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Jim Lentini: Market recovery and volatility

Business Commentary

Posted: December 13, 2010 7:02 p.m.
Updated: December 14, 2010 4:55 a.m.
 

Since today is my birthday and December marks 47 years of representing others in their insurance needs and retirement planning, I felt I should touch on three areas of the security needs and future planning for most Americans.

Those areas include: investing in the market, which represents most of investors pension plans; variable annuities, which offer a guarantee of future growth and income for retirement planning; and life insurance that provides protection by creating an estate. When we have created the estate, protecting it from depletion from estate taxes.

As we end 2010, Americans are concerned with what they have experienced the last two years, the financial crisis of 2008, government debt, and growth of spending that has not yet begun to correct any of our economic problems.

Market volatility has been flaring up in recent months. With news of government-debt troubles in Europe, continued weakness in the U.S. housing market and stubbornly high unemployment, many investors may be tempted to wait for calmer times before putting money back to work in the market.

After the decline of the market in 2008, many investors are keeping their retirement funds in conservative investments, and unfortunately missed the upswing resurgence of 2009.

While the daily market swings can seem unbearable at times, history has shown that investments can grow even when markets are choppy.

Most investors understand that volatility is an inevitable part of investing. Focusing on the destination, rather than the bumps of up and down, can help you stay the course.

Variable annuities are one way I know to add comfort and peace of mind for our future retirement income. How? As reported in previous articles, most investors have the option to have some portion of our retirement assets in a variable annuity. 

Should you consider investing in a variable annuity, you should be in a strong annuity that has a guaranteed withdrawal benefit, which is a rider that guarantees the principal, guarantees growth and guarantees a lifetime income. In addition, it is structured to continue the income to your spouse, and avoids probate expense when the assets in an annuity are passed on to your successor beneficiaries.

Life insurance has always been a guarantee that provides the security we need in our personal and business lives. In addition to protection for our families, it also can provide a way to accumulate funds to supplement our retirement.

I call it “The Private Pension Plan” and since there are no government regulations except required minimum distributions at age 70.5 you can withdraw money “tax free,” unlike our IRAs and 401(k) plans.

For business use, life insurance provides group coverage for all employees, funding for buy/sell agreements and is often needed for guaranteed payment to creditors.

As always, discuss your needs and options with your financial adviser as all three of these areas are part of your planning, security, and future for your family and business.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. He can be reached at (661) 254-7633. His column reflects his own views and not necessarily those of The Signal.

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