Retirement Planning Blog

Understanding Different Investment Risks in Retirement

Understanding Different Investment Risks in Retirement

When you think of the word “risk,” you may get a mental picture of such activities as skydiving, race car driving, rodeos, or other similar activities that have uncertain outcomes. For investments, the word “risk” may make you think of losing your life savings on a high-risk venture such as an oil and gas drilling partnership.

But the reality is that there are many different types of investment risk. All investments carry their own types of risk. It’s important to note that no investment exists without any type of risk. Read More

401k vs. IUL

401k vs. IUL

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. Read More

How You Can Work to Keep Your Retirement Date on Track

How You Can Work to Keep Your Retirement Date on Track

Everyone faces challenges to some extent when moving into retirement. Even those with the best-laid plans can still have some financial hiccups. And with everything that has happened in recent years, millions of Americans are wondering what it all might mean for their financial futures.

Take, for example, a 2020 workplace wellness survey put out by the Employee Benefit Research Institute. In the study, 1,028 workers of ages 21-64 said that they worried about their finances and retirement savings.

Two-thirds of employees felt stressed when they thought about their financial future. Almost half were concerned with their household financial well-being, with saving for retirement and having funds for an emergency being the top stressors. Read More

Social Security Will Get a COLA Boost of 1.3% for 2021

Social Security Will Get a COLA Boost of 1.3% for 2021

Starting on January 1, 2021, Social Security beneficiaries will see a boost in their benefits. Over 70 million recipients of Social Security and Supplemental Security income will receive a COLA bump of 1.3% in their monthly payouts.

This increase is lower than the increase of 1.6% for 2020 by 0.3%. It’s also 0.1% lower than the average COLA of 1.4% that recipients have received over the last decade.

The average Social Security recipient will see a monthly bump-up of about $20 overall. In other words, that will be an increase from an average benefit of $1,523 in 2020 to $1,543 in 2021. Read More

Fixed Annuity vs. CD — How Do They Compare?

Fixed Annuity vs. CD -- How Do They Compare?

If you are looking for a decent rate for your money, your local bank might not offer much to write home about. We already are in a low-interest rate environment, and the Fed doesn’t appear to be ready to raise rates anytime soon.

This is, of course, one of the effects of recent public health and economic conditions, which also might not be winding down anytime soon.

When it comes to earning interest, one option that banks offer is a certificate of deposit. Read More

How Have Investors Responded to the Covid-19 Pandemic?

How Have Investors Responded to the Covid-19 Pandemic?

There is no doubt that the pandemic has broad public health and economic impacts for millions of people.

From employment taking a hit and emergency funds being tapped to working-age and retirement-age households pivoting financially to deal with the unexpected, the effects have been widely felt.  

While a lot has happened in 2020, many people actually expected some sort of reversal in financial markets and economic conditions back in 2019, a survey found earlier this year.

According to Spectrem Group, an investor research firm, one of the biggest fears for investors in 2019 was a market downturn and ensuing economic downturn. While this didn’t happen then, the novel coronavirus pandemic brought it about in 2020.

A record-breaking market downturn and economy shutdown sparked fears of a recession. Since then, markets have recovered.

But investors continue to worry about the long-term effects of the recession that has hit the United States and other parts of the globe. Read More

How to Find the Best Retirement Planning Companies

How to Find the Best Retirement Planning Companies

When you near retirement it’s an important life transition. For one, this period brings changes to money matters. Now is time to examine portfolio assets and consider how you will use them for income to sustain your retirement lifestyle. A good retirement planning company can help you plan for this transition.

Retirement Planning Companies May Have Different Specialties

However, investors have many options of financial firms in today’s industry. Different firms can vary in the unique expertise to the table. Some companies specialize in investment management and others in financial planning, for example.

While similar in some ways to financial planning and investment management, retirement planning is different. It concerns advice on the distribution of money and how people will use the money for income needs.  

Business Type Also Matters

There is also the question of business organization. Some firms are just one of many broker offices for huge financial companies, while other firms are small, local businesses. Whether they have a captive or an independent status may influence the kinds and selections of the retirement products they can offer you.

So, all of this adds up to many retirement planning options for investors. How do you choose the right partner for you? Let’s take a look at some questions to answer. Read More

How Can the Timing of Your Retirement Withdrawals Affect Your Income?

How Can the Timing of Your Retirement Withdrawals Affect Your 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. Read More

What Are the Risks of Annuities?

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. Read More

Annuitization: Should You Annuitize an Annuity?

Annuitization: Should You Annuitize an 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.

Read More

Next Steps to Consider

  • Start a Conversation About Your Retirement What-Ifs

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    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

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    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

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    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

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