Article Summary:
This article highlights three common retirement planning mistakes: taking on too much market risk, relying too heavily on low-interest savings accounts, and overlooking tax-deferred growth opportunities. It explains how these choices can affect long-term retirement savings and how MYG Annuities may help provide more predictable growth and financial stability.
Retirement planning often involves balancing growth potential, stability, access to funds, and tax efficiency across different types of savings vehicles. As retirement gets closer, many savers begin reevaluating how much market risk they want to take and whether their current strategy still aligns with their long-term goals.
Three common retirement planning mistakes can affect long-term accumulation and financial flexibility:
Here’s why these issues matter for retirement planning and how some savers use Multi-Year Guarantee Annuities (MYG Annuities) as part of a broader strategy.
Many retirement savers are trying to balance competing priorities, including:
Finding the right balance often becomes more important later in life, especially for DIY retirement savers managing their own long-term strategy.
Common Retirement Priorities
|
Retirement Goal |
Common Concern |
How a MYG Annuity May Fit |
|---|---|---|
|
Reduce market risk |
Concern about market downturns near retirement |
Offers guaranteed fixed interest rates that are not tied to market performance |
|
Maintain steady growth |
Savings products may not keep pace with long-term goals |
Provides predictable growth during the guarantee period |
|
Preserve access to funds |
Need for occasional withdrawals |
Includes penalty-free withdrawal provisions, subject to contract terms1 |
|
Improve tax efficiency |
Annual taxes may reduce compounding potential |
Earnings grow tax-deferred until withdrawn |
1 Penalty-free withdrawals are subject to contract terms and withdrawal limitations.
Market fluctuations are a normal part of long-term financial planning. However, as retirement approaches, many people begin reevaluating how much market exposure they want within their overall retirement strategy.
Recovery timelines become more important later in life. A significant downturn shortly before retirement may leave less time for savings to recover.
As retirement gets closer, some savers begin looking for ways to reduce market exposure while still maintaining growth potential.
Some retirement savers use MYG Annuities to add more stability and predictability to a portion of their retirement savings.
MYG Annuities offer:
For DIY retirement savers, this can provide a way to balance stability and growth without adding additional market exposure.
You can learn more about how some retirement savers approached previous downturns in our article, Financial Flashback: How Smart Planners Weathered the 2008 Recession.
Savings accounts, money market accounts, and CDs can provide stability and short-term access to funds. However, relying too heavily on lower-yield savings products for long-term retirement accumulation may limit future growth potential.
For example, someone approaching retirement may keep a large portion of their savings in cash or short-term accounts to avoid market risk. While that approach can reduce volatility, it may also create tradeoffs:
Many retirement savers divide their money across different types of accounts depending on what the funds are meant for. Short-term emergency savings may stay liquid and easily accessible, while retirement savings intended for future income needs may be committed for a longer period.
For longer-term savings, some people choose MYG Annuities because they often offer higher guaranteed rates than the national average for traditional savings accounts and CDs.
Comparing CDs and MYG Annuities
Both CDs and MYG Annuities can play a role in retirement planning, but they’re often used for different financial priorities.
|
CDs may appeal to people who: |
MYG Annuities may appeal to people who: |
|---|---|
|
Want a shorter-term savings option |
Are planning for longer-term financial goals |
|
Value the convenience and familiarity of traditional bank products |
Are open to insurance products that offer guaranteed growth not tied to market performance |
|
Can leave money untouched until maturity |
Value limited access during the guarantee period |
|
Prioritize simplicity and flexibility over tax-deferred growth |
Want tax-deferred growth as part of a long-term retirement strategy |
Taxes can play an important role in long-term retirement accumulation, especially for savers holding interest-generating assets in taxable accounts.
With many traditional savings products, interest earnings are taxed each year. Over time, those annual taxes can reduce how much money stays invested.
For some retirement savers, tax treatment becomes a more important consideration as retirement balances grow over time. MYG Annuities generally allow earnings to grow tax-deferred until withdrawals begin, which may help more money remain invested over time.
You can also explore The Power of Tax Deferral: Unlocking Growth with a Multi-Year Guarantee Annuity for additional information.
Retirement planning is rarely about choosing a single financial product. Many DIY retirement planners build strategies designed to balance growth opportunities, stability, access to funds, and long-term financial confidence.
For some DIY retirement savers, products designed for more predictable long-term growth may play a role alongside other retirement assets.
Form Series: MYG24; AI20 (Forms may vary by state). CA Form: MYG16(04). Not FDIC/NCUA insured / Not a deposit / Not insured by any federal government agency / No bank/CU guarantee / May lose value
American National nor its agents give tax or legal advice. Clients should contact their attorney or tax advisor on their specific situation.