I am continually mystified about how some professionals look at allocating retirement funds. In 1994, a system was created that became the industry standard regarding how to blend bond and stock percentages. The concept was simple: Take 4% of the entire retirement account value annually and you will never run out of retirement income funds. That seemed simple enough except when unknown events occur, the percentage may need to be changed. In other words, 4% is no longer the gold standard, it now is an even lower number.

What gets me is why? Why would anyone go to the trouble of worrying about an unknown and unguaranteed factor? I mean, so many things can cause an interruption. The Credit Swap Mess in 2008, war, very low interest from the Federal Reserve and now the worst of all — inflation.

Stocks and treasuries began to tumble with the new Federal Reserve rate increasing and a pretense to lowering inflation. Now add the rethinking of the long-respected blend of stock and bonds allocation of 60/40 tumbling down thanks to the Federal Reserve’s policy direction. The long-accepted method of allocating 60% to equities and 40% to fixed income has dropped about 14% in value so far this quarter

Wall Street pros (are there really any of them?) still cannot agree on what to do and how to design a system that guarantees retirement income. Of course, we all know there is a system available, but these experts will not allow it to happen in their world. The answer is simple: Use a guaranteed annuity to offset concern over asset allocation.

One has to wonder why Wall Street is so dead set against these amazing, guaranteed products. I know the answer … for Wall Street to grow and be successful, they need one thing to always be happening: money in motion. When that happens, there are opportunities to make money. Once retirement funds are snuggled away in a guaranteed income annuity, it is out of their grasp.

Think about it this way. A guaranteed annuity can provide income for any period of time and both spouses can be included. If they live a long and happy life, it is a winner. If they die prematurely, the unused portion is passed to their named beneficiary. How simple is that?

Outsource the allocation decisions to the insurance company, take your hard-earned retirement funds and guarantee them.

Anyway, this is my idea of simplifying a very hard topic — simplify and sleep well at night. Let the Wall Street folks fight over someone else’s money.

Lyle Boss is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.

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