Phil’s Phacts

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In the realm of investing, few financial instruments have garnered more controversy than annuities. Unquestionably, annuities have their share of critics, especially when they are applied improperly, but, in the right situation, their benefits may be unmatched.

Until recently, many retirees have been able to rely upon the three-legged stool of retirement income sources: A defined benefit pension plan that guarantees a lifetime income, their own savings, and Social Security.

"The single best gift Congress has ever presented the American taxpayer.” “Anyone eligible to start one, should do so now!” “There is nothing more to analyze, it works.”
—”The Retirement Savings Time Bomb,” by IRA expert Ed Slott

A few weeks back, Jerry, a 67-year-old gentleman, walked into my office and asked about “stress testing” his retirement plan. I do a lot of these stress tests and, frankly, I hear the same thing over and over: “I think I feel pretty good about my plan.” When I asked Jerry what his financial goals are, he said he wants to ensure he has enough income to last his lifetime with the remainder of his assets going to his only son, who is struggling financially.

It may have passed quietly last month, but did you know April was National Financial Literacy Month? Or a better question might be: Do you know about National Financial Literacy Month? Very few do, so let me tell you what it is. National Financial Literacy Month is recognized to highlight the importance of financial literacy and teach Americans how to establish and maintain healthy financial habits.

When I speak with clients, I always talk about making sound financial decisions. I urge them to not base their choices on faulty logic or misinformation. I want them to take the emotion out of their decisions. By taking emotion out of the financial decision-making process, they can take a hard look at the numbers, which often helps things become much more clear.

I find the financial industry to be riddled with terminology designed to confuse the general population. With acronyms that no one can explain, multiple terms all meaning the same thing, and names that appear to be pulled from thin air, it can seem like the financial world is speaking a totally different language.

If you are a regular Phil's Phacts reader, you have probably noticed that I end some columns with the statement "be vigilant and stay alert." I do believe that is some of the best advice I can give with respect to creating a sound financial system. I teach and preach that same mantra to my clients and, therefore, encourage them to read a lot and question even more.