There are many kinds of financial professionals that are available today. With no shortage to choose from, why would you want to limit your search only to retirement income planners – or those who plan for retirement income?
The simple answer is life changes, and financial wellness at this point requires a certain specialty. You wouldn’t go to a family medicine doctor for matters relating to brain surgery. That is what a neurosurgeon is for.
The same goes for income planning near and in retirement. An experienced retirement income planner will be able to help you maximize the fruits of your life’s work net of taxes, inflation, fees, and other factors. They should be able to create dependable income streams that have a good chance of holding up for however long your retirement lasts.
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We all have spent most of our working lives hearing advice to save and plan for retirement. But retirement isn’t just about gathering assets for later years. It’s also about protecting them from loss.
Here are some practical wealth protection tips and strategies that you can implement to preserve your hard-earned assets.
What Is Wealth Protection?
Wealth protection in the financial industry refers to wealth management strategies and tools to help individuals, families, and businesses protect their assets. Everyone needs to put protective measures in place to deal with unexpected events, which will undoubtedly occur.
You will face various potential threats to your financial well-being throughout your life. These risks involve potential harm to your retirement plans and your estate plan. You will also want to manage your liability risk, whether professional in your career or at home in your family.
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If you want to maximize your retirement income, then it’s good to know how mortality credits can affect how much lifetime income you receive from an annuity. Insurance companies use mortality credits in their calculations of income payments to their annuity contract holders.
Leveraging mortality credits could make a big deal in just how much income you receive throughout retirement. Moreover, this income stream can let you keep up your current lifestyle in retirement with a predictable, ongoing flow of money to spend each month.
Here’s a look at how mortality credits drive annuity payments – and how these can play to your advantage for a financially comfortable retirement.
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Interest rates affect annuities in sometimes strikingly different ways. The interest rate that most annuity companies follow is the 10-year Treasury rate. When it rises, most types of annuities are better off (but not all of them). When it falls, it often hurts many annuities.
Again, interest rates don’t affect all annuities the same way. So, let’s start by looking at annuity types and then how interest rates impact them. That will help you decide what annuity might be best for your needs.
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Taxes are a top retirement concern, and as annuities are the only financial vehicle that can pay a guaranteed lifetime income, you might wonder about annuities and taxes. To understand how annuities are taxed, you should first understand the different types of annuities and how they can be used.
Basic Annuity Types
There are a few basic types of annuities in the market today. It’s good to note that all annuities are capable of paying a guaranteed lifetime income. But some annuity kinds are better equipped to pay you lifetime income while others are stronger for growth.
That being said, these basic types of annuities are:
Fixed Annuity – A fixed annuity typically provides a guaranteed rate of growth for a specified period. The longer the term is for your fixed annuity, the higher that interest rate tends to be. So, it’s vital to select the company from which you buy an annuity carefully.
Fixed Indexed Annuity – A fixed indexed annuity offers growth potential that is tied to an underlying financial benchmark index. The annuity allows the contract holder to have their money earn interest, based on what the index does, without downside exposure.
Variable Annuity – A variable annuity allows someone to place money in various mutual fund-like accounts for investment purposes. Legally, it’s both an insurance policy and a security. However, a variable annuity does expose the annuity assets to the full risk of loss in the market.
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With growing government debt and the prospect of increasing taxes, you may wonder if a Roth conversion is right for you. But there are many nuances to deciding on a Roth conversion and then following through on the conversion process.
You will pay taxes on the converted amount. In some cases, a Roth conversion can move you into a higher tax bracket, depending on your other taxable income. If you will need the money in five years or less, this tax planning strategy might not be a good fit for your situation.
Understanding your options can help in making a confident decision. That being said, here are a few quick factors to keep in mind as you explore whether a Roth conversion might make sense for your financial situation. You will also want to speak with your tax advisor and any other experienced professionals as needed for further guidance on your personal situation.
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Retirement planning covers lots of areas. But have you heard of a situation where someone with $500k – $600k in retirement savings might be ‘richer’ than someone who has $1 million? Economic paradoxes like this and other insights are discussed in a new film, ‘The Baby Boomer Dilemma.’
You may have heard of The Baby Boomer Dilemma documentary, which takes a close look at the retirement landscape in America and how it’s being funded. The movie centers around the fictional story of a Florida couple, who have concerns about their future financial security.
An 85-min film, The Baby Boomer Dilemma ends with the wife distraught about not having a guaranteed source of income for their retirement, whether a pension or an annuity. Here’s a little bit more information about the film’s content. If you have any questions about the movie or would like to request a personal retirement consultant based on the movie’s principles, please fill out the contact form for more information.
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If you are one of the lucky few with a defined-benefit pension, then you might have wondered about what your options are with a pension versus an annuity. But while pensions were a common thing of the past, they aren’t around as much anymore.
In the days before smartphones and social media, many people had only one employer. Throughout their career, folks worked for one company and received a pension when they retired. From there, they would receive payments for the rest of their lives.
Today, unless you have a government job of some sort, pension benefits are rare. An annuity may be a good option for you if you don’t have a pension but like the idea of receiving income for the rest of your life.
As you consider the pros and cons of annuities vs. pensions for retirement, here are some key factors to consider.
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You may think of life insurance as a way for people to protect assets or provide a windfall for heirs. But it’s also useful for survivorship strategies in retirement. When one spouse passes, the other is left with more than loss of love and support.
The survivor loses income from a second Social Security benefit. If their spouse had a pension or other benefit that paid income while they were alive, chances are it also goes away. Even so, there are steps you can take to protect against these risks.
One example financial plan with such strategies was once presented by Zach Parker, senior vice president of wealth management and product strategy at The Advisor Group. At one industry event, he showed how a combination of term life insurance and universal life insurance can provide income protection for both spouses.
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As a public employee, you could contribute to your 457(b) retirement plan to save for your future. In many ways, a 457(b) plan is similar to a 403(b) or 401(k) plan. A 457(b) plan is offered through your employer and is designed to help you save money for retirement.
Also known as a deferred compensation plan, a 457(b) plan is commonly offered to government employees – especially those working for local and state governments.
A few examples of who might have this plan are:
- Government officials
- Police officers
- Firefighters
- Emergency medical technicians
- Public school teachers
- Those who work for a city, like sanitation workers
Using this employer-sponsored retirement account, you can contribute pre-tax dollars. Also, you won’t pay taxes on that money until you withdraw it, usually during retirement. In this way, your contributions can grow tax-deferred until withdrawals are taken.
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