Insuring your retirement is not unlike insuring your car


You can insure your home and car from disasters and accidents. Life insurance essentially protects your family from the loss of your income should tragedy strike. You can’t insure your retirement accounts in the quite same way, but there are a few tried and true strategies that can help safeguard them.

1. Save for retirement even during…retirement

There is no rule that you have to stop investing when you hit your golden years. One of the best hedges to outliving your retirement assets is to continue investing even when you reach retirement age. While there are mandatory age distributions from 401(k) retirement plans and traditional IRAs, you can continue to make investments in other assets during your retirement.

Here’s a reminder: In the last 30 years, the dollar has lost nearly 60 percent of its purchasing power to inflation. Investing offers a way to combat that loss of purchasing power by developing a plan that not only takes this into account but allows you to achieve what you want to achieve over a given time period.

2. Work longer

While some Americans must continue to work during retirement because of a lack of savings, others simply want to work and enjoy the social aspect of working during retirement.

Retirement today looks very different than it did decades ago, and that isn’t necessarily a bad thing. The real problem is getting over our preconceived notions as to what retirement means in today’s economy and society. A longer work life means continued engagement as well as continued paychecks.

However, the day you cash your last paycheck, the price of everything begins to matter. Why enter a shrinking economic reality sooner than you need to, especially if you enjoy your work.

3. Invest in passive income strategies

Truly effective retirement planning should include other income streams to supplement your retirement. For example, you could have a pension, income from real estate, Social Security and an annuity to help replace the income that you had before you retired.

The key is to save assets that produce cash flow in excess of your expenses versus amassing a pile of inert assets that will have to be converted in order to fund your retirement. In other words, looks for ways to create perpetual income, reduce or eliminate risk and treat your retirement as a “working retirement” that aligns with your lifestyle.

Retirement is a euphemism for old-age financial independence. The core of financial independence using passive investments is that you create cash flow from investments that exceed your expenses and only spend the cash flow, not the principle balance. A passive income requires minimal input from you after you invest in it to start.

4. Invest in annuities

An annuity is an insurance product. You trade a lump sum for equal monthly or yearly payments when you invest in an annuity.

For example, a $1 million lump sum payment to an insurance company could provide you with more than $40,000 in yearly payments for you and your heirs for the rest of your lives. That’s because annuities shift risks from you to the insurance company including market risk, actuarial risk and longevity risks from you to the insurance company.

5. Hedge your investments

Receiving company stock in the form of options can be an important tool for insuring your retirement. An option gives you the opportunity to sell or buy shares of stock with contracts at a future time at a set amount of money, instead of relying on the fluctuations of the market. If you don’t feel comfortable with options, you can enlist a financial planner to hedge your retirement investments.

Finally, it never hurts to get professional financial help if you are worried about your retirement accounts and if you will have enough saved for retirement. Insurance companies do not offer retirement portfolio insurance, but there are ways that you can hedge against calamity with your retirement accounts.

FM International Services (NY), Ltd. provides a wide range of retirement services featuring customized benefit plans, flexible investment options, and centralized pension administration. Through Fmi’s countless services, businesses of all sizes create unique domestic and international retirement plans for two employees or two thousand – with a single provider handling conversion, setup, and administration. For more information, please call 1 (888) 960-1801 or visit


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