Retirement Income: A Story of Two Mountain Climbers

By Matthew J. Knee, A Specialist at New Hampshire Financial Services, LLC

Here’s the story of two mountain climbers.

Climber A limits himself to a certain distance each day.

That’s because he carries a tent and other supplies to protect himself from adverse weather conditions. Because he’s shielded from harsh elements, he can ride out a storm and not lose any elevation. Though he might not climb as high as others on a given day, he will never descend the mountain when severe winds blow. He is well prepared and well equipped.

Climber B can climb as high as he wants to on a given day because he carries much fewer supplies. Having less protection from the elements, however, means that adverse conditions will make him retreat down the mountain until the weather clears. The more severe the conditions, the further down he goes. He has less gear and less protection

So, who gets to the summit first? That depends of the weather. Conditions will dictate the results.

If it’s all clear, climber B will probably make it first. However, if there are any adverse conditions on the way to the top, climber A will have the advantage.

Now, consider this scenario when it comes to saving for retirement and examine the two options.

Would you rather leave your retirement dollars and income to forces outside of your control without knowing how high or how low it will go – OR – would prefer to make a steady climb and not have to retreat?

Most people planning for retirement prefer option two.

It’s called the step-up, or the guard rail method and it’s available with fixed indexed alternatives.

These vehicles are hybrid in nature and are like both certificates of deposits and mutual funds. Like a CD it will guarantee that you will never lose money you put into it or is credited to your account through interest. Like a mutual fund, it is linked to an external index such as the S&P 500 for growth. You’re provided the safety of a guarantee as well as the diversification and market growth of a chosen index.

I invite you to learn more about how the step-up method can benefit you and your retirement goals. Call our office or go explore our web-page for more information in our resources section.