AST Newsletter for August 4th, 2018

We’re going to start this off by talking about two of the more pressing issues that relate to retirement planning:  interest rates and market volatility.

The Fed met this week and decided to delay a rate increase this quarter but confirmed plans for two more rate increases later this year.  I don’t mean to be patronizing but many people mistakenly assume that actions by the Fed are what lead to the increased consumer rates that we all care about.  You may or may not know that the Fed can only control the rate at which they lend to member banks.

The increase in rates on treasury securities, which fuel all rates that affect us, depend on several other factors with the most important being government spending.  To highlight this I have a link to a recent Bloomberg article that talks about recent debt issuance by the Trump administration.  This will bring US Debt sales to the highest level since 2010.  Many analysts believe this is unnecessary given the strong economy and the result is that we will continue see large federal deficits with no end in sight.  News of the issuance caused the 10 year treasury to spike over 3% for the first time in several years.  This will increase borrowing costs for consumers but may also increase rates on fixed investment vehicles so it’s not all bad for retirees who are looking for higher rates in order to plan for retirement.

You can read the article here…

Next week I will talk more about how interest rates affect the economy and stock market performance so we can tie it all together and look at how that might affect the way you should plan for income or asset management in retirement.

It holds true that investors should pare back on risk within five years of retirement.  But that’s hard to do when markets are recovering or on extended runs.  The S&P 500 is back in positive territory for the year but the Dow Jones still lags back and hasn’t recovered from the February correction.  These are things we all deal with but when retirement comes you certainly don’t want it to affect your lifestyle.

Many analysts are calling for another correction and a recent article on MarketWatch explains several fundamentals that may give credence to the thought of some volatility ahead.  With a strong economy and slightly higher rates, retirement planning is easier today than in the past several years and my gut tells me we should see some steady growth in the near future.  However, I am not a stock analyst and I make my living advising and selling conservative strategies and products.

Read more from MarketWatch here…

It’s always a good time to eliminate risk if you don’t have the time, patience or stomach for a recovery.  The key is timing and it’s different for everyone.  Keep the big things in mind and use discretion when chasing yield.  Fear and greed drive most financial decisions so do your best to remove emotion from all decisions.

If you’d like to chat about how any of this might affect your situation you can always call or email any time.  I’ll be out of service this weekend but can return emails if you’d like to respond.  Phone calls will have to wait until Monday but if you’d like to leave me a message I’ll call as soon as I can.

Have a great weekend!




War Stories:  The Allianz 222

I’m choosing a product topic for my first version of this section.  “War Stories” came about mostly because I feel a fair bit of hostility toward this product in particular.  The Allianz 222 is the highest selling product in the Indexed Annuity marketplace.

That’s curious to me since it’s a product with a very specific use.  The reason it’s so popular is because the 30% bonus makes it kind of easy to sell and for agents who have a loose relationship with the truth then it ends up being owned by far too many people who will get a not-so-nice surprise down the road.

Let me explain a little more since I’ll never ask you to take my word for it.

1.) You get a 30% Protected Income Value(PIV) bonus when you purchase.

2.) PIV is used to calculate guaranteed lifetime income.

3.) You also get a 50% bonus to annual index credits that is added to your PIV.

4.) In order to capitalize on the PIV you must wait 10 years and then convert that PIV into a lifetime income stream.

5.) The PIV is not your money – it is simply a factor used to calculate lifetime income.

6.) Underlying growth potential on the contract is very limited, in order for the company to limit exposure to the income payments via the PIV.

7.) Do you really think an insurance company is going to give you 30% free money without a catch?

If anyone tells you anything to the contrary it is a lie.  This is the most misrepresented contract I’ve ever seen.  Nothing in life is free once our parents kick us out of the house and the Allianz 222 is no exception.

Do you have any specific questions?  Respond to this email or give me a call.

All my best,



Last Updated on May 10, 2024 by Bryan Anderson