Retirement planning explained by financial expert, Jim Poolman

Retirement savings is an abstract concept for many Americans.  It can be a little scary to figure out how to navigate the rough terrain that is finances.  Well, Jim Poolman, the Executive Director of the Indexed Annuity Leadership Council offers some sound tips to help you understand planning for retirement a bit more.

Jim Poolman connected with Michelle Tompkins for TheCelebrityCafe.com to offer his expert information and tips.

Michelle Tompkins:  What is your current job title and responsibilities?

Jim Poolman:  My name is Jim Poolman, and I am the Executive Director of the Indexed Annuity Leadership Council.

MT:  Where are you from?

JP:  North Dakota, where I used to serve as the North Dakota’s Insurance Commissioner.

MT:  Where do you live now?

JP:  My wife Nicole and I live in Bismarck, North Dakota with our three children, Collin, Grace, and Nicholas.

MT:  Please tell me about your educational background?

JP:  Before being elected Insurance Commissioner in 2000, I served four terms in the North Dakota House of Representatives, and was a trust officer for the Bremer Bank system. In 2007, I left my post to start an independent regulatory consulting practice. I advise insurance companies and producer clients on regulatory issues and work with regulators on their behalf. I hold a BBA in Marketing, Management from the University of North Dakota.

MT:  What is the Indexed Annuity Leadership Council (IALC)?

JP:  The Indexed Annuity Leadership Council (IALC) formed in 2011 with a commitment to providing complete and factual information about the use of indexed annuities as a part of any balanced financial plan. We are a consortium of eight life insurance organizations.

Our mission is to help educate consumers, the media, regulators and industry professionals about the benefits of fixed indexed annuities.  Namely, that these products provide a source of guaranteed income, principal protection, and interest rate stability in retirement as well as balance to any long-term financial plan.

MT:  When should people start saving for their retirement?

JP:  Right away! The earlier you can start saving for retirement, even in small increments, the better. A combination of saving early and diversifying is key. A recent study by the IALC found that 91 percent of Americans aren’t prioritizing diversification of their portfolio, and are likely putting too many of their financial eggs in one basket. Saving early and in different ways, like adding a Fixed Indexed Annuity (FIA) can ensure your risk is balanced with more conservative options.

MT:  What is the biggest mistake people make when it comes to retirement?

JP:  The biggest mistake people make when it comes to retirement is not considering all their savings options. Successful savers are always looking to achieve financial diversity. Start by researching a wide variety of products to find the ones right for you. Look at products you may not have considered before, such as Fixed Indexed Annuities (FIAs), which can help protect your nest egg, guarantee income throughout your entire retirement and offer growth without experiencing the downside of the market.

MT:  Please tell me about the study?  Who was involved?  What were the findings?

JP:  The IALC recently released retirement data, which takes a look at how Americans save and their knowledge of different financial products.  The study found that 91 percent of Americans aren’t prioritizing diversification.

It can be hard to create diversity if you don’t know what products to add to your portfolio, and we saw that come through in the responses from those surveyed. The study from IALC found:

• 1 in 5 Americans incorrectly believes a 401(k) allows you to receive guaranteed payments throughout your retirement, regardless of how the stock market performs.
• 84 percent of Americans say they are interested in a product that provides a steady income stream in retirement.
• More findings available at FIAFacts.org.

Data trends were compiled from the GfK’s KnowledgePanel, a nationally representative sample of 6,490 Americans between April and May of 2016.

MT:  From the study, what was most surprising that Americans did not know?

JP:  What may be most surprising is that 22 percent- over 1 in 5- Americans are not familiar with the most routinely used retirement products, such as mutual funds, Certificate of Deposits (CDs) and Fixed Indexed Annuities (FIAs). It’s incredibly important to be familiar with the savings vehicles available to you, in order to make the most informed decision about what products and strategies are right for you. Without base knowledge of helpful tools like Fixed Indexed Annuities, it can feel impossible to create a balanced savings plan that will work to meet your retirement goals.

MT:  What are some common misconceptions about retirement planning?

JP:  One of the biggest misconceptions about retirement planning is thinking Social Security payments will be enough to sustain you throughout retirement. We found that 84 percent of Americans say they are interested in a product that provides a steady income stream in retirement, so it’s crucial to look beyond the Social Security check and consider products like a Fixed Indexed Annuity, which can help to offer that consistent source of income for life.

FIAs may seem complex. What are the biggest myths that need to be set straight for people?

It’s true that a common misconception about Fixed Indexed Annuities (FIAs) is that they are too complicated and complex. In contrast, almost half of Americans clearly understand FIAs’ main benefit of providing income for the rest of their lives. Fixed Indexed Annuities offer a simple story: growth potential without risk of loss due to market downturns as well as a steady income stream in retirement.

Another commonly held myth is that any retirement account can generate guaranteed lifetime income. In fact, one in five Americans incorrectly believes a 401(k) allows you to receive guaranteed payments throughout your retirement, regardless of how the stock market performs. In reality, only annuities, including FIAs, offer the option to guarantee a steady income stream for your whole retirement.

A full list of commonly held retirement myths can be found here.

MT:  What keeps your team up at night regarding tax reform and retirement?

JP:  We are committed to teaching people that even in the face of major industry changes, such as the looming wave of tax reform, there are options to ensure you will not run out of money in retirement. Fixed Indexed Annuities (FIAs) can help bring balance to some more risky options in your portfolio and can help protect against tax reforms that might impact your finances.

MT:  What are some things people need to know about tax reform?

JP:  Within the context of retirement savings, it’s important to know that tax reform changes could negatively impact your portfolio. With the exact changes and their effects uncertain, now is the time to consider more conservative options such as Fixed Indexed Annuities (FIAs). A product like an FIA can help ensure income throughout your golden years, even if other parts of your financial life need to shift.

MT:  What should people be doing to protect themselves?

JP:  Consider all the options available to you and make sure you understand what each option achieves. 1 in 5 Americans incorrectly believes a 401(k) allows you to receive guaranteed payments, proving it’s not only good enough to participate in a program or use a product, but to understand what it’s achieving for you and your portfolio.

Additionally, find an easy-to-use resource to keep yourself educated when it comes to retirement. Resources like the IALC’s blog can serve as quick reads each week to aid in your retirement savings journey.

MT:  How do you diversify your portfolio to protect yourself?

JP:  To achieve financial diversity, start by researching a wide variety of products to find the ones right for you. Look at products you may not have considered before, such as Fixed Indexed Annuities (FIAs), which can help protect your nest egg, guarantee income throughout your entire retirement, and offer growth without experiencing the downside of the market.

MT:  Can policy changes, like tax reforms to retirement savings tools, impact my retirement and how can I protect against it?

JP:  Tax reform changes can impact your retirement savings strategy. To guard against possible negative impacts to your portfolio, remember to review your finances for strength of balance at least once a quarter. Ensure you have enough conservative savings vehicles, like those that will help to provide guaranteed lifetime income, such as a Fixed Indexed Annuity (FIA), to help bolster your savings even as tax reform decisions are made.

Is my portfolio diversified to protect against risks?

Consider your balance of more risky products vs. more conservative products. As you gear up for retirement, you should be looking to more conservative products, such as a Fixed Indexed Annuities, to prepare for your long-term retirement savings strategy. Talk to a licensed insurance agent or financial professional about reviewing your individual needs and what options may work best for you.

MT:  Where do most people get it wrong when it comes to saving for retirement?

JP:  Like our study showed, Americans- 91 percent of them- just aren’t making diversification of their portfolio a priority, which is putting them a risk of not having enough saved up for their golden years. Without a mindful eye on the makeup of your portfolio, you may end up with too much financial emphasis on one product over another.

MT:  With Fixed Indexed Annuities (FIAs), what are the benefits of committing to a long term product?

JP:  A diversified retirement plan is essential, and Fixed Indexed Annuities can add balance, giving you some peace of mind—no matter what happens on Wall Street. Fixed Indexed Annuities (FIAs) are a means to help create a foundation of conservative growth and to ensure a steady income during retirement. With an FIA, you can feel confident that even if the market takes a dip, you have a secure strategy and a steady income that will last throughout your full retirement.

MT:  Where can people go for more information?

JP:  For more information on retirement savings strategies and tips on how to save, visit FIAInsights.org. You can also follow along for the latest updates and tips on our Facebook page and on Twitter.

Retirement savings can be a reality.