Annuities-Retirement Speed Bump Flexibility

For most people on the edge of retirement, they’re already pretty cognizant of life’s potential speed bumps, but what some may not realize is their dreams are larger than their savings. The biggest uninsured risk that most people face is that something good will happen, and you live a long life: We buy insurance for our cars. We need to buy insurance for ourselves.

If you have an active lifestyle and you want to make sure you have enough income to cover living expenses and have enough to enjoy your retirement. If you are concerned you will live many years beyond their life expectancy, and run out of money, an annuity is compelling.

Annuities protect against that outcome. They promise regular payments as long as you (and your spouse) live, so that you won’t outlast your retirement savings.  Once people get an education then buying annuities is really a no-brainer.

Retirement income has three pillars: Social Security, Pensions and private pensions and savings. The demise of defined benefit pensions, where retirees are guaranteed an income stream for life, even if the sum of those payments exceeds the accumulated contributions of the employee. It is determined based on the employee’s income, years of service and age, rather than market returns.

In the private sector, these plans are now a rarity. Many private-sector workers have defined contribution plans (401k) where both the employee and employer contribute to a retirement account. At retirement, the accumulated sum from those contributions will determine the amount of pension payments. Market fluctuations — like the 2008 crash — can dramatically affect the value of these pensions.

The establishment of an annuity is an excellent way to provide for the future financial security of a recipient. A deferred fixed annuity bears a very close resemblance to a traditional pension. During the accumulation stage, the annuity holder makes regular payments to the issuer of the annuity, an insurance company. Those payments are invested and the gains grow tax-deferred. Just as with a pension, the accumulation phase eventually ends and the proceeds are distributed to the recipient.

Once distribution payments begin, the general principle underlying an annuity mirrors that of the pension – to provide a level, lifelong income stream to the recipient.

A fixed annuity is a type of investment that many individuals choose when planning for retirement.  Once you purchase this type of product, the insurance company guarantees to provide you with a regular monthly payment during your retirement years. One option of an immediate annuity is to take a payout sufficient to cover ordinary expenses. The plan offers greater safety of principal and more flexibility.

One such difference points up a key use of annuities in retirement planning. The IRS imposes a 10% penalty on withdrawal of annuity income prior to age 59 ½. This allows an annuity holder to retire and take annuity income beginning at age 59 ½ and defer receipt of Social Security until age 65, rather than holding up retirement until age 65 or retiring at 62 but settling for a lower Social Security payout.

Perhaps the appeal of an lifetime annuity lies in how simple it is.  Annuities are offered in general by insurance companies and millions have benefited since its inception. Annuities are considered to be a passive form of investment. You do not have to make individual investment decisions once you get involved with an annuity contract. You simply pay your premiums and then the insurance company takes care of the rest.

There are several types of annuity products available, all can provide an individual or a family with enough savings for retirement.

One of the biggest differences between the annuities is the way that the interest rates are determined. With a fixed annuity, you get a fixed interest rate throughout the life of the annuity. With an indexed annuity, the rate that you get will depend on the performance of a financial index such as the S&P 500. This allows you to get some exposure to the stock market with the funds in your annuity.

An indexed annuity typically carries with it a minimum guaranteed interest rate and a maximum rate that can be earned. If the index performs poorly, the insurance company will still provide you with some kind of return. If it does well, you may not be able to earn the same rate as the index. Fixed annuities also have a guaranteed interest rate.

While it’s impossible to plan for three decades and include every contingency.  Human beings may be the only creatures on the planet blessed with imagination. But it certainly can be a mixed blessing, especially when it comes to envisioning retirement.

The words “pension” and “annuity” are both sometimes used to describe the same financial arrangement – a stream of money paid regularly, lasting for the lifetime of the recipient.  In economic terms, a private pension plan utilizes saving to redistribute consumption from earning years to retirement or non-earning years.

I’m Sorry About Your Loss—Now Here’s the Bill

Funerals can be very expensive. The expense of a coffin, a plot, a headstone and the services can be very overwhelming for a family that was not financially planning for a death. When a loved one passes away the ceremonial process that our society participates in gives people a feeling of closure. 

Today, the average North American traditional funeral costs between $7,000 and $10,000.  This price range includes the services at the funeral home, burial in a cemetery, and the installation of a headstone.  While cremation is gaining in popularity, the traditional funeral is still the most popular manner for disposing of the deceased.

The honoring of the deceased has become part of our society and many families will go in debt to provide that. The funeral expenses are not the only unexpected costs that arise from a death. Many times there are taxes, probate costs or even the need for housekeepers and child care.

No one ever wants to lose a beloved friend or a family member. It is a very sad moment in time and is never easy to deal with. Some traditions hold on to the idea that the end of life is to be celebrated, not mourned. It is a romantic ideal that is much easier said than done.

On the other hand, when the most unfortunate event does occur, friends and family members find themselves discussing the life and memories of those they have lost. They do not focus on the fact that they are gone, but all of the happy memories that were created because of that person.

Average Funeral Costs: How the Funeral Industry Works

Most people planning a funeral use the services of a funeral home.  The funeral director is either the owner of a funeral home or, more commonly, an employee of a large corporate-owned chain of funeral homes.  In most cases the funeral director’s compensation is tied to the profits he generates for the funeral home or the sales commissions he earns by selling related goods and services.

While the funeral director will serve as the family’s main service provider when arranging a funeral service, other businesses are involved as well.  In addition to the funeral home, most families will need to use the services of a cemetery and a headstone dealer.  Often times, the funeral director will coordinate the purchase of goods and services between the family and the cemetery and headstone dealer.  While this is certainly convenient for the family, you need to remember that you are really buying things from three separate business entities: the funeral home, the cemetery, and the headstone dealer.

The funeral director’s main responsibility is generating profits for the funeral home.  Unfortunately, this often means the funeral director’s main objective is to increase the amount of money you spend at the funeral home, leaving cemetery and headstone costs as a separate expense for the family.  This is why the typical funeral service is publicized as costing $6,000 – because the family often pays about $6,000 to the funeral director.  However, the family still has to pay the cemetery for the purchase of a grave spot and the dealer for the price of a headstone.  It’s these additional goods and services that add another $2,000 to $4,000 to the price of a funeral.  Unfortunately, many families do not find this out until after they have signed a contract for the funeral services with the funeral director.

So perhaps there is something to the idea of celebrating the life as opposed to mourning the death. This practice can be difficult when there are mounting expenses involved. That is why many individuals choose to carry funeral trust insurance to ensure that their loved ones will have less to concern themselves with when they pass.

The last thing people want to think about when a loved one passes is money. Sure, there are those greedy, heartless family members that can think of nothing more than how much inheritance they will receive, but they are rare. For most people, they want to keep all of their attention and focus on remembering their loved one.

They prefer to remind themselves of all the cherished memories they were fortunate enough to have with the dear departed. They remember all of the good times and the bad. Everyone involved shares stories of how that loved one touched their lives and how great of an affect their presence had on them. It is a very sad time, but also one for remembrance and reflection.

Most people do not sit around thinking about what will happen when they die. It is a subject that is sort of taboo. However, it is one that every person should consider from time to time. As difficult as it is to imagine there is much more to it than people would like to think.

When a person contemplates death, they may only ponder what happens when they die. Where do they go and what will happen to them. Whether they know it or not, these questions ignore the tremendous affect death has on everyone they love. Not only does it carry a heavy emotional toll on family and friends, but a large financial burden as well. Holding onto a quality funeral insurance plan can help at least alleviate the financial difficulties associated.

When a loved one passes, the last thing you want to worry about is how to pay for the after death expenses. It is an important aspect to consider when thinking about your own life. How will your passing affect those you love financially? As mentioned earlier, it is not an easy subject to ponder, but it is one that can help dampen the impact of your death on your family.

Purchasing a casket, arranging a burial plot, and planning a ceremony tend to be extremely costly, especially if the family is not prepared. All together, it can cost upwards of about fifteen thousand dollars. However, if one plans ahead for their own passing with funeral insurance, they can ease that financial burden placed on the family. This way, all of the final expenses are covered in advance.

The death of a loved one is never a pleasant experience. Family and friends gather to remember the one they lost and reflect on how many lives were touched throughout their lifetime. Planning ahead with funeral insurance affords the family the chance to mourn and remember your life instead of worrying about how to cover the cost of your passing.

I’m Sorry About Your Loss—Now Here’s the Bill
Buying a package funeral deal seems to be the easiest option for grief-stricken family members—and that’s the way it’s intended. Instead of scaling down to the necessities, many people buy an all-inclusive “traditional” funeral—an embalming, an ornate casket, open casket wake, fancy flowers, ceremony, procession, and graveside service.

Anyone who has experienced paying for an unexpected funeral can appreciate the cost of this service. Knowing what to expect in terms of cost can aid in your pre-planning. Here are the facts:

The average cost of a funeral is $6,000, but many traditional funerals can cost more than $10,000. Many people feel there is a connection between how much is spent and how much you loved your family member or friend, but that should not be the case. Letting your family members know your wishes ahead of time will help them realize they do not have to spend money to show their love.

Here’s a breakdown of what you might expect to pay:

Transportation

• Hearse – $135–$250
• Limousine – $125–$250

Facilities and Services

Cremation

• Funeral Home – $1,500-$3,500
• Crematory – about $700, including container

Visitation

• On-site – $100–$520
• Off-site – $275–$550

Funeral

• On-site – $100–$850
• Off-site – $200–$660
• Graveside Ceremonies – $50–$415

Memorial Service*

• On-site – $100–$670
• Off-site – $100–$520
• Removal of Remains – $125–$300

Merchandise

Casket / Cremation Urn

• Less Expensive Casket – $90–$860
• More Expensive Casket – $2,995–$65,000
• Less Expensive Cremation Urn – $25–$235
• More Expensive Cremation Urn – $335–$3,650

Burial container

• Vault – $375–$525
• Liner – $285–$525

Professional and Administrative Services

• Embalming – $100–$525

Caterer

• Opening and Closing the Grave – $350-$1,500

Other

• Headstones or grave markers – $500 to several thousand
• Grave Plot – $350-$3,000
• Death certificates – cost depends on state
• Obituary – cost depends on newspaper and length

To read more click here:  http://annuitynews.net/2009/11/16/pre-need-funeral-trust

Annuity Distribution Of Assets is an Art

Many financial advisors recommend that 20% of an individuals investment should be in bonds, yet bonds in this market is risky to say the least.  It is my belief that annuities would be a better choice for that investment. 

With Americans generally living longer, longevity risk — the chance that you’ll outlast your portfolio’s ability to support you — is rampant, with good reason: U.S. Census statistics indicate that the average 65-year-old man can look forward to nearly two more decades of life, with women likely to live even longer. All this points to the importance of investments that can withstand the long test of time.

Annuities are designed to protect against the risk that retirees outlive their savings, a danger made clear by market losses suffered by older Americans over the last year. For example, the average 401(k) fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages.

The distribution of assets is an art.  For most of us, the immediate goal is to save enough for retirement so we can have a comfortable lifestyle and not have to eat dog food. But once you’ve achieved that goal, the next task is to ensure that you don’t withdraw so much from your retirement nest egg that you end up outliving your money.

An annuity is a type of “insurance” against outliving our assets. Annuities are a widespread retirement product that guarantees a steady stream of income for a lifetime.

When it comes to retirement planning, there are three main risks to a sustainable income. Investment risk, Longevity risk, and Inflation risk.

• Stocks or mutual funds can lose money. Of course, we all understand this from watching recent financial news.
• Certificates of Deposit and savings accounts are also safe, but they have low interest rates.
• Equity Indexed Annuity -Equity indexed annuities are relatively new products to the market and offer the best of all world’s to the investor. These retirement annuities increase in value when the market rises but they don’t lose money if the market drops. Instead, they receive a fixed interest rate promised in the contract. While not all equity indexed annuities are ties to the same type of index, many use the S&P 500 as their benchmark.  The return rate will be somewhat less than the actual market return in years when the index goes up. When the market goes down though, there is a guaranteed return rate so the account does not lose money. A common guaranteed return would be 2% – 3%.

An Equity Indexed Annuity is the one tool that can accomplish three things.

Investment risk: All investors have experienced the ups and downs of market cycles, but these fluctuations can be particularly problematic in the years just before and just after retirement. The ability to generate a lifetime income from retirement can depend greatly on when you start to take income and, specifically, on the sequence of your returns. Negative returns early in retirement have more impact, and when returns eventually turn positive, it takes longer to make up the losses caused by the initial declines.

Equity Indexed Annuities, Provide investment risk protection by helping to assure a predicable level of income, regardless of market conditions.

Longevity risk: The risk of outliving your retirement savings. Thanks to advances in science and medicine, life expectancies – and the length of the average retirement – have increased by 20 years. And if both you and your spouse reach age 65, there is 52 percent chance that one of you will live to be 90. (Source: Society of Actuaries, 2006.)

As a result, without careful planning, the risk increases significantly that you may outlive your retirement savings. Income must be able to sustain lifestyle needs for much longer, while also covering health care, housing and other costs for an extended period of time.  Length of retirement… life expectancy- It’s extremely important to make sure your assets last a lifetime and if at all possible increase to provide for adjustments to the cost of living.

Equity Indexed Annuities, Eliminate longevity risk by generating a guaranteed flow of retirement income that cannot be outlived.

Inflation risk What would appear to be a statistical marvel is a financial irony, for inflation can devastate lives as readily as healthy lifestyle choices and modern medicine can sustain them. Inflation erodes the purchasing power of your income and wealth. And it doesn’t stop just because you have retired.

Of particular concern in any retirement income plan is the cost of health care, which is rising far more rapidly than the cost of living. During the past eight years, while inflation was pushing prices up by about 20 percent, the cost of health care more than doubled. 

Equity Indexed Annuities, Combat inflation by allowing you to access the upside of the equity market and lock in gains to increase potential retirement income.

In the past, it was possible to address these risks individually by combining multiple types of investment products, but it was almost impossible to effectively reduce all risks with a single investment vehicle. Today, however, new annuity designs integrate a range of features and benefits that make it possible to deal with all three risks.

To recap, An annuity is a contract between you and an insurance company, In exchange for your premium payment, the insurance company guarantees you income, starting immediately or at some time in the future.” This potential income can be a supplement to Social Security.

Withdrawing retirement funds