Creating Guaranteed Retirement Income With Your Old 401K

So what do you do when you have a bunch of money sitting in your 401K from a previous employer?

Well first let's talk about why you're no longer affiliated with said employer. Maybe you have changed jobs, or maybe you have been laid off or terminated from your previous position. Sometimes these things are in your control, but many times they are not. You may be left with an employee sponsored 401K with funds just sitting there. *crickets*

You may be wondering, well, isn't it safe there? The issue now is that you are no longer an employee. So the administrative fees necessary to maintain your account will increase. Additionally, your 401K funds are connected to the market and therefore are fluctuating with market gains and losses. That can be a job for your new 401K account with your new employer, or for your other current investments if you have additional investment streams. But for that money, you want to create an additional, protected stream of income. This is usually done by transferring those funds into an annuity (of which there are different types).

An annuity is a contract between a person and the insurance company that trades a lump sum of money for regular, guaranteed payments. It creates a guaranteed stream of income that does not outlive you, and acts very much as your own personal pension. It can also have several other benefits such as protection against market losses, unlike traditional 401K's, and guaranteed rates of return. There are some cons as well, including the fact that there are fees, which need to be reviewed with a licensed professional. Also one major thing to note, is that this is a LONG GAME. This means that for the best results, your money is locked up. For at least 5-10 years depending on how you set it up. This is why it is ideal as a retirement income strategy and not necessarily a liquid strategy you'd like to use now. Other instances where this strategy would still apply, is if you have sold a home and want to use a portion of the proceeds to create guaranteed income for the future. If you have sold a business, or received an inheritance that has now left you with extra funds to better prepare for your future. Or if you have actually maxed out your 401K (this yer that amount is $24,500).

If you'd like to learn more, or have those 401K funds or funds from other sources that you would like to turn into a guaranteed stream of income for retirement, reach out to us and we can help you decide if this is the right strategy for your needs.

Shoot us an email at: info@roseveritasconsulting.com, Call us at: 443-608-2188. Or schedule a financial protection review session HERE

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