• Risk Versus Time Commitment

  • Financial Mistake: Not realizing that there are alternatives to risking your retirement accounts.

    Risk vs. Time Commitment

    Attributes of an ideal savings vehicle might include:

    1. Great potential to earn competitive interest

    2. No potential to lose value

    3. 100% immediate liquidity

    This is simply too good to be true. Obviously, this does not exist. Typically, vehicles with short term commitments and high earning potential involve some degree of risk.

    So if you want to earn more than a low savings rate, you typically have a choice between making a Risk Commitment or a Time Commitment.

    Many investments have inherent risk of losing value*. Even if you have immediate liquidity, there is often a distinct possibility of getting back less than your original investment. This is a risk commitment.

    Fixed annuities offer the possibility of earning reasonable interest while allowing you to avoid market risk. Instead of making a risk commitment, you make a time commitment on a large portion of your money.

    Fixed annuities have surrender penalties that apply only if you take out more than the penalty-free withdrawal amounts available during the surrender schedule of the contract. Most fixed annuities offer the fol-lowing liquidity provisions**:

    #1-10% penalty-free withdrawals annually to allow for income or emergency events. When a person has emergency funds outside of an annuity, this is considered more than ample liquidity for many contract holders. Most people understand the concept that if you withdraw more than 10% of your money annually, you are likely to eventually run out of money (which is a major concern for long term money).

    #2-Additional penalty-free liquidity for other life emergencies such as nursing home expenses (varies per contract).

    #3-Many fixed annuities offer a guaranteed future selling price to liquidate the entire contract. This feature is not available in many other financial vehicles. Some of the most popular products available today have surrender schedules ranging from 5 years to 15 years (this varies per contract). Most contracts have a decreasing surrender schedule over time.

    Early withdrawal penalties exist to protect the insurance company issuing the contract, which ultimately protects the contract owner.

    If you consider a large portion your retirement nest egg to be your long term money anyway, then the pen-alty-free provisions of an annuity might offer you more than enough liquidity, thus enabling you to make a time commitment versus a risk commitment. 


    Why not make a temporary time commitment on your long term money instead of

    risking retirement savings? 

    Click here for a complimentary no obligation financial review with a Future Benefits Agent

    Or call us at 901-754-2040

    * We are not stock brokers or financial advisors and do not give investment advice. **Liquidity provisions vary per annuity contract. Information in this section is meant to be general as details and guarantees of fixed annuities vary from contract to contract. Consult your agent and company material on each particular contract. *** Distributions from non-qualified annuities prior to age 59 & 1/2 may cause the owner to incur a 10% Federal tax penalty on interest distributed. We are not tax advisors and do not give tax advice.

    See our Professional Disclaimer