Fred M. Orentlich | Frederick M. Orentlich

Frederick Orentlich || What place do annuities have in a modern portfolio?

Frederick Orentlich also famous as Fred Orentlich is a one of the best finance professional. Contact him for any kind of finance relates service like health insurance; invest in best life insurance plan to get tax free profit.

In today's discussion about annuities and their place in one's portfolio I would first like to focus on the typical concerns and priorities my clients express to me regarding their financial positioning in relationship to their retirement and other financial needs and goals.

First, in framing this discussion, it is important to note that my typical client is of a more mature nature and is either planning for retirement or already in retirement, thus their priorities tend to be more conservative than their younger counterparts. More specifically, my clients are usually over the age of 55 and have been savings toward their retirement for at least 15 to 20 years. A good number of clients express the need to re-allocate their portfolio in a more conservative direction to protect some of the assets from market loss and feel it crucial to lock in some of their gain to help insure a successful retirement.

When many of my clients began their working careers, company pensions were far more prevalent, thus the mindset regarding retirement savings was very different. During their careers many of my clients saw a gradual yet substantial paradigm changes toward providing for one's own retirement needs, due to the preponderance of employers that discontinued retirement and pension plans, combined with the advent and expansion of IRA's and 401ks. For many people this change toward increased self-sufficiency put them at a substantial disadvantage as to the amount of precious time they have or had to prepare for retirement when compared to many of their younger counterparts whom more recently entered the workforce. Today most people beginning their careers have the advantage of knowing early on, that they must prepare for their own retirement and are acting accordingly. Additionally, as our population is enjoying an increasing lifespan the amount of assets needed to sustain a longer retirement can be daunting. In addition, this longevity may also increase one's need to have some financial resources earmarked for health care expenses associated with the varying needs of the elderly. Consequently, the need to accumulate sufficient assets might cause some to people to take on more risk, than might be prudent.

A particular concern that many of my clients express about their retirement savings is the volatility of the financial markets, and of course the potential of market loss.

Many of them sustained substantial market loss during past market corrections, especially during the 2000 and 2008 corrections. Some expressed losses of up to 50% and more, during certain time frames. When considering market loss, I believe it is wise to consider the real-world mathematical challenge in recovering from that loss. If a person sustains a substantial loss of 50%, it can take them more time to recover (break-even) than some people consider. As an example, using the simple amount of 100,000.00, if the market corrects by 50% the 100,000.00 could be reduced to 50,000.00, then if the market rebounds by the same 50% (over a number of years) a person could end up with 75,000.00, not their original 100,000.00. Thus, to recover from a 50% loss, one would need a 100% gain just to break even! This truth once understood can cause people to be more concerned about averting substantial market loss, especially if that person is older and has less time to recover from such a loss. Based on the reasons stated above many people approaching retirement or already in retirement are looking for a way to earn a good return, but critically, without the risk of market loss. The most common "safe" options of CD's and Money Market accounts may not produce sufficient gains to both grow one's retirement assets sufficiently, and to compensate for inflation. Although we have recently been experiencing below average rates of inflation, many are concerned that this may change in the future.