Recent history suggests that the tried and true retirement tools are still being tried, but aren’t so true. The traditional way of saving for retirement may not be the best way anymore. Take, for example, Bob and Marge who retired in 2005. Bob and Marge saved up their entire life so that they could move to Florida and enjoy the fun and sun. They put most of their money into mutual funds and when they had a sizable amount, they sold their house and moved to sunny Florida.

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Every month, Bob and Marge received a good amount of returns on their investments. They had plenty to pay their new mortgage, taxes, entertainment costs and for activities of daily living. Marge and Bob were living the highlife. Then 2008 rolled around and the market crashed. Stocks lost their value. They were getting more than 20% less from their investments than before. They could no longer afford the beach front condo they had moved into and they couldn’t afford to sell it because the bottom fell out of Florida property values. They were broke and under water. The bills began to pile up and their stress level eventually threatened to ruin their retirement. Bob and Marge wondered if they could have done something differently. What could have they done differently?

Well, if Bob and Marge chose an investment strategy that was stable, then they could have continued to enjoy their retirement. Most people retire around 65 and may live for 20 or 30 more years. No one can predict what the stock market is going to do 20 years from now. So why have the majority of your retirement in something that no one can predict. Chances are, sometime during that 20 to 30 years, the market is going to do something that will hurt retirement funds. CD’s would be a safe alternative, but they have a lousy return and it is hard to retire on a lousy return. So the popular choices are the volatility of the stock market, CDs or savings accounts (which have a worse return than CDs. A safe investment with a good return is hard to come by these days. Bob and Marge should have looked outside of the box to a safe investment with a better return.

Bob and Marge, but why and how? The reason is that secondary annuities are guaranteed. When you purchase a secondary annuity, you know exactly what you are getting and when you are getting it whether the purchased annuity promises monthly payouts of $400 or a lump sum payout of $400,000. Unlike the 401k which is pegged to the stock market coupled with the mistaken belief that the market will always increase, the secondary annuity is fixed. Whatever the payouts were that you purchased will still be the payouts no matter what happens to the stock market, the price of oil or pig futures.

Not only do you know what you are getting, the payments are guaranteed. The payments are guaranteed by highly rated insurance companies and they are often guaranteed by the state in which the structured settlement began. These secondary annuity payments are secured by a huge insurance company that is probably owned by another huge company. The security of secondary annuities can be compared to that of a large banking institution. Unlike their 401k, Bob and Marge would certainly know how much, when and that they would be getting paid, guaranteed.

So, secondary annuities are safe, but what about the rates? The current equivalent rates of return on secondary annuities beat out CDs by a mile and often beat current stock market/mutual fund returns without the risk. A secondary annuity gets the equivalent of a 5-10% return. A bank isn’t going to come close to that rate. Also, there are many different types and schedules of payouts of secondary annuities so there are always choices that fit each person’s retirement plan.

Relying solely on volatile investments for retirement doesn’t make sense. Risking a portion of retirement may make sense, but the best bet is to find something, like secondary annuities, that are guaranteed and still pay out at a great rate. The savvy investor doesn’t have to worry about the market at all, because they put their money in a secondary annuity and enjoy the income and their retirement without stress and worry.