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Retirement Planning Blog

on 24 February, 2017

How Does Longevity Risk Affect Retirement Planning Intro Image

It’s been said that the 70s are the new 50s. But if a new research study is any indicator, U.S. life expectancy may be set to grow even more. With current American life expectancy sitting at 78.8 years, researchers at Imperial College and the World Health Organization project that longer lifespans could be in store.

According to the researchers’ findings, U.S. life expectancy would lengthen to 83.3 years for women and to 79.5 years for men. The predictions jar against data published in December 2016 in a longevity report from the Center for Disease Control, which found U.S. life expectancy dropped in 2015 – the first time in 20 years.

Now, why does this matter? Longevity risk, or the possibility of running out of money in retirement. As life expectancy rises, the amount of post-work years for which you will need money may increase. According to the Social Security Administration, 25% of 65-year-old Americans today will live past age 90, and 10% of 65-year-old Americans will exceed 95 years of age. So, it’s important than ever to plan for old age in your financial future.

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on 03 November, 2016

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401k vs iul img

In the last decade, we had two major market crashes. Understandably, many working professionals worry about the long-term safety of their money. They may have retirement saving plans such as 401(k) plans at their disposal. But with its contribution limits, costly tax implications, and investment options’ exposure to market risk, the 401(k) can be unseemly for conservative-minded savers.

One trend we have seen is presentation of “IUL,” or indexed universal life insurance, as an alternative to the 401(k). To be clear, IUL isn’t an investment strategy, it is a type of permanent life insurance. So be wary of discussions in which IUL is treated as an investment vehicle, especially relative to a 401(k) plan.

With that said, IUL may be attractive to retirement savers, including younger professionals, on account of its more tax-efficient advantages over the 401(k), among other benefits. Some advantages include protection against market downfalls, more flexibility with contributions and money access, and better tax treatment for future income. Keep in mind, though – just like with any financial product, suitability will always depend on individual client needs, circumstances, and objectives.

Here’s a quick overview of indexed universal life insurance, and how it can differ from a 401(k) as a wealth-accumulating option.

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on 16 February, 2017

Diversification asset allocation blog post img 1

Chances are you know the concept of asset allocation. As Forbes contributor Mitch Tuchman puts it, asset allocation is the “collection of investments you own,” depending on your risk tolerance and your desire for potential investment returns.

In the investing world, it is a strategy of apportioning assets to achieve a strategic balance of potential risks and returns that is right for an individual investor.

What Does That Have to Do with Retirement Planning?

That’s all good and fun, you may say. But what does that have to do with retirement planning?

Well, from a planning standpoint, plenty. It is the same question of deciding how to allocate a retirement portfolio.

But in this case, decisions revolve around striking a balance between managing potential risks and achieving desired retirement outcomes, like income certainty, wealth protection, or other goals. In financial lexicon, this strategy is known as “diversification.”

When it comes to retirement planning, diversification is arguably an essential part of a successful retirement strategy. But why?

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in Annuity
on 20 October, 2016

fixed index annuities vs cds multi year guarantee annuities

As many of us know, October is the renewal month for many bank certificates of deposit. Some common selling points for bank CDs are low risk and steady earning potential. But today’s low interest rate environment throws some real curveballs for retirement savers.

In fact, CD rates have remained low for some time now. And what interest rates might be in the future still remains unclear. With the diminished prospects for wealth accumulation, many people seek an alternative to bank CDs and their low yields.

When used properly, annuities are often tapped as transfer-of-risk strategies. Many Americans rely upon them for lifelong income security, dependable asset protection, or other financial assurances. Nevertheless, annuities of the fixed variety – particularly fixed index annuities (FIAs) and multi-year guarantee annuities (MYGAs) – can also offer value as tax-efficient savings vehicles.

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in 401(k)
on 11 January, 2017

what are my 401k rollover options intro img

Retirement planning involves many decisions. For many retirement savers, an important question is what to do with their 401(k) retirement account. As they near retirement, investors must decide whether to leave the money within their account or choose another option, such as an IRA rollover.

The good news is Americans typically have six options for moving 401(k) assets around or leaving them alone. But not all of these possibilities may be appropriate, depending on the merits and downsides of a particular rollover option for your personal situation.

It’s also not unusual for an investor to have the lion’s share, or even a large bulk, of their retirement assets in a 401(k) plan account. So, whatever they do with these retirement assets, it’s a decision that will have tremendous implications for the future.

If you are mulling over 401(k) rollover options, be sure whoever you work with understands all the ins-and-outs of different rollover outcomes. Your financial professional should clearly explain the positives, negatives, and details of each rollover option to you. They should go over how it may help or hurt your personal situation.

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on 12 October, 2016

Blog common financial risks in retirement

When it comes to lifestyle, it can be said that we have “two” lives – or rather two different life phases. The first phase is the working years, or when we work for a living. The second phase is retirement, or when we can choose to stop working, should we desire to, and do what we want. From volunteering or spending time with family to social gatherings, vacation getaways, gourmet dining, or personal luxuries, there’s no shortage of ways we can enjoy our time in retirement.

However, many Americans who are retired or nearing retirement face unique barriers – financial challenges which can keep them from enjoying the lifestyle they worked hard for. Preparation is key, so the importance of planning ahead can’t be overemphasized. Here’s a quick look at some common financial challenges to account for.

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on 23 November, 2016

5 ways to boost your financial wellness during the holiday season

The holidays offer a great opportunity for us to reconnect with loved ones, relatives, and friends. From Thanksgiving dinners and seasonal gift shopping to holiday get-togethers and family gatherings, these times are truly special. But apart from the joy, merriment, good cheer, and great company, many Americans find this period financially stressful.

Discretionary spending, in the form of gift buying and other holiday shopping, ups the pressure on household budgets. And for a large proportion of retired and working Americans, the coming year-end may increase the brunt of existing financial pressures and obligations. Having sufficient income and healthy cash-flow is a concern for all households, especially people in their retirement years. The holidays are an ideal time-frame for financial review, but it can be intimidating to get our house in order, as personal finances are tedious, detailed, and, for many, overwhelming.

However, a secure financial life is well within reach, and it involves taking the right steps. If you are retired or approaching your golden years, read on for four quick tips to boost your financial wellness this holiday season.

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on 07 October, 2016

slider safe money retirement planning

Chances are you have heard of “safe money” at some point. From financial talk shows and radio commercials to television broadcasts and retirement seminars, it’s a concept that is all over the place. “Safe money” is commonly defined as the money you can’t afford to lose.

But for those of us approaching retirement, what does that mean in real-world terms? Many advisors explain safe money in investment terms. For example, it could mean discussion of “safe money investments,” or vehicles with less exposure to market volatility.

A downside with this approach is its investment planning focus. We have discussed how retirement planning should emphasize monthly income over asset values in its goal-setting. After all, retirement is a life stage in which we draw on a nest egg and other income sources for income – wealth we have accumulated over many years for this timespan. So, when discussing “safe money” in retirement, we shouldn’t frame it in terms of only the possibility of money losing value.

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in Annuity
on 16 November, 2016

using annuities for income or growth blog image

After years of hard work, all of us want a comfortable retirement. But it may be unclear as to what we need to achieve this. What steps are necessary for a worry-free financial life – the ability to spend with confidence?

Part of it means a transition in thinking. In real-world terms, it encompasses a shift in focus from asset values to monthly income. We want to be sure we have sufficient cash-flow for funding a retirement lifestyle. On the other hand, we should also be attentive to the matter of preserving wealth. With all those savings accumulated over many years, our money will now need to last for the rest of our lifetime.

However, this doesn’t mean that savings growth has to be put on the back-burner. For Americans looking for “safe money financial” vehicles, annuities may be attractive. In particular, fixed-type annuities can offer guaranteed lifelong income, tax-deferred accumulation, and growth via guaranteed interest rates or rising index values.

If you are investigating fixed annuities or fixed index annuities for personal growth or income goals, here’s a quick look at a few variables to consider.

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in Annuity
on 28 September, 2016

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 should an annuity be part of your retirement income strategy pic

Record numbers of Americans are retiring. According to the U.S. Census Bureau, there will be over 80 million retirees by 2040. Life expectancies are on the rise – people are living longer. And a large proportion of Americans worry about market risk. They get anxious over how the stock market performs or fear potential losses.

Because of these and other reasons, some Americans have been adopting annuities as transfer-of-risk strategies. They want the guarantees associated with these contracts – particularly the assurance of lifelong income, for many annuity buyers. For those of us worried about outliving our money or other income-related risks in retirement, this raises an important question: “Should an annuity be part of my income strategy?”

It’s indisputable that many Americans desire guarantees in their financial plan, and this number continues to grow. But that doesn’t mean annuities are right for everybody. If you are wondering whether an annuity is for you, here’s a quick look at some situations you may want to consider.

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