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Decumulaon: This is a relatively new word, coined to generally describe the effect on capital when using retirement monies for income. Decumulation can be defined as the process of converting pension savings into retirement income. The big question is: “What is the best Decumulation product available today?” Building up your pot of money for retirement is done during the “Accumulation Phase.” Using that money for Retirement Income would be the “Decumulation Phase.” Copyright 2021 Financial Scenarios. All Rights Reserved.

Most of the funds set aside for retirement by individuals (i.e. IRA’s, 40Ik’s, SEP’s, Roth IRA’S, or Roth 401k’s) are generally placed into mutual funds, which are supposedly by design, diversified investment plans, that take advantage of the growth of the market with some degree of safety. History shows the degree can be highly volatile.The Decumulation Phase is where the real opportunity for failure can occur in most retirement plans. During both phases, while the markets always go up and down, the ongoing contributions added every year to the savings plan during Accumulation, tends to help camouflage somewhat, any downturns in the market. Another larger problem is the returns on safer investments have gone down dramatically in recent years. The once thought of 4% rule (living on 4% of your money to make it last your lifetime) has now become the2% rule! So, how can we fix this and what can we do about it? In the Decumulation phase, three things tend to happen to compound the problem:  First, since the retiree is now no longer adding additional funds tothe plan but is doing the reverse of that, He or She is now taking funds out of a potentially ever shrinking plan to use for income.  Second, the retirees are coached to move their money into safer allocations and maybe even move a good bit of it into fixed annuities, CD’s, or Bonds which usually means with safer vehicles they will usually be getting lower returns overall.  Third, at the same time, any monies they leave in the market even though it is hopefully in a “safer” allocation, are still at risk, as well as subject to the ongoing expenses that mutual funds have been known to charge, somewhere in the 1.5% to 4% range annually and you are charged for these expenses even when there is a downturn in the markets. Copyright 2021 Financial Scenarios. All Rights Reserved.

The Best Decumulation Solution: The Best Supplemental Retirement Plan of the 21st Century!  It all starts with a New Generation Indexed Life Insurance product that is structured properly to Maximize Income.  The new decreased amounts of life insurance required to tax qualify the policy leverages your savings amount dramatically. The Savings Element in the policy is not subject to downside market risk or taxes during both the Accumulation and Decumulation phases.  When safely tied to the S&P 500 or some other well known Index accounts but not in them, it can currently safely earn in the high single or even double digits. There is NEVER a loss due to marketdownturns in an Indexed Life policy In regard to safety, the best plans also have a minimum of at least a 2.0% underlying guarantee.  When the money is taken out correctly, via policy loans, the income producing account actually never goes down in value andthat provides Maximum long term Income Growth Potential.  If set up correctly during the accumulation phase, the money can come out tax free (can easily provide a 25% to 40% or more increase in actual Spendable Income).  The policy includes Chronic Care Insurance coverage similar to a Long Term Care plan (a Leveraged Cash benefit).  The policy includes Critical Care Insurance coverage for Heart Attack, Stroke, Cancer and other catastrophic illnesses (a Leveraged Cash benefit).  The Life Insurance is always greater than the residual cash account at death and is passed on income tax free to the owner’s Beneficiaries.  Overall annual expenses, especially during the “Decumlation” phase, can also be 1/10 to 1/3 of the cost of expenses in the average mutual fund. Copyright 2021 Financial Scenarios. All Rights Reserved.