Creating your IRA income from volatile stock market investments can be very risky. When the market is down you should stop taking income but if you need income that would be impossible! It would be especially impossible over an extended period of time like 2 or three years. What if there was a way to set your income up to come in without relying on the volatile stock markets?

Traditional retirement planning relies on your investments going up more than inflation and more than the percentage you are taking out each year. If you are preserving your principal to pass on to your heirs you are probably taking somewhere in the neighborhood of 4-6% as IRA income or retirement income from all of your investments. This is a great plan as long as your investments are up but what happens when they are down?

Down Investments Plus Income Needed Can Spell Disaster

If your investments are down and you need income out of them you can be setting yourself up for problems.  If you have $500,000 in investments and you need $30,000 per year out for income that is 6% of your total assets.  Your investments have to earn 6% each year to break even. 

If the markets were flat for the year with no earnings and you still take your income you now only have $470,000 to draw income from. The problem is you still need $30,000 per year in income. Now you are taking out almost 6.4% just to get your income.   From this point a down market of just 10% leaves you with $423,000. And you take out your income of $30,000 you now have $393,000 and need to earn 7.63% just to break even. And really that doesn’t even break even as you have to earn the inflation rate as well.  Seeing the big picture yet? What happens when your investments go down 20 or 30%? Disaster can follow. But what if you could set up your investments to never go down?

A Better Option

Annuities can guarantee your principal and income.   What if you would have had guaranteed income during this same time period of $30,000 per year? Your full principal would be intact and you would have had no worries about ever running out of money. Fixed indexed annuities will also provide inflation protection and have the potential for rising income as inflation goes up.

Indexed annuities as well as other annuities are also guaranteed by each state. The state guarantee insures the insurance company and if they go out of business you will not lose money. Be sure to check your own states guarantee for all of the details.

If you never lose money you never have to spend the years after a downturn recovering your losses.  So as most people are recovering from their losses you would be earning money.  Use annuities to guarantee your income and your principal and never rely on the risky stock market ever again!

Disclaimer: Always seek individual advice from a licensed professional. This article is for general information purposes only and is not a substitute for personal advice.

IRA Income Without Risk
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