Retirement Planning Blog

Annuities are contracts between you and an insurance company. As the policyholder, you are entitled to certain guarantees provided to you by your life insurance company.

You can enjoy guaranteed income for life, guaranteed growth, guaranteed protection against market risk, or a guaranteed death benefit, among many other benefits.

Annuities also give the benefit of tax-deferred growth until you start withdrawing money from them. Not only that, annuities can also provide you with certain protections against creditors.

However, this helpful protection characteristic of annuities can vary by state. Here's a quick look at how annuities can offer various creditor protections if you are concerned about the exposure of your assets or money.

Certificates of deposit, also known commonly as bank CDs, are one of the oldest and most traditional types of investments offered in America today. They are also among the most conservative investments in terms of loss risk. You can find CDs available at financial institutions such as banks and credit unions across the country.

While deciding whether to buy a bank CD has many factors to consider, the biggest one that CD customers look at is the annual interest rate that the CD pays. How much will your CD rate be? That will depend on a number of things, including how long you commit to keep money in the CD and how big your deposit might be.

Here's a quick rundown of the basics of CDs and a look at what CD rates have been over the past 10 years, from 2009 to 2020.

Editor's note: The following post has been contributed by Andy Masaki. Andy is a blogger and financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums, where he shares his advice as well as tips to lead a financially independent life.

A recent CNBC report has revealed that the total debt burden of older adults in our country has ballooned by 543% in two decades. Isn’t it shocking enough?

Carrying debt into retirement can become an obstacle to your dream of relaxing during your golden years. Because after retirement, you are likely to have a limited income. Though you can increase Social Security payments by taking necessary steps, expenses may go up every year due to inflation, resulting in blowing your budget.

That means precisely, you are likely to struggle with your finances if you carry debts into retirement. So, it’s better to pay off your debts at the earliest and enjoy your golden years.

Here are some of the best possible tips that can help you manage your debt in retirement.

Retirement is a major event after many years of work. It marks the time when you end your career and begin the next chapter of your life.

But sometimes retirees discover that they haven't prepared as much as they could have for this transition. Just on the financial side, there are many pieces to set in place.

Those focal points range from ensuring you have enough retirement income to knowing what your post-career goals are and being ready for unexpected financial challenges.

You have worked hard to reach this point. Now it’s your turn to make the most of this point and enjoy the things that you may have delayed or put off during your working years.

Here are 11 steps that you can take to help ensure that you are ready for the big day when it finally comes. You can use these steps as a starting guideline for putting your retirement planning in order and being ready to enjoy your post-career lifestyle.

There are only two sure things in this life, and they are death and taxes. Taxes affect us at every turn financially, and investments are no exception.

The taxation of your assets can have a substantial impact on how much money you end up with. As any financial advisor will tell you, it's not what you make that matters, it's what you get to keep.

Increase Your Nest Egg with Tax Deferral

With that in mind, there are ways to increase the stockpile of savings that you have for your post-career lifestyle. ‘Tax-me-later’ vehicles can increase the amount of money that you have in retirement. In financial circles, this sort of vehicle is known as a tax-deferred asset.

In other words, it’s an asset where you don’t pay taxes on your money until you start making withdrawals from there. When you do withdraw money from this asset, you will pay income taxes on the withdrawn amount.

If you have heard of annuities, you might wonder if they are right for you. Some advisors use annuities as part of the financial strategies that they create for their clients. Other advisors aren’t as much a fan of them.

Sometimes annuities get a fair amount of negative press. However, when they are used as a solution and are structured properly, annuities can actually be a great solution as part of your portfolio.

So, how can you tell if an annuity makes sense for you? Here are some reasons why one of these guaranteed insurance contracts could be a good addition to your portfolio.

Let's take a look at how fixed annuities and fixed index annuities might be of benefit.

Banks and insurance companies are two main types of financial institutions. But they both have key differences, including how they guarantee your money. That can be of importance for retirement savers as they strive to make confident, well-informed decisions about where they park their hard-earned savings.

Indeed, it’s not uncommon for this question of “banks vs. insurance companies” to come up when someone is exploring whether to buy a certificate of deposit or fixed annuity. For the reason, this article will focus on life insurance companies for the insurer side of the discussion.

Here’s a look at some of the core differences between banks and insurance companies, including how they back customer dollars with financial reserves of their own.

Millions of Americans depend on annuities for retirement and for tax-advantaged accumulation. But if you are considering one, you might be unsure about which questions to ask about an annuity. Beyond that, you also want to be able to judge whether a specific annuity product is right for you.

Essentially, an annuity is a contract between you and a life insurance company. The contract provides tax-deferred growth for your money and different choices for your payout options: a lump-sum payment, income for life, or income for a set period.

Most annuities are started with money from retirement accounts -- 401(k) plans, IRAs, or Roth accounts. But you can also purchase an annuity with personal savings or proceeds from a transaction like a home sale. The money you use to begin your annuity contract will have its own tax implications, so keep that in mind as you consider your options.

Determining what annuity is right for you is up there with other important retirement decisions. After all, these are your life savings.

You want to be sure that you bought the right annuity contract -- if indeed it does make sense for you -- and that its unique features and benefits solve for the existing gaps in your portfolio.

Here are some questions to ask about annuity options that can help you narrow down your choices to the right fit.

Arguably the greatest benefit that an annuity can bring to a portfolio is protection. But depending on the contract you get, the annuity may provide enhanced protection for you in different qualifying circumstances.

These enhanced benefits can protect you against a number of financial risks. Those risks can range from confined care in a nursing home facility to home-based care and death benefit protection.

Some contracts have these as built-in features. In other cases, most enhanced benefits come as insurance contract add-ons, or annuity riders. Many of these enhanced benefit riders come at an additional charge.

You should be sure of what that enhanced annuity benefit specifically gives you, what it doesn't give you, how much it costs, and whether it truly makes sense for your situation before confirming any add-ons to your contract.

Even so, enhanced benefits can be a great supplement for the right financial situations. Here's how different enhanced benefits for annuities might help your retirement security in various situations.

Many Americans worry about whether they have saved enough to have a comfortable retirement. But, surprisingly, most haven't actually crunched the numbers to estimate how much money they will need in retirement in order to live comfortably.

According to a survey by the Employee Benefit Research Institute, just 42% of Americans have attempted to calculate how much money they might need for retirement. In other words, almost 60% haven't estimated how income they might require.

A Gap Between Retirement Confidence and Readiness?

In the survey, just 3 in 10 people said they have tried to estimate how much they might pay in healthcare expenses during retirement. These are sobering findings, considering that many people report they are confident in knowing how much money they need to live comfortably in retirement.

Six in 10 (67%) said they were "somewhat confident" about their understanding of their income needs. As for higher levels of assurance, two in 10 (23%) said they were "very confident."

However, as the Employee Benefit Research Institute's other findings show, the vast majority of retirement savers haven't actually calculated how much money they might actually need. This could set retirement savers up for a future of unnecessary stress – and even reduced lifestyles.