Guaranteed Income vs. Stock Market Gains: Which is Better for Your Retirement?

Guaranteed Income vs. Stock Market Gains: Which is Better for Your Retirement?

You have probably heard the old adage, “A bird in hand is worth two in the bush.” This bit of folksy wisdom applies to a range of situations, including retirement planning. It means that, if you already have something in your possession, it’s better to hang on to it than it is to potentially lose it by chasing bigger rewards.

When it comes to your retirement nest egg, would you rather keep what you have, or would you rather risk losing everything by chasing bigger gains? That is a decision countless retirees have had to make throughout history, and for many, it has cost them everything. For your retirement, it could be the most important decision you ever make.

If you are saving for retirement, you essentially have two choices: You can place your investments in risky, securities-based investments with the hopes of striking it rich, or you could create a guaranteed income stream that will last your entire life and that can never be lost due to a stock market crash. Our Crash Proof Retirement team of consumer advocates presents this crucial information about the ins and outs of securing guaranteed retirement income so that you can make informed decisions about your nest egg.

Chasing Gains on the Stock Market

Securities-based investments are the ones most frequently recommended by traditional financial advisors, especially for younger investors, so you probably already have some in your investment portfolio. These include stocks, bonds, mutual funds, and some other types of investments. Even your IRAs and 401k plans contain securities! When the stock market is up, securities are capable of achieving big gains, but financial advisors will often downplay the risk that comes attached to them. 

The important thing to remember about stock market gains is that they are not realized until you capitalize by selling the security in question, whether you do it yourself or a money manager does it for you. Your portfolio could be up 100% from last year, but if the stock market crashes, you won’t see a dime of that money unless it recovers. Chasing big stock market gains may seem attractive, but the closer you get to retirement, the less risk you can afford to take. That’s because younger investors can keep working to rebuild their nest egg. If you are in or near retirement, you don’t have that luxury. If you lose your nest egg, you might never be able to regain it.

There’s another thing traditional financial advisors might fail to mention: fees. Your advisor may charge an up-front fee, plus ongoing money management fees, per plan fees, and hourly fees that all chip away at the gains you are making. When you consider the risk and fees associated with securities investing, is it really worth it?

A Guaranteed Income Stream

When you talk about maintaining the standard of living you had while you were working throughout retirement, what you are really talking about is how much income you will have. A securities-heavy portfolio can give you retirement income – as long as the stock market keeps going up forever and you are able to capitalize on your investments at the right time. As you have already experienced in your lifetime, that is an unrealistic expectation. 

In reality, your principal investment is not guaranteed when you invest in any kind of securities. It could go up, adding to your principal, or it could go down and erase your principal investment entirely. When you consider that money managers and financial advisors still charge you fees whether or not you are realizing gains, your losses can even be compounded. If you want to protect your nest egg and have guaranteed retirement income, you need to look outside the securities industry.

Even Ted Benna, known as the “Father of the 401k,” has since recognized the need for steady income in retirement, as well as the risks that workers took on when their employers switched from pensions to 401k plans.

“People who are retiring today where most of their savings are in 401ks and IRAs should seriously consider committing half or more of that money into a monthly fixed guaranteed/life income investment, because managing your investments today to provide a stream of income for 20-30 years during retirement is a major challenge,” he said in an interview for the film “The Baby Boomer Dilemma.”

Other financial industry experts interviewed for the film echoed this sentiment, including MIT Ph.D. and Nobel Prize Winning Economist Robert C. Merton.

“Standard of living is not defined by a pot of money. We always define standard of living in terms of a stream of income,” said Merton.

Achieving a Crash Proof Retirement with Guaranteed Income Investments

As you can see, more and more financial experts are embracing the idea that guaranteed income is more important to achieving your retirement goals than chasing big gains on the stock market. This comes as no surprise to the team at Crash Proof Retirement; after all, we have been promoting this idea for over 20 years.

The Crash Proof Retirement System utilizes the same kind of guaranteed income solutions discussed in “The Baby Boomer Dilemma” and more than 5,000 retirees have already used it to find safety and steady income in retirement. Unlike risky securities, the Crash Proof® Vehicles are guaranteed to prevent you from losing your principal during a stock market crash, have no up-front or ongoing fees, and they also credit interest at rates similar to securities-based investments. When you consider all the fees associated with actively managed retirement accounts, they can even perform better in some cases.

If you want to find out more about the Crash Proof Retirement System and how it works, we are waiting to hear from you. Call us at 1-800-722-9728 to schedule your free financial checkup or visit our events page to reserve your seat at our next complimentary screening of “The Baby Boomer Dilemma.” In this film by award-winning director Doug Orchard, you can hear for yourself from Ted Benna, Robert C. Merton, and other finance experts about the importance of having guaranteed income in retirement.