Legacy Financial

Create a Pension Substitute in the 401(k) World

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Create a Pension Substitute in the 401(k) World

When Maurice Mathieu died in 1990 at just 59 years old, his eldest son, Stephen, had to help his mother with her finances including the planning for her retirement. This turn of events in the life of President Stephen Mathieu changed Legacy Financial Solutions from a business that focused on helping business owners open 401(k) plans to one that helped those nearing retirement to manage the transition.

Retirement is a period of asset disbursement, a time when wages discontinue. You no longer work, either by choice, you chose to retire, or by circumstance (disability or layoff or death of a spouse). You switch from earning wages, saving and building wealth to the spending phase, a time of disbursement from your portfolio that can last 10, 20, and even 30+ years. You must prepare for this new stage of life.

When Maurice was planning for his retirement, he relied upon the company pension plan as a cornerstone of the strategy. A pension is a well-defined contract between you and an entity that agrees to pay the pension benefit. A pension has some extremely important characteristics: guaranteed, predictable, with a lifetime solution.

Back in the 1980s, almost 6 out of 10 employees were covered by a traditional defined benefit pension plan. In 2014, this reduced by half to 3 out of 10. A lot has changed since 1980 – 35 years ago, the company took care of your retirement. Today, most Americans must rely on their savings and investments to provide for their future.

The best way to plan for longevity—the risk of outliving your retirement assets—is to create your own pension using a portion of your financial nest egg. Many tools can help you achieve a successful outcome:

  • Traditional instruments, such as stocks, bonds, mutual funds, ETFs
  • Income Annuities with guaranteed income solutions
  • Fixed Index or Variable Annuities with lifetime income riders
  • Reverse Mortgage on your home

Using a combination of these solutions, a baseline of essential income can be guaranteed to last a lifetime, and also, the issues of inflation and liquidity to meet emergency needs can be addressed.

Product allocation – using a variety of tools with differing attributes – in addition to traditional asset allocation, is an efficient way to add pension benefits for those without traditional pension plans.

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