Super Charging Your Retirement Savings

As a result of historically low interest rates many consumers will incur a continual loss in purchase power, after inflation and taxes, when participating in today’s traditional fixed options.   In an attempt to keep pace with inflation and taxes many are now considering the secondary cash flow market which offers similar fixed options purchased at a discount from a buyer resulting in competitive fixed rates to the buyer.

Structured Cash Flows, offering secondary market pensions, as an example offer customizable immediate pay fixed options with interest rates of 5% to 7% paid over periods of 1 to 10 years. For those who are looking for accumulated savings versus immediate income, many financial advisers have devised a strategy offering the ability to repurchase additional cash flow annually as principal and interest is returned. This has results similar to a bond laddering strategy and can provide some liquidity if conventional interest rates were to rise.

This strategy can also be structured for income and accumulation or, as they’re popularly known, split annuity concepts, where some funds are spent immediately to solve for current income needs while other funds accumulate in value often growing back to the original amounts.

It also has a tactical use in retirement planning, when there needs to be funding in a transition period, like retiring at the Social Security full retirement age of 66, but delaying the benefits until age 70 to maximize the lifetime payout of Social Security. The income from a factoring source can fill in the income gap. You could use the same tactic to delay qualified plan income to age 70 when RMDs are due and use a factoring income source to fund the short fall between age 65 and age 70.

Joe Hipp was a co-contributor to this press release.