In case you haven’t noticed, the investment world has been pretty unexciting for some time.  As of June 30, 2008 the S&P 500 index has returned an average of 2.9% peer year.  This is in contrast with a historic average return of better than 10%. An average investor, placing his $100,000 retirement assets in an S&P Index fund, saw that fund grow to $134,000 in ten years.

This highlights one of the key reasons that we advocate the use of Investment Annuities for funding at least a portion of each person’s retirement plan.  These investments perform like the traditional Defined Benefit Pension plan, with advantages.  The Defined Benefit plan was the safety net of retirement plans, providing a guaranteed income at retirement regardless on market performance.

The investment annuity provides the same guaranteed benefit, but has an added feature: if the underlying investments perform better than the guarantees, the retirement income will be much higher than the guarantee.  If this is not the case, the retirement income will be based on the guaranteed rate.  The absolute minimum guaranteed rate for both accumulation and income on quality Investment Annuities in 6-6.5%. In case you haven’t noticed, that is a lot better than 2.9%.

Our investor above would have a guaranteed fund balance of $179,000 at the end of ten years, a significant improvement over the index investment. The aim of retirement planning is to deliver a guaranteed income at retirement.  There are no other investment vehicles that can deliver both a strong guarantee and the opportunity for increases over that guarantee.

If you have been frustrated by recent investment returns, and if you are trying to build a satisfactory retirement income, you should investigate the utilization of investment annuities in your portfolio.  Some are better than others, but the good ones offer a unique combination of guarantees and opportunities that are unmatched.

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