a tailored retirement plan that fits your financial situation and goals.

Balancing Tax-Advantaged Growth

A crucial aspect of retirement planning is balancing immediate tax benefits against future tax savings. The principle of tax-deferred triple compounding plays a vital role here. This powerful mechanism boosts your investments in three significant ways:

• Investment returns: Earnings generate further earnings through reinvestment.
• Principal growth: Funds grow without current tax deductions, allowing more of your money to compound.
• Tax savings: The money you save by not paying taxes annually also compounds, providing even greater growth potential.

Leveraging this compounding effect in tax-deferred accounts like traditional IRAs and 401(k)s can dramatically increase your retirement savings.

Incorporating Annuities for Guaranteed Income
Annuities often get overlooked in retirement planning, yet they offer valuable benefits. Fixed annuities, for instance, provide a steady, predictable income that does not depend on market conditions. This feature is crucial for maintaining financial stability and peace of mind, complementing withdrawals from other retirement accounts.

Regular Reviews and Adjustments
Life is unpredictable, and so are financial markets. Regularly reviewing and adjusting your retirement plan is essential. Changes in economic conditions, personal goals, or lifestyle choices might necessitate adjustments in how you balance investments among different accounts, modify contributions, or even rethink your overall retirement objectives.

Seeking Professional Guidance
The complexities of retirement planning can be overwhelming due to intricate tax implications and regulatory considerations. Consulting with a financial advisor can provide immense benefits. They offer personalized advice that considers your entire financial landscape, helping you make well-informed decisions that enhance your retirement preparedness.

Maximizing Contributions and Utilizing Catch-Up Provisions
To fully benefit from your retirement accounts, it’s crucial to maximize your contributions up to the legal limits. For individuals nearing retirement age, taking advantage of catch-up contributions is particularly advantageous. These provisions allow people over 50 to contribute extra funds to their retirement accounts, accelerating the growth of their nest egg during the critical years before retirement.

New Topics for Comprehensive Retirement Planning

Managing Inflation Impact
Inflation can significantly erode the purchasing power of your retirement savings. Investing in assets like Treasury Inflation-Protected Securities (TIPS) or real estate can help mitigate this risk. These investments often outpace inflation, preserving the value of your savings.

Planning for Healthcare Costs
Healthcare costs typically rise as you age. Planning for these expenses, including Medicare, supplemental insurance, and potential out-of-pocket costs, is crucial. This ensures you are financially prepared for health-related needs without compromising your retirement savings.

Understanding Social Security Benefits
Social Security benefits can complement other retirement income streams. Maximizing these benefits involves understanding the best time to claim them based on your financial situation. This can significantly affect your retirement income and requires careful planning.

Estate Planning and Will Preparation
Preparing a comprehensive estate plan, including wills, trusts, and powers of attorney, ensures your assets are distributed according to your wishes. This planning can also help minimize the tax burden on your heirs, ensuring they benefit fully from your legacy.

Addressing Psychological Aspects of Retirement
Adjusting to retirement can be challenging. It often involves changes in daily routines and identity. Planning for this transition can help you find new purposes and maintain your well-being in retirement.

Housing Options in Retirement
Choosing the right retirement housing, whether downsizing, moving to a retirement community, or exploring assisted living facilities, impacts your retirement planning and expenses. Each option has financial implications that need consideration.

Leveraging Technology in Retirement Planning
Modern technology aids in retirement planning through tools like online calculators, financial management apps, and investment tracking platforms. These resources can simplify managing your finances and help you stay informed about your investments.

Conclusion: Charting a Path Forward
Building a comprehensive retirement strategy involves more than spreading investments across various accounts. It requires creating a plan that adapts to both economic and personal changes. With careful planning and strategic investment, achieving a secure, financially stable retirement is within your reach. Remember, the most effective approach is customized to your unique financial needs and focused on long-term success.

Looking for Guidance?

If you’re seeking personalized advice, consider reaching out to a financial professional.. Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. If you would like a personal referral for a first appointment, please call us at 877.476.9723 of contact us here to schedule an appointment with an independent trusted and licensed financial professional.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Mastering Retirement Account Diversification first appeared on SafeMoney.com.

In an era where medical advancements and healthier lifestyles are pushing life expectancies ever higher, the challenge of ensuring that your wealth lasts as long as you do has become increasingly critical. For many, the solution lies in a financial instrument that is both ancient and misunderstood: the annuity.

Understanding the Longevity Risk

The joy of a longer life comes with the concern of outliving one’s savings. With retirement periods extending beyond the 20 or 30 years that past generations planned for, the risk of depleting one’s nest egg is real. Traditional retirement savings accounts, like 401(k)s and IRAs, are subject to market volatility and withdrawal rates that can make them unreliable as sole sources of retirement income.

The Role of Annuities

Annuities present a strategic solution to this longevity risk. By definition, an annuity is a contract with an insurance company that, in exchange for a lump sum payment or a series of payments, promises to pay you a regular income for either a fixed period or for your lifetime. This feature makes annuities a crucial tool in retirement planning, providing a steady income stream that can complement other retirement funds.

Types of Annuities and Their Benefits

Annuities come in various forms, each with its own set of features designed to meet different financial needs and objectives:

• Fixed Annuities offer a guaranteed interest rate and a predictable, steady payout, making them a safe choice for conservative investors.
• Variable Annuities allow for investment in the stock market, offering the potential for higher returns (and higher risk).
• Indexed Annuities provide returns based on a stock market index but with certain protections against market downturns.

Incorporating Annuities into Your Retirement Strategy

To effectively use annuities in mitigating longevity risk, it’s crucial to:

Assess your financial situation and retirement goals. Consider your current age, expected retirement age, health status, and financial needs.

Determine the right type of annuity. Evaluate which annuity type aligns best with your risk tolerance and financial objectives.

Consider the timing of annuity purchases. Deciding when to buy an annuity can impact the benefits you receive, with options ranging from immediate annuities that start paying out soon after purchase to deferred annuities that begin payments later in life.

Annuities and Estate Planning

Annuities can also play a role in estate planning. Certain types of annuities allow for the continuation of payments to a spouse or beneficiaries, ensuring that your loved ones are provided for in your absence.

Challenges and Considerations

While annuities offer significant benefits, they are not without their drawbacks. Fees, surrender charges, and the complexity of some annuity products can be deterrents. Additionally, the guaranteed income of an annuity comes at the cost of less access to your principal in case of unexpected financial needs.

Considering an annuity as part of your retirement plan? Speak with a trusted independent financial professional to explore how annuities can fit into your comprehensive financial strategy, ensuring a stable and secure future for yourself and your loved ones.

Navigating the Complex World of Annuities with a Financial Professional

When considering the integration of annuities into your retirement strategy, recognizing the importance of partnering with an independent financial professional cannot be overstated. Annuities can indeed form a crucial part of your retirement income, offering a buffer against longevity risk with their guaranteed income. However, the landscape of annuity products is diverse and complex, marked by variations in costs, fees, and terms across different offerings and providers. This variability underscores the critical need for expert guidance.

An independent financial professional brings to the table a wealth of knowledge and experience in assessing the wide range of options available, ensuring that the annuity selected aligns seamlessly with the broader contours of your retirement plan. This involves a holistic assessment of your financial landscape, including other income sources, liquidity needs, and long-term financial objectives. The intricacies of annuity contracts—ranging from fee structures to benefit options and riders—demand a nuanced understanding to navigate effectively.

Working with an independent financial professional also provides the opportunity for personalized advice tailored to your unique financial situation. They can help decipher the complex language of annuity contracts and interpret how different annuity features might play out in various market conditions or personal circumstances. Moreover, an independent financial professional can offer insights into how an annuity fits within the context of your overall retirement portfolio, balancing it against other investments to achieve a diversified and robust financial plan.

The decision to incorporate an annuity into your retirement income strategy is significant and requires careful consideration. The right independent financial professional not only aids in selecting the most suitable annuity product but also ensures that this decision is integrated thoughtfully within your comprehensive retirement planning. This partnership is invaluable for navigating the complexities of annuities, making informed decisions, and ultimately securing a stable and confident financial future in retirement.

Conclusion
As we face the prospect of longer lives, the importance of planning for financial longevity becomes ever more critical. Annuities, with their promise of lifetime income, offer a powerful tool to mitigate the risk of outliving your wealth. By carefully considering your financial situation, understanding the different types of annuities, and consulting with a financial advisor, you can develop a strategy that ensures your wealth lasts as long as your life.

If you are looking for someone to help you, many independent financial professionals are available here at SafeMoney.com. Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. If you would like a personal referral for a first appointment, please call us at 877.476.9723.

The post Your Wealth: Financial Strategies for a Longer Life first appeared on SafeMoney.com.

If someone is within that timespan, then a major financial loss can seriously derail their retirement goals. For instance, many people were ready to retire in 2008, but they were forced to work for another ten years or so in order to make up for investment losses suffered in the financial crisis.

But what is a volatility buffer, and how does it work? In simple terms, a volatility buffer is a way to reduce investment loss risk in your financial plan. It can help you keep financially on track in times of unsavory market conditions, including when you are taking withdrawals from your asset holdings for retirement income.

You have a variety of options that you could use in a volatility buffer strategy. One way that you can guard against this heavy cost of investment loss risk is with a fixed index annuity. This type of annuity has a feature of protection in the volatility of the markets while keeping your money safe from losses. Of course, this is just one option among others.

In this article, we will go over what a volatility buffer is, how to include a volatility buffer strategy in your overall plan, the pros and cons of this strategy, and how to tell if it’s a good fit for your financial situation.

What is a Volatility Buffer?

For our purposes here, a volatility buffer is simply any financial instrument that guards against negative changes in value to some degree. Which financial products are used in a volatility buffer strategy will vary, but it’s not unusual for financial products with contractual guarantees – such as cash value life insurance or annuities – to be part of the mix.

For example, a fixed index annuity earns interest, and that interest is based on a linked, underlying benchmark index and its changes. The money inside a fixed indexed annuity won’t drop in value when the markets go down, regardless of how the underlying benchmark index does. You might have some benefit add-ons on a fixed index annuities, called riders, that might come with a fee. In times when the index goes down, the rider fee may eat into the zero percent crediting and therefore leave you with a loss, but that is only in those situations. And that if you opt for a rider benefit to begin with. On the other hand, the growth potential for a fixed index annuity is limited because of the protection against losses from an index decline.

Therefore, a volatility buffer option like a fixed index annuity won’t offer the highest growth potential since it also has that protection feature. But among those who are attracted to annuities, the idea of getting “some of the up and none of the down” is growing more popular among retirees and those near the point of retirement.

How Does a Volatility Buffer Work?

Volatility buffers are fairly straightforward vehicles in lots of cases. They help smooth out losses in your overall asset holdings when markets take a beating and some of your investments lose value.

For example, say that you have a retirement portfolio of $1 million, and you put half of that money into a fixed index annuity. Then you can only lose money in the remaining half of your portfolio.

If the markets drop by 30%, then you could lose as much as $150,000 in the half of your portfolio that is in investments which can change in value. However, the money in your fixed indexed annuity will stay high and dry.

This buffer can be advantageous in times when your market-based investments take a hit, and you are retired and taking income from your overall holdings. The volatility buffer portion of your holdings can be the place from which you withdraw some money so that the market-based investments portion can recover from their losses.

In these down-period times, the volatility buffer gives you “buffer” money to supplement your income. In the up-period times, the market-based investments can fill that role.

Volatility Buffer Strategy and Sequence Risk

Having a volatility buffer in your overall retirement plan can guard you against something called sequence risk. This risk is the chance that you will see a big loss in your portfolio either just before or after you retire.

For example, if you have $1 million in retirement assets and a market decline caused them to drop by 30%, you will have $700,000 left to retire on. Some market losses can be sustained over time, but this type of loss can severely affect your retirement goals.

You would have to wait for your portfolio to go back up by over 40% just to get back to where you were. That being said, a volatility buffer will effectively shield you from this risk. It wouldn’t go down in value unless you took out money from the buffer asset yourself.

Here is another example of how sequence risk works. If you have $1 million in the market and it drops by 25%, then you will have $750,000 left. Then, say the next year the markets rise by 25%. This should get you back to a million, right? Wrong!

You will only gain 25% on the remaining $750,000, which comes to $187,500, bringing your total portfolio value back to $937,500. So, you are still short by $62,500, even though your arithmetic rate of return for those two years comes out to zero.  

Of course, there is no guarantee that the markets will rise by that much the year after they fall by that amount, so your actual loss may be larger. The reason that it matters so much is that it can leave you with a much smaller amount of money to draw from after you retire. If you still had your entire million, then a 4% withdrawal rate would net you $40,000 per year. However, if your portfolio drops by 25% during the first year of your retirement, then your annual income is reduced to $30,000 per year.

There are other potential wrinkles to think about as well. Many financial professionals are of the opinion that a 4% rate of withdrawal might be unsustainable in today’s largely unprecedented markets.

Some financial professionals are showing clients withdrawal rates of 2.4 percent (or around that level) since the market crash of 2008. Of course, others are even showing withdrawal rates that are higher than 4.0 percent. They are confident that this withdrawal rate might be sustainable, given future market conditions and their ability to support that level.

Ask your financial professional about their opinion, especially since it has a large effect on what your lifestyle in retirement might be.

What Should You Use a Volatility Buffer For?

As said before, a volatility buffer can help protect you from drastic market losses when you retire. If you have a retirement portfolio of $1 million and put half of that into a volatility buffer instrument, then you can rest easy knowing that half of your money is quite protected from market loss risk.

The other half can stay in the markets just to get the higher growth potential that the markets can offer, but now you have one foot on dry land when the “waters” become chaotic again. This way, if the markets drop by 25% in the year after you retire, then your losses will only be half as much as they were in the previous example.

Volatility buffers are designed to reduce the losses that you may see in your portfolio due to poor market performance. If you put half of your money into a fixed indexed annuity, then you just cut your risk of loss in the markets in half. The annuity can also help by paying you a contractually guaranteed income stream that lasts as long as you need it. That feature can be highly useful especially if you are in the throes of exploring strategies for funding your retirement lifestyle.

Other guaranteed investments or savings vehicles offer the core benefit of protection, as we have mentioned many times, but not a truly guaranteed income stream as an annuity does. Talk to your financial professional about annuities and their ability to pay a steady income stream for life if that matters to you.

Alternatives to a Buffer Strategy

Of course, you can always use other strategies to manage your retirement accounts if you prefer. Independent management of your retirement accounts can expose you to risks that you may haven’t thought of, such as the markets going down by 10+% just before or after you retire.

If that happens, then you may be more open to the idea of a fixed indexed annuity, which can guarantee your principal while giving you some healthy growth potential for your money.

Is a Volatility Buffer Strategy Right for You?

If you worry some over your retirement portfolio and what the markets could do to it, then you are an ideal candidate for volatility buffer strategies. Using ‘safe money alternatives,’ your financial professional can help protect some, or much, of your hard-earned retirement money from drastic market losses.

One thing to keep in mind with annuity or other contractually guaranteed strategies is that you do give up some liquidity in exchange for the protection benefit and other benefits such as a guaranteed lifetime income.

If you might need liquid money that would otherwise go into an annuity or similar vehicle in fewer than five years, this sort of vehicle probably won’t be for you. If the thought of tying up your money and some liquidity has very little appeal to you, even in exchange for those guarantees, then you probably won’t be a good fit for these options either.

Your financial professional can help you ask the right questions and determine what sort of volatility buffer options, if any, make sense for your financial situation and preferences.

The Bottom Line

A volatility buffer can be an effective risk-managing portion of an overall retirement strategy. In particular, a fixed index annuity can serve as an effective buffer against market losses in your retirement portfolio.

You may not want to put all your money into one, but if it lines up with your long-term financial goals, it may be worthwhile to look into it and other guaranteed vehicle choices.

Consult your financial advisor for more information on how these financial instruments work and how they can benefit you. If you happen to be looking for someone to help you figure out how to have more financial peace of mind for your future, many independent financial professionals at SafeMoney.com can help you there, too.

You can get started by visiting our “Find a Financial Professional” section and connecting with someone directly, where you can arrange a goal-discovery meeting to discuss your goals, concerns, and overall situation. If you would like a personal referral, please call us at 877.476.9723.

The post Volatility Buffer: Reduce Investing Risk in Retirement first appeared on SafeMoney.com.

The simple answer is life changes, and financial wellness at this point requires a certain specialty. You wouldn’t go to a family medicine doctor for matters relating to brain surgery. That is what a neurosurgeon is for.

The same goes for income planning near and in retirement. An experienced retirement income planner will be able to help you maximize the fruits of your life’s work net of taxes, inflation, fees, and other factors. They should be able to create dependable income streams that have a good chance of holding up for however long your retirement lasts.

Retirement Is Different

Your retirement years are different from your working years. During the latter, you were accumulating and building up assets for retirement. Now it’s a matter of living off those accumulated assets for the rest of your life.

You will need to make sure that you don’t outlive those assets. You should be able to have income still flowing in no matter what happens. While it used to require planning for five to ten years, retirement can now be as long as 30 to 40 years.

Over time, your holdings will generate income to replace your career earnings or other income that you brought home during your working years. It will also need to replace or supplement the assets that you have begun spending now.

Outliving Your Money

One big fear for many folks facing retirement is the looming risk of running out of money. This can be concerning especially when you are trying to maintain a comfortable, and not inexpensive, lifestyle.

A Nobel Prize-winning PhD economist, William Sharpe, has called running out of money in retirement “the nastiest, hardest problem” in finance.

If you want to be one of the “lucky ones,” insofar as you don’t run out of money, you need to rely on more than luck. It’s good to work with someone who can make your income last as long as you need it.

Your financial professional should go over ways to produce enough reliable, ongoing income for your lifestyle expectations. Remember, times are different now. You are looking for someone who is as comfortable teaching you to decumulate assets as they were teaching you to accumulate them.

Where to Look for a Retirement Income Planner?

Finding the right retirement income planner isn’t easy, even when you know what you need. To some extent, you can rely on your friends’ word of mouth, so long as you check it out.

Online is another good starting point. Look up local financial firms in your area and see what services are available locally. You can build up a list of different candidates for your retirement income planning needs pretty quickly this way.

You might also come across financial professionals in other venues. Some agents and financial advisors invite folks in the area for seminar presentations with a meal. You may come across others on social media platforms, hear of them from radio spots, or learn of them from community events or some other marketing of theirs.

If something that they say resonates with you, it might be worthwhile to check them out for your financial situation. Again, some due diligence and research will go a long way in ferreting some firms out so that you can dwindle down your list.

You are also welcome to contact one of our local independent financial professionals here at SafeMoney.com for a personal meeting, if that would be of interest to you.

Who Might Be Good for You?

Think about what sort of financial guidance that you need. The type of financial services that you might use will vary in their fees as well as how they are charged.

Do you want to pay a flat fee for management or as a percentage of your assets? Do you want to pay only when you make a transaction? How about a fee structure where the insurance company pays your financial professional directly and all of your money goes to work for you on day one?

The first of these structures represents an investment advisor representative, who may be called an investment advisor, financial planner, and similar names. They are usually statutory fiduciaries, but the SEC discourages its use in promotional materials.

The second option is a registered representative at a broker-dealer. This individual can’t act without speaking to you first (unless you give them power of attorney) and only charges you money when they actually execute a trade. These are known as registered reps, investment consultants, and similar terms.

The final option is the case with many annuity products. Life insurance companies are required to have lots of capital in place to back up an annuity policy. When you incorporate an annuity as part of a lifetime income strategy, the financial professional’s payment comes directly from the insurance company’s coffers.

It’s often based on a percentage of your annuity premium, and 100% of your money goes to work for you in the annuity policy.

If your agent has provided strong value to you in giving you retirement clarity, good work in learning about your situation, and finding a good-fitting solution for you, then this route may be appealing in conjunction with the other options discussed.

The bottom-line? However a fee structure is composed, you want the guidance that is right for your particular financial situation. Don’t be afraid to explore different avenues and see what might work best for you.

Get More Information on Retirement Income Planners Under Consideration

Do interviews with at least three financial professionals so you get an idea of what they can offer — and what your ideal retirement income planner will look like for you.

Do a background check if you think you have found someone you would like. Any credentials they claim to have, such as being a Certified Financial Planner or a Retirement Income Certified Professional, can be found online.

You can check out a registered rep’s history at FINRA’s BrokerCheck website. It will tell you how long your candidate has been in the business, what FINRA licenses they have, and any disciplinary action, financial problems, or litigation in their past.

You can check out an investment advisor at the SEC’s Investment Adviser Public Disclosure website. It offers the same kind of information as BrokerCheck. The SEC also provides information about individuals, not all registered, who have had a court or SEC order entered against them.

The North American Securities Administrators Association (NASAA) maintains links to state disclosures. See NASAA’s website for more information.

What Should Your Retirement Income Planner Specialize in?

What do you want your retirement income specialist to be good at? Do you want or need many different skills? Are you honing in on one particular skill set that you consider essential?

Some of the skills you might look for are:

Retirement income strategies – If you don’t have all the assets you think you will need or get hit with a week where the market drops big time, you will need someone familiar with ensuring that you continue to have income in retirement.

They will need to understand how that continuing income affects your other assets. They should be familiar with various income strategies that give a high probability of generating lifetime income, and what risks like sequence of returns as well as inflation can do.

They should also be skillful in careful tax planning.

Understanding retirement withdrawals and how to maximize your money from all of your retirement accounts. Again, strategic thinking is essential here.

Some money is better used when you first retire and aren’t yet getting Social Security. Other money has a better or worse tax consequence, depending on timing.

Your retirement income planner needs to plan withdrawals to avoid catastrophic losses and tax consequences. An experienced planner will be the expert to help you decumulate your assets wisely.

Specific Investment Risks to Watch Out For

The specter of the sequence of returns risk is real. When you make money on an investment is essential to its real value.

The sequence of returns risk is the risk that you will experience negative portfolio consequences late in your working life. That is, when you have little opportunity to recoup those losses.

Don’t forget if you lose 10 percent of your assets, you will have to make 11 percent to get back to your original position. High losses take even higher returns, so a 25 percent loss requires a 33 percent gain to get back to even.

Investment risk refers to the risk inherent in every investment. Some investments, like Treasury securities or fixed-type annuities, generally have low investment risk. At the other end of the spectrum, trading futures and selling call options have very high investment risk.

When you select your retirement, you will need to discuss your comfort level for investment risk tolerance. Bear in mind that risk and potential reward go together.

Taxes and Your Retirement Planning

Taxes are an important consideration in retirement. If nothing else, they can consume a large chunk of your retirement income.

You can have retirement assets and income taxed as ordinary income, assets taxed on withdrawals, and assets that have already been taxed from which withdrawals and income are tax-free. Your retirement income planner needs to be sensitive to tax consequences and inflation over time — and how to plan for both of them.

One of your major expenses in retirement will be healthcare and long-term care. While most of your healthcare is covered by Medicare, long-term care generally isn’t.

There are sophisticated ways of using things like annuities to cover your long-term care. You will want a retirement income planner who understands these issues.

Questions to Ask a Prospective Retirement Income Planner

As we mentioned above, it’s critical to understand who your potential planner is. The big question is how they can work with your retirement goals. There are questions to ask that can help you decide if a candidate is the right one.

• How long have you been in the financial services industry?

Those websites mentioned earlier can give you licensing and credential information about professionals in financial services. They will also disclose adverse background information that might affect your decision.

• How long have you been doing retirement income planning?

It’s a little harder to determine how long a financial professional has focused on retirement income planning. Some of their answers to your questions will be clue-ins.

However, there are specifically retirement-oriented credentials that can give you an indicator as well. Among these are the RICP, Retirement Income Certified Professional, offered by the American College for Financial Planning.

• Credentials and professional experience?

These earlier websites carry records of employment in the financial industry. If your retirement income planner is savvy, they may have a LinkedIn profile and other aspects of an online presence. Here, you can cross-reference your findings of their employment against what they have listed.

FINRA has a list of credentials used (or not) in financial services, and you can check out any credentials your candidate uses from FINRA’s viewpoint.

However, FINRA doesn’t approve or endorse any professional credentials, other than the Series license exams (e.g., Series 7 license). On the other hand, FINRA does tell you what it takes to get and keep any particular credential, which lets you judge its worth to some extent.

Does Your Candidate Communicate Well with You?

Financial services and retirement planning can be complex fields. They are full of acronyms and abbreviations that can make it hard to understand the industry as well as we would like.

Nonetheless, a truly effective retirement income planner will also be a teacher. They will work to understand what you need and then present their suggestions for achieving those goals. But, when they do so, they will try hard to ensure that you understand their recommendations, its risks, and how it will help you.

Only when you truly understand a concept, and your financial professional understands it as well, can you make a reasoned decision together about the wisdom of that recommendation.

How Does the Retirement Income Planner Make Decisions for You?

When you consider a financial professional, it’s important to understand how they think about retirement planning and how they will make recommendations for you.

Ask about their retirement planning philosophy and how much risk they believe is appropriate for you. Generally, to make the risk level decisions, a planner will ask for a great deal of information about you, your future plans and goals, your dependents, and lots of financial information. Don’t be afraid to ask them questions as well.

If someone starts making retirement plans for you without this information, you should be concerned.

Who Does the Retirement Income Planner Work For?

Retirement planners work in a variety of situations. For one, they might be captive or independent (more on that below).

Some are entirely independent investment advisors, and they have a relationship with a custodian financial company for their client accounts and any other necessary relationships. They may be independently licensed as insurance professionals to handle annuities, but still work on their own.

Some retirement market-focused agents are independent insurance brokers. They can offer annuity and insurance products from multiple carriers, and they receive payment from a life insurance company only when they do business with you.

The life insurer puts all of your money to work for you in your annuity policy. These agents have the business freedom to recommend annuity products from multiple carriers depending on your situation.

Other retirement planners will have an independent contractor relationship with a registered investment advisory company (or, less often, a broker-dealer). This affiliation allows them to take advantage of large-scale company advantages available to clients of a larger firm. By doing so, the planner can focus more completely on you and your needs.

Finally, some planners are “captives” of a registered investment advisory firm, insurance company, or broker-dealer. They are subject to the controls and limitations of that company, particularly as to the products they can use for your account and the fees they can charge.

The limited products available to the captive financial professional may mean that what might be the best product for you isn’t available to that planner.

How Many Clients Does the Retirement Income Planner Have?

You want someone with experience. Therefore, you should expect that your preferred candidate has more than just a few clients.

On the other hand, you don’t want a planner whose book is so large that you won’t get any individualized attention.

Will the Planner Be Available to You?

Sometimes you will want to discuss your retirement plans and accounts with your planner. You may be concerned about market activity. Or you may have recently experienced a good or bad financial change that needs to factor into your plan.

Before choosing someone, think about how frequently you want to be in touch with them and how you would like that contact to work.

This accessibility is another issue to discuss with any potential candidates to ensure that you have realistic expectations of your possible relationship.

Adjusting to Changes

Speaking of potential financial changes, you want to know how your planner is likely to handle any necessary adjustments to your plan.

Sometimes, you may have good changes, like an unexpected inheritance or other financial gains. At other times, the news may be less good when adverse market action forces a reevaluation of your plan.

How will your candidate deal with those changes? How do you want your retirement financial professional to deal with them? The level of consultation for necessary adjustments to your plan is a vital issue for discussion before setting up the relationship.

Some Final Thoughts

As you can see, there is a lot to think about when selecting a retirement income planner. While your initial selection isn’t irrevocable, moving your accounts is somewhat of a hassle.

It’s better to be careful and make a good choice in the first place. The retirement income planner you choose will have a tremendous impact on your retirement. Make your choice thoughtfully and carefully.

Are you looking for a financial professional that is independent and experienced with retirement matters? As a starting point, you are welcome to visit our “Find a Financial Professional” section and connect with someone to explore your options. Please feel free to request an initial appointment to discuss your goals, needs, and situation, and to explore a potential working relationship. Should you need a personal referral, call us at 877.476.9723.

The post How to Find a Good Retirement Income Planner first appeared on SafeMoney.com.

You may have heard of The Baby Boomer Dilemma documentary, which takes a close look at the retirement landscape in America and how it’s being funded. The movie centers around the fictional story of a Florida couple, who have concerns about their future financial security.

An 85-min film, The Baby Boomer Dilemma ends with the wife distraught about not having a guaranteed source of income for their retirement, whether a pension or an annuity. Here’s a little bit more information about the film’s content. If you have any questions about the movie or would like to request a personal retirement consultant based on the movie’s principles, please fill out the contact form for more information.

The Baby Boomer Dilemma – a “First Look” at Retirement Income

Throughout the movie, some of the nation’s top economic minds weigh in on the state of U.S. retirement financing since World War II. Pressing insights on public and corporate pensions, Social Security, 401(k)s, and annuities are covered.

By the end, some of the experts discuss how annuities can help close a national retirement income gap. This all-star line-up of experts includes:

• William F. Sharpe, Ph.D., American economist and Nobel Prize winner
• Olivia S. Mitchell, Ph.D., U.S. economist, professor at The Wharton School, University of Pennsylvania
• Moshe A. Milevsky, Ph.D., economist, professor at York University Schulich School of Business, Executive Director of the Individual Finance and Insurance Decisions Centre
• Bridgette C. Madrian, Ph.D., Dean, Marriott School of Management at BYU & former professor at Harvard and University of Chicago
• Robert C. Merton, Ph.D., Nobel Prize winner, U.S. economist, professor at MIT Sloan School of Management
• Ted Benna, human benefits consultant, ‘father’ of the 401(k)

Former government officials, whistleblowers, and other movers-and-shakers also appear, including The Honorable David Walker, former U.S. Comptroller General, and Eric A. Cioppa, former president of the National Association of Insurance Commissioners.

Have any questions about this documentary, its content, or the principles of retirement strategies that it covers for yourself? We have helped many households have more financial confidence about their financial future, and would be glad to assist you.

Contact us for more information on the Baby Boomer Dilemma movie or about a personal retirement consultant for your financial future.

The post The Baby Boomer Dilemma — What You Should Know first appeared on SafeMoney.com.

Not only that, there is often the need to start providing care for elderly parents or other relatives who have become unable to perform one or more of the activities of daily living (ADLs).

Paying to have this type of support professionally can be a financial burden for those who don’t have any insurance to cover them. But providing the care yourself can be equally burdensome in other respects.

Nationwide Retirement Institute conducted a comprehensive survey on caregiving and how it affects the lives of the caregivers. The survey researchers looked at those who were in the middle of their careers. These folks are commonly referred to Gen Xers or the sandwich generation.

The survey was designed to find out how they fared in retirement when also dealing with the challenge of caregiving for loved ones.

What Did Their Responsibilities Look Like?

Nationwide researchers noted that some of the respondents anticipate caregiving in their future responsibilities. Meanwhile, others take it on out of necessity.

The poll surveyed 1,462 adults. Those surveyed were at least 50 years old and had a minimum of $50,000 in investable assets.

These adults were already retired or were planning to retire within the next 10 years. The survey also included a separate sample of 516 people ages 50 and up who were currently or had been caregivers.

On average, the caregivers spent 54 hours per week giving assistance to loved ones. Almost two-thirds of caregivers were women. On average, women spent 46 hours per week providing caregiving assistance while men spent 35 hours on average.

This could have implications for women in terms of not having enough savings for retirement and having to work longer to make up for income shortfalls. Kristi Rodriguez, VP of thought leadership at Nationwide, noted this in a post-survey interview.

How Much Did Caregivers Spend Each Year?

According to the survey, caregivers spent an average of $4,012 per year on caregiving expenses out of pocket. Over half of them (62%) spent money out of their own pocket on caregiving expenses. Meanwhile, 21% said they fear that caregiving expenses would keep them from ever retiring.

Among the overall group of those surveyed, 83% agreed with the statement that “I’m afraid that caregiving expenses will keep me from ever retiring.”

What Were Their Expectations for Their Own Future?

How does caregiving for loved ones affect people’s own expectations and desires for the future? In the survey, over half (54%) said they would rather die than live in a nursing home. Yet 50% worry about becoming a burden to their family as they age.

Nearly three-quarters (74%) of the adults would prefer to receive long-term care, if needed, in their own homes. But only 53% actually count on being able to achieve that.

One in 20 (5%) said they would prefer to live in another family member’s home while receiving long-term care. Reportedly most of the caregiving help for older adults came from “family members, friends, or other unpaid caregivers.”

Independent or Depend on Others for Long-Term Care?

Almost 6 in 10 (58%) reported they would like to be able to rely on a family member for long-term care help. However, they wouldn’t expect assistance (72%) or rely on family (69%) unless they were able to compensate them for their help.

Just 41% of older-aged adults have confidence in their ability to pay for long-term care. However, over a third haven’t discussed long-term care costs with their financial advisor, significant other, or family member.

This should serve as a wake-up call for children of elderly parents who haven’t discussed this issue with them yet. When they start to need this type of care isn’t the time to find out that they have no money to pay for these services.

Why Hasn’t There Been Discussion of Long-Term Care?

Part of this may be due to future expectations.

One-third of adults don’t expect to live long enough to use long-term care insurance. Meanwhile, 46% believe a long-term care insurance policy is “most often used in a nursing home.”

Those expectations and perceptions can influence buyer decisions. Nevertheless, according to Nationwide, 52% of long-term care policy claims are used to cover home healthcare by paid professionals.

How Can You Plan for Long-Term Care with Confidence?

Be sure to check up on how you can be ready for the possibility of caregiving for loved ones in your future — and whether you might need any long-term care assistance yourself.

There are a variety of helpful clue-ins you can use to indicate what your future needs might entail. You can look to your family history, your personal medical history, and conversations with your doctor for some insights.

Where Can You Find Help Planning for This?

A qualified financial professional is an excellent resource for finding ways to pay for long-term care.

With their help, you can build out financial strategies for long-term care support, whether it is for you or someone else. There are financial professionals who specialize in this segment of the market.

They can tell you what types of coverage are the most beneficial and affordable. They can also help you to determine which assets you might need to liquidate to cover this type of expense — and how to do it in the most tax-efficient manner possible.

Another alternative for those who are caring for someone else is to charge them for your services, albeit at a much lower rate than a professional caregiver would charge.

This can provide you with at least a measure of income for all of your time and effort without draining all of the assets of the recipient. Find out how much professional caregiving services would cost and then consider charging them half that much in return for the help that you can give.

This can allow you to arrive at a happy medium that is beneficial for both of you.

Planning for Tomorrow Starts Today

Caregiving when you are at or near retirement can be a heavy burden, and not just financially. Talk with your older relatives about their long-term care needs and how they plan on receiving them in the future while you still have some time to prepare for this.

Having a plan in place when the time comes can make all the difference. Consult your financial advisor about different options and how you can plan for long-term care with confidence.

What if you are looking for a financial professional to guide you? No sweat.

Many financial professionals are available at SafeMoney.com to assist you. Use our “Find a Financial Professional” section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

The post Caregiving Continues to Be a Challenge for Retirement Security first appeared on SafeMoney.com.

From reading the first recap of the Top 10 Financial Crises in History (Crises 6 through 10), you may have noticed that certain patterns emerge.

Sometimes we have an overblown sense of optimism, even in the face of empirical evidence to the contrary. At times, it has led our country into a number of financial crises. And while these crises have proven to be more exception than norm, they are yet another reminder of how we just can’t put off personal financial planning.

Not only that, history repeating itself shows that every investor is responsible for protecting their own financial future. With the days of employer-backed pensions fading away, Americans are more responsible for their personal financial security than before.

Having all that in mind, here are five more historical market events which remind us that bad things happen to good investors.

5. Gold Panic of 1893

Sometimes a financial crisis is so great, it sends shockwaves beyond financial markets.

Such was the case of the Gold Panic of 1893. It led to an economic depression that is considered among the worst in American history.

This watershed crisis not only depleted the fortunes of American companies and individuals. It drummed up political unrest among farmers and Midwesterners, who channeled their anger toward the East Coast elite, politicians, and other groups. That led to the birth of a new populist movement.

There were many contributing factors to the Gold Panic, including the collapse of railroads, such as Reading Railroad. But the run on gold was the result of the bimetallism movement trying to shift our country toward a monetary standard based on not just gold, but on gold and silver.

Investors, worried about the U.S. abandoning the gold standard, drove up the demand for gold. This drained the Treasury’s gold reserves and strained the liquidity of the financial system.

In April 1893, news that the government had run low on gold created the Panic and a severe Depression. The result? Widespread bank failures, farm failures, commercial failures, and high unemployment of 11%.

4. OPEC Oil Crisis

Raise your hand if you remember those half-mile lines to get gas during the oil crisis of 1973.

When Arab oil producers quadrupled prices in the early 1970s, the American economy suffered a sucker punch.

A decade passed before economic recovery came. The rising cost of gasoline and higher interest rates strangled the economy and stunted the stock market for the next 10 years.

Before the oil crisis, the Dow Jones Industrial Average hit an all-time high of 1051.70. Just two years after the crisis began, the DJIA had dropped to 577.60. It didn’t recover to pre-embargo levels until 1983.

3. Subprime Mortgage Crisis

This one hits close to home, in fact close to many peoples’ homes.

If you have seen the movie “The Big Short,” you have an idea of how mortgages were being handed out like candy to borrowers. Borrowers were not even required to prove their income.

You “stated” your income and signed below that you were telling the truth. Then, poof, you got a mortgage. And with prices escalating so quickly up until 2006, everyone wanted to jump on the bandwagon and ride real estate appreciation to the top.

Unfortunately, the top soon turned into the bottom, as many homebuyers found themselves in over their heads.

In mid-2006, the U.S. housing market started to stabilize from its meteoric rise, as prices began falling back to more sustainable levels.

About this time, buyers began to see their once-cheap adjustable rate mortgages reset into rates and payments they couldn’t afford. Then the flood of foreclosures began.

The crisis led to the failure of Lehman Brothers and government bailouts of such “too-big-to-fail” companies as AIG.

When Congress rejected the bank bailout bill, the stock market crashed on Sept. 29, 2008, with the DJIA falling 777.68 points. At that point, it was the worst one-day drop in history to that point.

Since then we have experienced the two largest one-day drops in U.S. history: the 1,175.21-point drop on Feb. 5, 2018, and the 1,032.89-drop on Feb. 8, 2018.

It was a slow climb back for many Americans and for our economy overall.

2. Panic of 1873 & The Long Depression

Several factors led to the long, deep crisis that affected both the U.S. and European economies.

Post-Civil War optimism fueled widespread speculative investments, primarily in railroad expansion. The failure of Jay Cooke & Company, then the largest bank in the U.S., threw markets into chaos.

The Coinage Act of 1873 depressed the price of silver, which hurt American mining interests. Property losses from the Chicago and Boston fires, the impact of the demonetization of silver in German and the U.S., and other factors strained bank reserves.

As a result, bank reserves plunged from $50 million to $17 million in New York City in September and October 1873.

This financial crisis triggered a depression in both the U.S. and Europe. It lasted for 6 years here and led to two decades of stagnation in France and England.

Oversees it was called the “Long Depression.” In America it was referred to as the “Great Depression,” until 1929 and the years that followed redefined that name.

1. The Great Crash

During the 1920s, the U.S. stock market was expanding rapidly. In fact, it experienced a 6-year bull run, with the DJIA increasing in value by 500%.

Much of this growth was the result of wild speculation. Brokers loaned clients as much as 66% of the money used to purchase shares.

American production had already begun to decline, and unemployment was on the rise. Stocks were priced beyond their real value. A perfect storm of negative factors led to the Great Crash.

Proliferation of debt, a pool of large bank loans that couldn’t be liquidated, a weakened agricultural sector, low wages, and even investor fear of a tariff war with Europe caused a series of market drops in October of 1929.

It culminated in the day that would be known as Black Tuesday.

On Tuesday, October 29th, stock prices imploded with 16,410,030 shares traded on the New York Stock Exchange in a single day.

Thousands of investors lost billions of dollars. It’s said that stock tickers ran hours behind because the machinery couldn’t handle the overwhelming trading volume.

Within a year, the DJIA was at 41.22, a nearly 90% loss from its pre-crash high. The Dow didn’t claw its way back to that pre-panic high until 1954. The Great Depression that ensued lasted a decade and only subsided with the onset of World War II.

Putting Your Financial Future in Your Hands

Now, back to the idea that all of these financial meltdowns were unforeseen. These historical market events were often preceded by a period of great expansion or optimism. In some cases, the optimism was excessive, leading from euphoric bullishness to bearishness in quick turnarounds.   

The greatest lesson from these crises of the past? Have a plan, and be ready to readapt, depending on your current financial progress, your retirement timeline, and other variables that play into an appropriate level of risk for your portfolio.

For those nearing retirement and needing reliable income, instruments offering lifetime income such as annuities can be attractive. Annuities may also be worth a look if you are near retirement and need to protect some of your principal for future income needs or goals.

Planning for Lifelong Financial Security

Consult with your financial professional about ways you can ensure that, should another economic reversal occur, your hard-earned nest egg will retain its value. And be sure to work with someone who acts and guides in your best interest.

If you are ready for personal help, financial professionals at SafeMoney.com can assist you.

Use our “Find a Financial Professional” section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

The post Top 10 Worst Financial Crises in History, Part 2 first appeared on SafeMoney.com.

When the economy is tooling along and we find ourselves facing only an occasional hiccup in our money matters that falls short of expectations, it’s easy to feel complacent about the future. Surely life tomorrow will be a lot like it was today.

Except, as anyone who owned a home, a retirement account, or an investment account in 2008 knows all too painfully, our situations can change in a ‘heartbeat.’ And, in turn, they can affect our future outlooks.

To make sure we are all diligent about protecting our financial futures so that we can achieve the retirement we envision, here are 10 valuable reminders.

These historical lessons reinforce the importance of having a financial plan – so you can trudge on ahead or reset your course as needed. They aren’t necessarily typical of what might happen in our lifetimes, but they do show the value in being financially prepared.

As you think about the future, consider working with an experienced financial professional, who acts in your best interest, and who can help you make any such determinations. That includes the whens and ifs of any changes that might be right for you. And keep an eye out for part 2 of our series, coming next week.

10. Knickerbocker Trust Panic

“Oh, what a tangled web we weave.” In this case, “we” is Charles T. Barney, president of the Knickerbocker Trust Company, which was one of the largest banks in America in the early 1900s.

In 1907, Barney colluded with two executives of other banks in an attempt to corner the copper market. Their plan failed when other market manipulators simultaneously dumped millions of dollars in copper onto the market to foil a hostile takeover of an unrelated organization.

When Knickerbocker’s involvement in the copper manipulation scandal became public, the National Bank of Commerce announced that it would no longer process checks from Knickerbocker accounts.

Worried depositors swarmed Knickerbocker in an effort to withdraw their assets, triggering the Panic of 1907. It then spread across the country as depositors lost faith in their local banks.

The Knickerbocker Panic was a key cause of the Dow Jones Industrial Average losing 48% of its value from its high during the previous year. It also sparked Congress to form the Federal Reserve System in 1913.

9. Panic of 1798

This event severely impacted the credit markets and merchants of all economic levels on the East Coast. It was brought about by the bursting in 1796 of a land speculation bubble (think housing speculation bubble in today’s terms).

The impact was worsened by deflationary actions the Bank of England took to prevent insolvency should its account holders fear a possible invasion by the French.

All of this financial turmoil triggered the collapse, in the early 19^th century, of financial and commercial markets throughout the coastal U.S. and the Caribbean.

8. Dot-Com Bubble

“Irrational exuberance.” Those two words, tucked into a 1996 speech by then Federal Reserve Chairman Alan Greenspan, characterized the irrational investing that led to one of the worst stock market declines in U.S. history.

With the rise of the internet and e-commerce in the late 90s, every investor and venture capitalist wanted in on the action.

But many of the companies showered with capital couldn’t figure out how to turn their promising ideas into businesses that could turn a profit.

On March 10, 2000, the NASDAQ peaked at 5,132.52, a four-year gain of approximately 390%. The next day, investors who felt their tech investments would likely never pay off began selling their shares.

That selloff popped the bubble, causing a market drop that had the NASDAQ ending the year at 2470.52. That was a 52% drop from its March high.

7. Western Land Panic of 1837

Like the crisis in 2008, the Panic of 1837 was yet another crisis sparked by a speculative real estate boom.

It followed a directive by President Andrew Jackson for settlers to push westward. In a campaign to effectively push Native Americans off their land, investors swarmed west to purchase cheap land.

Other economic factors at play, from a sharp decline in cotton prices to restrictive lending policies in Great Britain, led to U.S. banks calling in their loans. It triggered a major recession that would last for almost a decade and cause more than 40% of U.S. banks to fail.

6. The Ohio Life Panic

Just as bad news spreads at the speed of the internet today, in the late 1850s bad news sped quickly across the country via telegraph.

By this time, land values in the West were declining as Native Americans fought back to hold onto their lands. U.S. banks had made large loans to railroad companies, and now many of those railroad companies were experiencing falling revenues and asset values.

Several railroads were forced to shut down. With the failure of the New York branch of the Ohio Life Insurance and Trust Company, news of the financial panic spread quickly. In the aftermath, banks collapsed, businesses went belly up and land prices declined.

It led to workers losing their jobs and farmers facing rock-bottom crop prices.

Need Help with Securing Your Financial Future?

These events, and our own experiences, highlight the importance of having a long-term financial strategy. If you don’t have a plan in place, or you could benefit from another professional opinion of your existing strategy, help is a click away.

There are many financial professionals at SafeMoney.com who can help guide you through the “what ifs” of your retirement planning. Use our “Find a Financial Professional” section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

The post Top 10 Worst Financial Crises in History, Part 1 first appeared on SafeMoney.com.