Why I Call It The Flex Strategy
Main Key Takeaways:
- Flexibility: Adapt plans to changing income needs and retirement goals.
- No Fees: Avoid unnecessary costs and keep more of your money.
- Growth Potential: Maximize long-term asset growth and wealth accumulation.
- Lower Costs: Reduce annuity commitments by 25% or more.
- Market Resilience: Balance annuities with market assets for stability.
What Is the Flex Strategy?
Regardless of your expectations when you first hit the website, you should know by now that I try to get everyone to think about annuities differently. Most of you come here with a general interest in annuities, trying to find a solution to a specific problem. If I join the chorus and just stick with saying things you already know, then you wouldn’t have an opposing viewpoint with which to judge a potential option.
Why the Flex Strategy Stands Out
Most people don’t believe that I started this website because I didn’t like annuities. Agents get pitched products too, and my initial reaction was to question the motivation of anyone who said I should sell one thing or another.
I realized that many retirement concerns can be solved using basic contracts stripped of all the options that make for good commercials and ad copy. No matter why you’re here, I know you didn’t come in expecting to see the AST Flex Strategy, much less know what it means and why it’s a really good strategy.
Eliminating Fees: Keeping More of Your Money
Cost is only an issue in the absence of value. I’ve run the numbers, and most annuity fees will not give you anything that you can’t already do for yourself. Fees erode the growth potential of your assets. So much so that this point deserves its own newsletter. Eliminate fees and keep as much of your money as possible in your own pocket.
Addressing Short-Term Uncertainty
The market is top-heavy, and interest rates are low. It’s a bad time to be over-committed to risky assets, and if interest rates rise, you don’t want to be locked to a contract paying lower rates. I’m not predicting a market correction or sharp increase in inflation, but I do recommend keeping your options open so your assets can be rebalanced if rates rise or an excellent opportunity arises for buying securities at lower values.
Flexibility to Pick Your Retirement Start Date
Lots of people don’t make a move because they don’t have a planned retirement date. A few years ago, I read a statistic that said the average person who buys an annuity with a deferred income rider takes income several years before they initially planned. This means they end up changing plans and settling for less income because the contract had fewer years to grow. A better approach is to implement a plan that can be activated at any time without negative effects.
Adapting to Changing Income Needs
I spend more money in the summer than in the winter. Some years, I spend far less than I did the year before. I don’t expect retirement to be any different. I want a plan flexible enough to choose the amount I want to spend each year. Some people retire before collecting Social Security or becoming eligible for Medicare, meaning expenses in the first few years of retirement are higher. Many reasons may cause you to spend more or less at certain times. It makes sense to have a plan that can adapt to these changes.
Lower Costs with the Flex Strategy
Guaranteed income products in today’s marketplace are expensive, causing many people to hesitate before committing. The Flex Strategy, however, produces more efficient results and often reduces the amount of annuity required by 25% or more to make the plan work.
Greater Wealth Accumulation Potential
Spending less on an annuity and avoiding fees leaves more money available for long-term growth. Without being locked in for life, you have the opportunity to rebalance assets toward growth or preservation. Many people respond to the Flex Strategy by saying, “I don’t need all that money.” But I like my clients to win, and this strategy provides substantial wealth increases in retirement. Unexpected costs like inflation, long-term care, or legacy wishes become easier to handle when you can continue growing your assets.
Real-Life Example: Flex Strategy in Action
Last year, I ran a simulation with Bill, who wanted me to explain the strategy to his CPA before buying annuities. The CPA asked, “Explain your reasoning for this recommendation.”
I said, “Interest rates are low, making guaranteed income products expensive, and long-term commitments to fixed products inadvisable. Bill would need 2/3 of his assets for guaranteed income. My solution cuts that to less than half. He can draw income from the annuity when market assets are down and take market gains when it’s up. This ensures long-term growth and protection during bad markets. Splitting funds between five- and seven-year contracts allows him to shift to better opportunities as rates rise.”
The CPA called it the most creative annuity use he had seen and approved the plan. A year later, Bill’s annuities had grown modestly, his securities were flat, and he was ready to start taking income with no worries.
A Simple, Effective, and Flexible Retirement Plan
Take out all the things you don’t like about annuities and use them for what works. The Flex Strategy simplifies retirement planning, offering control, growth, and peace of mind. If you haven’t seen it already, give it some thought. If you’d like to explore it further, give me a call.
Bryan
800.438.5121
Further Readings:
Fidelity Annuity Recommendation
Fidelity Investments Annuity Marketing in 2024
Surrendering of Allianz Products
Episode 9: The Flex Strategy
Last Updated on December 3, 2024 by Bryan Anderson
