Retirement Help

 

As you begin to plan your retirement, you may or may not have a good picture of how risky income planning can be. The truth is that a frightening percentage of individuals do not adequately save for retirement and if you are on the border of not having enough, or even if you think you do have enough, there is a very real chance you could come up short later in your retirement years. A retirement annuity could close the gap between what you have and what you need.

While there is no easy fix for the lack of inadequate savings, the only way to guarantee yourself a lifetime income stream that cannot be outlived is through a retirement annuity. By taking a portion of your retirement savings and purchasing an retirement income annuity, you can ensure that you will not outlive your assets. You can look at this option in two phases.

The first phase of this “income for life” model focuses on guaranteed income. In a high-interest-rate environment, a ladder of certificates of deposit with staggered maturities would work well. But in today’s low-interest-rate climate, a five-year immediate-payout annuity gives you more bang for your the buck.

Phase two focuses on conservative income-generating investments, such as a bond ladder or a deferred annuity, that can be converted to an income annuity in years six through 10. Each subsequent phase allocates a little less money and directs it toward assets that are slightly riskier. The goal is to refill the immediate-income bucket every five years.

While no single product can offer a perfect solution for the wave of baby-boomers about to retire, income annuities can be an important element to true financial security.

“Best Solution” or More of the Same…

The current economy has had financial impact on many aspects of family life including plans for retirement. No doubt, you have heard someone say, “I don’t even want to look at how much money I’ve lost in my retirement fund.”

So what retirement actions are necessary? Determine the amount of money that will be needed for retirement based on accumulated wealth, growth rate of invested dollars including workplace retirement funds; number of years between now and retirement; amount of income needed during retirement; as well as the number of years one plans to be retired.

Having an updated personal net worth statement is a good place to start this determination. 

When someone is not where they want to be in life or in their portfolio and self-aware enough to realize this, they might want to try to fix it for the better. Fixing for the better can mean a well thought out change in strategy and habits or a desperate path that relies far more on chance than is prudent.

We are in an economic situation where all measures taken previously came up short of what was expected yet the “best solution” seems to be more of the same.

Make your best estimate for how long you plan to be retired, because long term planning is still the key, even in this economy. 

Not only can the economy and having enough money be a worry but what about knowing how to make your money last over a long period of time?

Two characteristics distinguish the purchaser of an immediate annuity: desire for regular, lifelong income payments and desire to begin those payments as soon as possible.

The category of buyer that best fits this description is a retiree who wants to convert retirement savings into a regular source of income that cannot be outlived. Hence, individuals who are just retired and whose risk tolerance is heavily weighted toward security are very good candidates for immediate annuities.

Purchasing an annuity is a big decision. Online research is a good start, but prudent investors should discuss all their options and risks with an independent financial advisor.

When to Put Money Where?

 

 

 

 

 

 

Are you confused as to when is a good time for which different savings vehicle? Many of us hear all the different ways to invest and save, but the real question is when is a good time for each of them?

There is a simple rule of thumb to go by. The younger you are, the more money you should have at risk and the older you are, the more money you should have be safe. As far as who is young and who is older, you can take 100 and subtract your age. For example if you are 60 years old then you should only have 40% of your money in the riskier investments.

Now once you figure out how much money can be at risk and what amount shouldn’t. Where do you look to put the money? the money that can take on risk should be in some part in stocks in the market.  As far as safe places for the money which should not take on risk there are many options.

You can look at your bank and see what money market rates are and Certificate of Deposits rate are at. But most likely the return is not the highest you can find, sometimes barely staying up with inflation.

A fixed annuity can make sense for an older investor nearing retirement age or one who has already retired, provided he or she has additional assets that are growing faster than the rate of inflation. In this case, the retired investor could purchase the annuity as a way to protect his or her money from extreme market fluctuations.

Almost all life insurance companies sell fixed tax-deferred annuities. But they are typically sold through another division or subsidiary of the company. Life insurance companies are required by law to keep certain assets separate from others. This prevents a catastrophic event in one division from disrupting business in other divisions. For example, the money that needs to be available to pay claims in the form of death benefits is kept separate from money that is invested in equities to pay annuity distributions.

The following features are common to most fixed annuities:

• Guaranteed Rate of Return
• Tax Deferral
• Secure Principle
• Option for Lifetime Income
• Bailout Provision
• Penalty-free Withdrawal Provisions

Gambling for the Future

 

 

 

 

When it comes to retirement we all know the earlier you start the better off you are. But why is it  matter how early you start it still feels like you have to gamble with your hard earned money?

Why must we feel like the only option we have to earn potentially enough for our future is by putting it in the stock market and holding our breath? It doesn’t seem right to gamble with your savings to be able to have enough to live when we retire.

The options out there consist of bank rates on savings accounts and CD’s which at this point in time we can all either laugh or cry about. Or the stock market that again most of us are crying over. Neither seems like that great of an idea at this time due to the uncertainty of the environment we are in.

So what do we do if the banks can get us to where we will need to be and the market is a terrifying thought? First thing is to find a financial professional who you can confide in and trust to tell you the truth about your situation. Everyone is in a different boat when it comes to now and the future.

Second, once you find that person who you feel will have your best interest at heart and you have explained your situation you need to ask the right questions. For example, have them go through all the options you have, therefore you can familiarize yourself. Also ask what options you can get out of the products they are showing you.

You will find that there are not just two options for saving. We don’t have to be all in the  stock market or at the bank. There are many insurance products that can help you get a competitive rate that you won’t find at the bank accompanied with the security of no loss of principle. Also you have options to still have the potential gains of the stock market without any hit of the losses.