Retirement Planning Blog

Different Types of Bonds Explained: Municipal and Corporate Bonds

Bonds and other fixed-interest assets play a valuable role in modern retirement planning. They help balance market risk, create retirement income streams, and keep overall volatility in a financial plan at bay.

Bonds assure that you will be paid interest during their term. Then once the term is over, they repay the original investment, or principal, back to the investor. The ability of a bond to meet these obligations is backed by the financial strength of the bond issuer.  

In this article, we will go over different types of bonds offered by a municipality or a corporation. Before going into further detail about different kinds of bonds, here is a quick sum-up of a bond’s basic features.

Read More

Different Types of Bonds Explained: Government Bonds

different-types-of-bonds-explained

Bonds are a core staple of many financial strategies today. They are among the different types of fixed-interest instruments that can be used for generating retirement income, balancing out risks held by other assets, and smoothing out volatility in general.

With a bond, someone has a guarantee that they will be paid interest during its term. Once the bond matures, the principal is paid back to the bondholder. The ability to meet these obligations is backed by the financial strength of the issuer of the bond.

For this reason, government bonds are generally considered to be a type of bond with lower risk than others. After all, the government has the authority to raise taxes and print money to meet its obligations.

There are different types of bonds, and they vary in a number of ways: length of term, interest rates, and the type of issuer, to name a few. It’s helpful to know at a high level about these different bond types and how they might play out.

Here is a breakdown of the different types of bonds and what they involve. In this article, we will go over various types of government bonds available.

Read More

Questions to Ask Your Financial Advisor About Retirement

As you near retirement, it’s important to talk to your financial advisor about retirement. After all, you need to know that they can competently guide you on your retirement goals, build a plan that lets you maintain your preferred lifestyle, and help your money last as long as possible.

This begins with having a conversation around your unique situation, and it pays off to ask your advisor some questions that help put everything in context. Here is a high-level list of questions to ask your financial advisor about retirement:

  • Tell me about what you do to help people with retirement planning.
  • How long have you worked as a retirement financial advisor?
  • Why do you do what you do, and what are you most passionate about in this field?
  • When do you think that I can retire, and what are my options?
  • Do I have enough money to retire?
  • What should my retirement goals be?
  • What do you think of my current financial plan for retirement?
  • How much can I spend in retirement? Will I be able to keep up my lifestyle?
  • How will I fund my lifestyle once I have retired?
  • What will taxes be like for me in retirement?
  • How long will my money last before I run out of income?
  • What can you do to help me be ready for major financial risks in retirement?
  • I have a pension. What could happen if something happened to my old employer or if my pension benefits were cut?
  • When should I take Social Security benefits?
  • What should I know and do about Medicare and health coverage in general?
  • What can healthcare cost me throughout my retirement years?
  • What do you do to help my retirement plan keep up with inflation?
  • What can happen if I retire in a recession or market crash? How do we plan for that?
  • What are some other ‘bad situations’ to keep in mind, and how can you help you plan for those scenarios?
  • Say I choose to delay retirement or keep working. What are the advantages and disadvantages of doing that?
  • What can we do to ensure that my spouse or I have sufficient financial resources in place should one of us pass away?
  • How much could long-term care cost us in retirement? How likely are we to need some sort of long-term care support?
  • What sort of life changes have you seen other people experience in retirement?
  • What do you think of my estate plan?
  • What else can I do to prepare for retirement?

Read More

Medicare 101 – Understanding the Basics

If you are 65 years old or older, then you are eligible to enroll in Medicare. Medicare is the federally subsidized healthcare program for senior citizens. It’s run by the Centers for Medicare and Medicaid Services (CMS).

Funding for this program comes from three separate sources. One is the taxes you pay for Social Security and Medicare. Another is the premiums that you pay for your Medicare coverage. The third part of the funding comes directly from the federal government.

Here’s a quick rundown of the basics of Medicare. Call it “Medicare 101” — the essentials of what you need to know about this federal program for your retirement or other financial circumstances.

Read More

Is a Survivor Annuity Death Benefit Taxable?

You may have heard of annuities and how they are the only thing besides Social Security that can pay you guaranteed lifetime income. But what happens to an annuity when someone passes away? The tax rules surrounding survivor or inherited annuities are already complex, but the SECURE Act, a federal law passed in 2019, has made them even more complicated.

The proceeds in a survivor annuity are generally taxable when the heirs receive them. If the recipient isn’t a spouse of the original annuity owner who passed, that recipient will pay taxes on the money they receive from the annuity.

If the surviving recipient is a spouse, then there are some steps that they can take to defer the taxes on the annuity proceeds. How much of the proceeds are taxable will depend on what type of account the annuity was housed in.

Most annuities are bought with pre-tax qualified money, meaning the premiums often come from a traditional IRA, a 401(k) plan, or another qualified plan. Since most annuities are bought with this pre-tax money, we will talk about how the SECURE Act can affect an heir’s tax burden now.

Read More

Capital Preservation and Why It Matters

capital-preservation

You may have heard of capital preservation strategies at some point or another when planning for retirement. But what is capital preservation exactly? What could it mean for your overall financial plan?  

Here’s a quick look at what capital preservation involves – and why it becomes more important as people move into retirement and beyond.

What Is Capital Preservation?

In a nutshell, capital preservation is a kind of financial strategy that aims to minimize the risk of loss in your investments. It emphasizes the protection of your money, or “principal protection,” as it’s known in more formal terms.  

A well-known rule of thumb in finance is how there is an inverse relationship between risk and reward – or how much risk you take on in order for your money to have more growth potential.

Since capital preservation is focused on protecting your money, this brings up certain questions. By adopting a capital preservation strategy, does this mean that your portfolio won’t grow any more over time?

Thankfully, the answer to that is no. That said, the rate of growth will vary depending on what makes sense for your risk tolerance, personal situation, and timeline until retirement.

Read More

A Guide to Different Types of Trusts and Understanding Them

different types of trust

If you are at or near retirement, then you probably have thought somewhat about your estate plan. But what about different types of trusts, or other estate planning strategies for that matter, that you might use as part of your plan?

It’s natural to aim for as efficient and tax-advantaged of a wealth transfer to your loved ones as is possible. Of course, you may already have a will and even some powers of attorney. However, there is still the probate process to contend with, and some type of trust is one way to help your assets avoid this.

A trust can allow your assets to be passed directly to your heirs without going through the publicity and expense of probate. It can accomplish many other legal purposes as well. Note that this doesn’t mean that a trust necessarily is the best option for your situation.

You will want to review different estate planning options and types of trust with experienced estate planning counsel and other experts in this area. They can help guide you on the legal implications of various options available, each one’s pros and cons, and what might make sense for your situation and goals.

Read More

What Is a Wealth Transfer?

What is a Wealth Transfer?

When thinking about retirement, it’s common to ponder about how we will want to leave something for loved ones once we are no longer here. Of course, there are many aspects to this issue: lowering taxes for heirs to pay, protecting assets from legal risk, keeping family conflict to a nil, and more.

In estate planning, this is known as planning for a wealth transfer. If you haven’t heard of it before, wealth transfer simply refers to the process of passing wealth from someone who has died over to their beneficiaries.

Effective wealth transfer can be done through a variety of strategies, including annuity contracts or life insurance policies, wills, trusts, and gifts of cash or tangible assets prior to death. The typical goals for wealth transfer strategies are to maximize the estate assets that are left behind as a legacy to heirs and to make the transfer as tax-efficient as possible.

Read More

Social Security Claiming Strategies

Are you trying to decide when to start drawing on your Social Security benefits? Knowing what your options are before you make an irreversible decision can really pay off.

It may be surprising to see the number of ways that you can increase your benefits, regardless of whether you take them early, on time, or late. There are several strategies that can provide you with a higher benefit, both now and later, if you play your cards right.

Read on to find out how you can get the most out of your benefits once you are ready to do something with them.

Read More

Social Security Will Get a Boost of 5.9% for 2022

What sort of increase in Social Security benefits will benefits recipients see for 2022? The official word is out, and there will be a record-breaking 5.9% cost of living adjustment (COLA) to benefits for next year, according to the Social Security Administration.

In 2021, Social Security had a 1.3% COLA to benefits, which was slightly smaller than the 1.6% increase of 2020.

But in 2022, Social Security recipients will get a boost in benefit payments that is over four times the average COLA from these past two years. This coming COLA of 5.9% is also the largest increase in almost 40 years.

This has been done in an effort to keep up with the runaway inflation that has gripped America. The consumer price index shows that the price of retail goods has risen by an astounding 5.4% in 2021, at the time of this writing.

The pandemic has also disrupted much of the United States’ economic infrastructure and caused job losses. Retirees who depended on part-time work and other income sources were hit, so the COLA adjustment will help offset the decline in their incomes.

Read More

Next Steps to Consider

  • Start a Conversation About Your Retirement What-Ifs

    retirement planning services next steps

    Start a Conversation About Your Retirement What-Ifs

    Already working with someone or thinking about getting help? Ask us about what is on your mind. Learn More

  • What Independent Guidance
    Does for You

    independent vs captive advice

    What Independent Guidance
    Does for You

    See how the crucial differences between independent and captive financial professionals add up. Learn More

  • Stories from Others
    Just Like You

    safe money working with us

    Stories from Others
    Just Like You

    Hear from others who had financial challenges, were looking for answers, and how we helped them find solutions. Learn More

Proud Member