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THE BOND BUBBLE!

Many experts are predicting that we could be in the midst of a bond bubble that’s getting ready to burst.

Jim Morguelan Q&A

Jim Morguelan is a licensed life and health agent with over 10 years of experience specializing in the field of Long-Term Care insurance.

An update from Matt Dicken - June 2011

Summer is the second biggest time of the year, behind the Christmas season, when individuals and families contemplate their respective budgets and finances. Now is one of the best times of the year to get a second opinion on where your current retirement portfolio sits. 

Can Annuities Solve the Retirement Crisis?

A couple highlights from it:

• A government study is drawing accolades from professionals in the insurance and financial community—a rare event, given that government and financial interests are often at odds.
• The 79-page document issued by the U.S. Government Accountability Office (GAO) says experts are recommending use of income annuities to generate retirement income, among other strategies.
• It names various types of annuities, including indexed annuities, that people can use for retirement income purposes.
• The fact that the report comes from a reputable government source gives it more credibility than if the same information were to come from, say, a large life insurance company.
• The GAO prepared the report in response to a 2010 Obama administration request for information about retirement income strategies.
• The request had followed President Obama’s Task Force on the Middle Class recommendation early last year that there be promotion of “the availability of annuities and other forms of guaranteed lifetime income.”
• It says income annuities can help protect retirees against the risk of underperforming investments, the risk of outliving assets (longevity risk) and, in the case of inflation-adjusted annuities, the risk of inflation diminishing purchasing power. It also discusses how annuities provide risk pooling, can help relieve retirees from the “burden” of managing their own investments and can help deter overspending or under-spending.
• As part of its research, GAO asked the experts it consulted to assess income strategies for five households that were near retirement, based on 2008 data. The households were randomly selected from the lowest, middle and highest net wealth quintiles and had varying types of pensions. The experts saw places where annuities could work well and other places where they may not be useful.
• The report also discusses how the sequence of investment returns can impact the success of a drawdown strategy for retirement income and how purchase of an annuity can reduce exposure to the risks of longevity, inflation and market volatility for those using the drawdown strategy.
• Having all this on the table opens up the concept of the annuity…This is a “fantastic” way for the country to start addressing the lifetime income need.