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Retirement Planning Blog

on 14 August, 2017

protect wealth academy

Brent Meyer, President and Founder of SafeMoney.com, recently sat down with Protect Wealth Academy (PWA). PWA is an organization which teaches investors how to protect their assets, minimize taxes, and create wealth. During the conversation, they talked about retirement planning, why it's critical to plan for a long retirement lifespan, as well as growth, income, and protection strategies using guaranteed insurance contracts.

You can read the interview in full here.

in Annuity
on 10 August, 2017

annuity options explained master

Are you considering different annuity options for your retirement portfolio? An annuity is a type of insurance product, purchased from a life insurance company and/or an annuity company. Annuities are popular retirement options due to the safety they offer for your money, the potential for tax-deferred growth, and their reliability for giving permanent, lifelong income.

That being said, sometimes it can be confusing when you try to make sense of different annuity types, contract features, benefits, and downsides. Since you would commit a sum of your money to an annuity contract for a period of time, it’s prudent to do research and develop an understanding of your annuity options before committing to any financial decision. Here is a short guide to help you get started on understanding the different annuity options.

on 09 August, 2017

 

longevity retirement planning

A number of recent studies indicate that today’s Americans have a higher life expectancy compared to previous generations. The Social Security Administration suggests that after reaching the standard age of retirement, 65, U.S. men and women may anticipate living at least a couple of decades more.            

There is no denying the fact that a longer life is a reason to celebrate. However, this increased longevity certainly adds new challenges in the process of retirement planning. While living a longer life is a worthy milestone for most, whether it will be enjoyable is largely based on the question of whether its quality is high. So, it’s prudent to pay careful attention to longevity risk in retirement planning – that way you are well-prepared for the uncertainty of potentially spending decades in your post-work life stage.

in Annuity
on 08 August, 2017

Is an Annuity Death Benefit Taxable

The proceeds from an annuity death benefit are taxable when they are received by the beneficiary. In the case where the recipient is a surviving spouse, he or she can initiate certain measures to defer the payment or taxes on the amount received. In other instances where the recipient is not the spouse, the recipient will have to pay taxes on the money he or she receives from the annuity. Depending on who the beneficiary is, these funds may be subject to estate taxes as well.  

Before deep diving into this, it may be useful to have a clear understanding of what an annuity is. A simple way to think of an annuity is to refer to it as an insurance product that offers a certain income benefit, backed by contractual guarantees. It can be utilized as a component of a retirement benefit plan. As an individual, you can purchase the annuity by paying a lump-sum premium payment or by making several premium payments over an extended span of time. The annuity premiums are allocated into the annuity contract, and the annuity owner receives benefits as the money grows over time. 

What is an Annuity Death Benefit? 

When the holder of an annuity contract passes away, the money and the death benefit available from the annuity come into play. Many annuity products come with the provision for the annuity holder to include a death benefit for a beneficiary, which they choose while setting up the contract. The policyholder may choose his or her child, spouse, or any other individual as the beneficiary. In some cases, depending on the type of payout option the policyholder chooses, the insurance company may be the beneficiary. It would receive the balance of the money in the contract when the policyholder passes away. This payout option is called “life-only,” and depending on your financial picture it may or may not make sense for your personal situation. You can ask your insurance or financial professional for more details.

in Annuity
on 07 August, 2017

 qualified annuities vs non qualified annuities

While researching your retirement income options, you have probably come across the concept of annuities. Chances are the general idea of annuities is pretty straightforward. But once you start digging deeper and trying to find your way around the different annuity terms and concepts, things may start looking a lot more complex.

If purchasing annuities is on your list of options, then one of the first decisions that you will need to make is whether to opt for a qualified or a non-qualified annuity. One piece of good news is that these terms apply to all of the different types of annuities, including fixed, fixed index, variable, and so on. The primary difference between the two is the type of money you may put in them – after-tax dollars or income that you haven’t yet paid taxes on, pre-tax dollars.

While this is the essential difference between qualified and non-qualified annuities, knowing specifics behind each type can help with making a well-informed decision. So, without further ado, let’s get into the basics of a qualified annuity versus a non-qualified annuity.

in Annuity
on 04 August, 2017

 

what is a market value adjusted annuity

Have you ever heard of a market value adjusted annuity? If you are planning for your retirement income, then you may be considering an annuity as one of your options. Of course, there is a number of possibilities when it comes to purchasing annuities. So, it is important to understand clearly what annuities are so you can make sound financial decisions.

In cases when you are looking for tax deferral and an instrument which can offer safe growth and reliable future income, a fixed annuity can be the perfect option. These typically entail an average contract of seven to twelve years and guarantee a minimum annual interest rate. While the duration of the contract and interest rates are important to consider, you should also take into account whether the annuity is subject to a Market Value Adjustment (MVA). It's common for an MVA to be attached to fixed annuities, and as you probably noticed, it's these contracts with an MVA that are called "market value adjusted annuities."

Before making a decision, it's important to know what a market value adjusted annuity is. So, let's get into it.

on 03 August, 2017

 thrift savings plan distribution options basics img

Editor's Note: This article is not intended to be and should not be used for tax advice. We have published this to be a source of information and for educational purposes only. Please consult with a qualified tax planning professional for guidance with your personal circumstances.

Update: In November 2017, Congress passed the TSP Modernization Act, which gives Federal Workers more flexibility with their plan withdrawal options. While the legislation has been passed, the Federal Retirement Thrift Investment Board is in the midsts of adapting new policies and procedures into its publications and websites. You can read more about that here. Some of the information below may be subject to change with these new procedures and policies.

As part of the federal civil service or the uniformed services, you may participate in the Thrift Savings Plan (or TSP). According to the Thrift Savings Fund, there were 4.8 million plan participants and approximately $458 billion in plan assets under management, as of December 2015. But while millions of federal employees rely on the plan, many are confused about their TSP distribution options for retirement.

In retirement, you will need access to your money for income. However, it’s prudent to be aware of all implications before you start taking money from your account. The Thrift Savings Plan has a unique framework for withdrawals. Making a withdrawal before knowing everything involved can greatly affect your future money access options.

Here are some basics on different distribution options you may have with the Thrift Savings Plan.

on 01 August, 2017

is the market set to correct

Update: Just moments ago, the Dow Jones Industrial Average hit 22,000 points -- a 20% increase from election season as well as an all-time high! The rise was attributable to strong earnings by Apple and other companies. Read on for some insights and opinions from experts and commentators about what may be ahead.

While the U.S. stock market hits red-hot highs, many investors wonder if a market correction may be ahead. With reports of upbeat corporate earnings in, the Dow Jones reached 21,982 points on Tuesday, at one point reaching an intra-day all-time high of 21,990.96 points. As of last Friday, 73% of the S&P 500 companies posting earnings reports had sales figures above estimates, as reported by FactSet.

Likewise, other indices saw growth. The S&P 500 attained 2,476, just a few points shy of its record-setting high at 2,484.04 in the week prior. And the Nasdaq rose to 6,375, putting on the pathway to setting a new record of its own.

While nobody knows what the future holds, economists and stock market experts say there is a growing possibility the market will end its current upward trajectory and correct itself. And the issue? Potentially overinflated stock valuations.

“There are many indicators showing that equities have reached a higher valuation than is consistent with changes in either underlying economic growth or revenue fundamentals,” commented Aaron Klein, a fellow in Economic Studies and Policy Director for the Center on Regulation and Markets at the Brookings Institution, to NBC News.  

With stocks holding steady against political dysfunction in Washington, D.C. – not to mention as-yet-to-be-delivered political pledges for healthcare and tax reform – it’s difficult to forecast where market trends may head. But if you’re in your fifties or older, being prepared to weather the effects of market volatility on retirement money is critical.

Here’s a quick look at some insights from various commentators and experts – and why you and other retirement investors may want to consider wealth preservation strategies while the value of your retirement assets is healthy and strong.

on 31 July, 2017

retirement income planning tips for small business owners

Retirement income planning already is difficult. But for small business owners, it poses even more challenges. Despite being used to the hustle-and-bustle of day-to-day tasks and operations, even businesspersons have to slow down at some point.  

Eventually entrepreneurs get to an age when they can’t run their companies like they did before. As a company owner, you likely will face this someday. You may have to reduce your involvement, or it may even be time for an exit. If that’s in the cards, you might have to sell your business or let someone else in the family take it over.

In any case, there’s retirement at the end, and moving into retirement means you have to make plans to safeguard your financial future. In practice, this means being able to pay the bills today while saving enough to live off tomorrow (when your business can be no longer a source of personal income for you – or less income).

Retirement income planning, however, is not a linear thing. It entails holistically evaluating your lifestyle alongside your income and making projections for your life after retirement; then putting in place protections to ensure you can enjoy a lifestyle that’s right for you as long as you live. 

If you are confused about what you should do to retire happy and comfortably, you are not the only one. Many small business owners – not to mention several Americans in general – are in the same boat as you. Read on for some helpful tips to assist you with enjoying more lifelong retirement income certainty.

on 31 July, 2017

biggest retirement income planning mistakes to avoid

Sure, life happens and we make mistakes. We learn and try not to repeat them. But in retirement income planning, the margin for error is smaller. Just one or a few mistakes could derail your goals or even put your retirement on the rocks.  

If you are someone who plans to retire within the next 10 years or sooner, now is the perfect time to start putting your financial house in order. However, as you devote attention to daily tasks in the workplace and your household, it can be hard to make your post-work future a priority. But retirement can come sooner than you think, and it’s prudent to start preparations before your time has passed.

So, meet with your financial professional to discuss your goals, review the status of your retirement assets, and evaluate your financial picture. And as you near your retirement, it’s important to refrain from critical income planning mistakes. From bad saving and spending habits to easy-to-overlook risks and planning pitfalls, here are six critical retirement income planning mistakes you should avoid.

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