Nurses – Turning Assets into Income

If you’re like most of my clients who are nearing retirement, you may be watching your retirement accounts like a hawk!  You are laser-focused on the end-game now that you are no longer working and you are taking the necessary steps to be a retiree.  You’ve worked years – even decades – to get to where you are, and nothing is going to get in your way!  You are so close to enjoying the proverbial fruits of your labor that you can almost taste them!

And then, as your last day is nearing and you are no longer helping patients get back to good health or wearing those scrubs you either loved or despised, you must start making some serious decisions that will affect your post-working years.  The financial independence you’ve always dreamt of depends on them!

Once you are no longer an employee, you may not make further contributions to any employer-sponsored plan in which you were a participant.  Though you may be able to keep the balance of your account with your former employer’s plan administrator, that isn’t always the case.  You may be asked to “roll over,” or move, your assets into a Traditional IRA.

While we are very focused on growing our assets during our working years, income becomes a more important focus in retirement, particularly in a low-interest rate environment.  Though our parents or grandparents may have enjoyed 4-5% returns in a very low risk (or no risk) vehicle, those vehicles just don’t exist any longer and may not again in our lifetime.  What concerns many of my clients that are nearing or in retirement is the need for a steady stream of income they can count on for the rest of their lives.

So, how exactly does one turn their retirement assets into a stream of income?  Well, the first step is an approach I like to use called “flooring.”  Flooring can utilize an annuity to take away the guesswork in attempting to invest in years when being conservative with your assets is your greatest defense to a down-market.  In other words, you’d take the balance of a qualified, taxable account (let’s assume a 401(k) or Traditional IRA), and give those funds to an insurance carrier as a premium payment for the purchase of an annuity.  In return you would receive a stream of income that is guaranteed to you for life.  The type of annuity I’m referring to is fixed in nature, meaning you are contractually guaranteed to know what your exact payout will be each month or year, depending on the payout frequency you choose.

Many of you may be asking the question, “But what if I only want to turn over some of the balance of my 401(k) to an insurance carrier to create lifetime income- is it an all or nothing situation?”  The answer is simply “No.”  You call the shots as the investor to determine what amount is appropriate for you, although you would be well served by utilizing a financial professional that has expertise in this area to help you determine what that amount might be.

You may wonder what might be the appropriate amount or percentage of one’s qualified assets to turn over to generate guaranteed income for life.  Well, it’s certainly not a cut and dry answer.  It’s different for everyone and depends on their financial situation.  At the very least, it’s typically recommended that someone create an income stream that will cover their fixed debts or liabilities, expenses that they are certain they will always have.  Others may want to eliminate even more of the guesswork by creating a stream of income that replaces a greater percentage of their income than just taking care of their ongoing debts.

All in all, the important part is to realize that there are options available to be sure that you cannot “live too long,” and that your assets can work for you in a guaranteed manner that is also financially attractive, particularly when compared to traditional savings, bond-type accounts, or other low-risk investments.

You’ve saved and saved and have waited years to access the funds in your retirement accounts so that you can live the life you’ve always dreamt of – speak to a CreativeNurse financial advisor today and let them show you the options and benefits available to you.

Article Written by Jason Frederico, CreativeNurse Team member in Las Vegas

This material contains the current opinions of Jason Frederico but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.
This material is intended for public use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation.
2017-33821 Exp. 10/17