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As pensions increasingly become ancient history, today’s retirees are more dependent than ever on equities (i.e. 401(k)s, IRAs, brokerage accounts, etc.) for income in retirement.

The challenge of taking income from an equities portfolio is complicated by two uncertainties:

1. Market volatility
2. Mortality

Because none of us know exactly how long we will live or what the markets will do in the future, we’re left exposed to economic downturns and the possibility of outliving our retirement savings.

Fortunately there is a better way to hedge against economic downturn—the Volatility Buffer.

The Volatility Buffer is a pool of capital insulated from market volatility that you can withdraw from in years following negative market returns. The ability to buffer against market volatility is a vital element of an effective retirement income plan. The tool ideally suited for the strategy is a whole life insurance policy structured for maximum cash growth.

Life insurance products from mutual insurance companies aren’t correlated in the same asset class as qualified retirement funds like 401(k)s and IRAs. The market doesn’t influence mutual insurance companies the same way it influences market-based funds. A bad day on Wall Street won’t hurt the value of your mutual insurance-based assets.

Mutual insurance companies can protect and grow your wealth in multiple ways, including guaranteed interest and dividends. In fact, the top-rated mutual companies Paradigm Life utilizes have consistently paid out dividends for nearly 200 years, even during the Great Depression, the Great Recession, and during pandemics.

To learn more about the strength of mutual insurance companies and why they are ideal for your Volatility Buffer, download the two free infographics included in this section, then read The Donohoe Bulletin: How to Use the Volatility Buffer to Achieve Financial Independence.