This article written by Dr. Moshe A. Milevsky in Monday’s Wall Street Journal is one all members and visitors of AnnuityStraightTalk should read. It deals with the management of risk according to a set of factors rarely considered in financial planning circles.
The article discusses the difference between personal and financial capital. Your personal capital reflects your future earning power while financial capital is comprised of the assets you have accumulated over your career.
Younger workers hold most assets in the form of personal capital while pre-retirees tend to have more financial capital. Both forms have associated risks and proper financial planning can not be done without considering the two in conjunction.
If your personal income is negatively affected by downturns in the market then financial assets should be conservatively invested. The closer a person comes to retirement, the more closely those assets should be guarded because personal capital decreases with the number of working years remaining.
If your financial capital needs protection, how do you plan to do it? When considering safe investment vehicles, do annuities fit into your retirement picture? Browse my site for information on how annuities can help protect your financial capital.
I highly recommend reading Dr. Milevsky’s article.