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Retirement Planning Blog

on 13 October, 2020

how can retirement withdrawals timing affect income

Sequence risk is the risk that you will take a big loss early on in the life of an investment portfolio. It's already bad when you have investment losses at the early start of your retirement. It's equally bad when you take losses just before you retire.

But if you are retired and taking withdrawals when the portfolio losses happen, the impact of those losses is compounded. By taking a withdrawal, you are already drawing down the balance of money in your portfolio from what it was prior.

If your portfolio also sustains a loss at the same time, the effects of both will come together to affect you. You will not only have to eat the loss, but you will further deplete the balance in your portfolio. So the timing of your withdrawals matters, especially in relation to how your portfolio performs.

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on 25 September, 2020

ways to increase your social security benefits

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.

Everyone wants a comfortable retirement to relax during their golden years. But a recent report by Barron's revealed that most of the retirees are stressed about their income in retirement.

In our country, Social Security payments are one of the major sources of income for most retirees. In 2020, you can receive up to $3,790 per month as your Social Security benefits. But the fact is, many people don’t receive that much. According to the Social Security Administration, the average check is around $1,390.12.

So, what can you do to maximize your Social Security payments?

Here are some of the best possible tips to increase your Social Security benefits so that you can relax during your golden years. Let’s start.

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in Annuity
on 09 October, 2020

how much income will an annuity provide

How much income will your annuity contract pay you? The answer depends on what age you start collecting income from your annuity.

If you start income at age 70-75, you will receive higher payouts. If you begin your annuity income in your mid-50s, it will be less than what you would receive in your 60s or later.

Annuities therefore resemble Social Security in that their payouts will increase the longer you wait to take them. But annuities with qualified money, or pre-tax dollars, in them have required minimum distributions that must be taken by age 72.

Why is this? Since the insurance company is on the hook for paying you guaranteed income for a certain period or life, it manages its risk based on the age of when you start that guaranteed income stream.

The insurance company also builds estimates of statistically how long it believes you will live into every single one of its income payments. These estimates are based on life expectancy and mortality data.

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in Annuity
on 17 September, 2020

what should i do with my annuity at maturity

From variable to fixed annuities, millions of people buy annuity contracts for many reasons. These purposes range from lifetime income to asset protection and tax-advantaged growth. As a contract, each annuity has a different time period that it takes to mature.

Depending on what you buy, your annuity may have a maturity period that goes only for a few years. If your annuity has more benefits or the benefits are guaranteed for a longer time, its maturity period can be as long as 15 years.

But what about when you are on the backend? What should you do with your annuity at maturity? Annuity owners have a variety of options when they reach that point.

Depending on your age, financial situation, and the goals that you have for your annuity money, you can do the following when the contract ends:

  • Keep your money in the contract and withdraw it at strategic times (or a certain withdrawal schedule),
  • Cash it out in a lump-sum balance,
  • Renew your contract,
  • Annuitize your contract into an irreversible income stream, or
  • Transfer the money into a new annuity contract.

Let's go into more details about what you can do when your annuity contract matures.

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on 05 October, 2020

what retirement expenses are you most likely to face

When planning for retirement income, the devil is in the details. Once you are retired, you want to be sure that you have more than enough income for your lifestyle expectations.

One way to get a good grip on this is by mapping and estimating what you expect your future spending to be.

This can give you a high-level perspective of how much income you will need for your idea of a comfortable retirement. Everyone has a different situation. Because of that, the amount of annual income that you will need will likely differ from others.

That being said, you can still have more clarity in your income planning and decisions by seeing what others’ financial experiences are in retirement. One helpful metric in this regard is understanding which expenses can dominate your retirement spending.

Here are four expenses that can take a bundle out of your retirement money if you don’t plan for them. Having strategies for these costs, and your overall expenses, can go a long way toward keeping your retirement goals on track.

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in Annuity
on 15 September, 2020

how does an index annuity differ from a fixed annuity

There are many different types of annuities available in the financial marketplace today. Two of the more popular types of annuities are fixed annuities and indexed annuities. Indexed annuities are also known as fixed index annuities nowadays.

Both kinds of annuities can have their place in a retirement financial plan. But there are key differences between a fixed and an indexed annuity that people should understand in order to make an informed decision when choosing which type to use.

Before we delve into the differences between fixed and indexed annuities, it’s good to know the ways in which they are similar.

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in Annuity
on 28 September, 2020

what are the risks of annuities

Annuities can help strengthen your overall retirement strategy with their unique guarantees.

From lifetime income to growth or protection, their contractual guarantees can help in many areas. But just like with any other instrument, annuities also have risks of their own.

What are these risks of annuities? What should you keep in mind as you consider an annuity contract for your retirement?

Here's a quick rundown of different risks of annuities and some other information that can help with your decision-making.

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on 09 September, 2020

post retirement planning does not stop

Financial planning for retirement, or "post-retirement planning," doesn't end once you retire. Even if you have accumulated enough money for a secure retirement, your plan will require ongoing checkups to confirm that everything is going smoothly.

You will have to continue to make changes and adjust your plan as time goes on. Retirement can last as long as one-third of someone's lifetime, as medicine, wellness, and technology have seen tremendous progress in recent decades.

In other words, having an ongoing plan for this phase of life is quite crucial. You may also experience more changes in retirement than you have previously, as your abilities and health evolve over time.

Your retirement planning strategies will need to be reviewed and updated on an ongoing basis. Conducting annual reviews of your financial plan, at a minimum, and making changes as necessary is a solid course of action. 

Here are some 'moving targets' that are likely to change in your retirement years.

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in Annuity
on 23 September, 2020

annuitization should i annuitize my annuity

Annuities are becoming an increasingly popular retirement savings vehicle for people in the U.S. Many folks are seeking alternative instruments that can guarantee them a stream of income for life.

With corporate pensions gradually disappearing from the financial marketplace, annuities have emerged as a viable substitute for these bygone streams of income.

Most annuity contracts today come with a variety of benefits and features that were unheard of a generation ago. Living and death benefit riders, guaranteed income riders, and disability and long-term care riders are now commonly available in many annuity products.

However, in order to take advantage of many of these benefits, the annuitant will have to give the insurance company permission to annuitize their contract.

Annuitization is a one-time, irreversible event that ends the accumulation phase of the annuity, where money was being put into the contract or a lump sum of money was left to grow on its own. Annuitization marks the start of the payout phase of the annuity.

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on 02 September, 2020

how to maximize retirement income img

Paying the bills after you retire is quite different from during your career. After all, the income you receive will come from a variety of sources, as opposed as to earned income or a bimonthly paycheck.

Social Security, your own investment portfolio, a pension (if you are lucky), and maybe even part-time work can be sources of income that help pay for your retirement lifestyle.

The trick is therefore to maximize the total amount of income that you receive. But many Americans worry that they won’t have enough income during retirement to meet their needs.

The Alliance for Lifetime Income conducted a survey of 3,119 adults regarding their financial readiness for retirement. Eight in 10 (80%) of them expressed at least some level of concern that they won’t have enough income after they retire.

The survey revealed that 18% of the respondents were extremely worried about this. Meanwhile, 26% were “moderately” concerned and 36% were “somewhat” concerned about this issue.

Here are six key steps you can take now to avoid these concerns and maximize your income. You don’t have to wait until you are retired to start planning out the rest of your life.

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