Retirement Planning Blog

Where do you find independent annuity advice that you can trust? Just mention the topic of annuities, and you certainly won’t have any shortage of opinions coming out of the woodshed.

Many financial advisors and pundits are in the pro-annuity camp due to the strong contractual guarantees that only annuities give. On the other hand, annuity naysayers point to a few things, such as sometimes overly aggressive sales pitches, to make their case of annuity pessimism.

So, how can you find independent annuity advice that is somewhere in the middle: objective, honest, and focused on helping you become educated and make a well-informed decision? A good source will give you, among other things:

• Clear and publicly available information on annuities without any obligation on your part to access it
• The fundamentals of annuities and their role as the foundation of an overall retirement plan
• Straightforward questions to ask about annuities you may be exploring
• Upfront points on what annuities can do and what they can’t
• Clear outlines of the different annuity pros and cons
• Opinions on who is a good candidate for an annuity (millions of people, but not everyone)
• Clearly spelled-out details of the strong point of annuities – protections stemming from their guarantees – and what they can do for you

In other words, a credible source of annuity information will be upfront and clear about what annuity contracts can achieve – and also not accomplish – for you. Read More

Are you looking for safe money and income strategies that you heard of on the radio or someplace else? After a long career, most people would like a financially secure retirement that they can spend in peace and comfort.

This probably applies to you as much as anyone else. As you prepare for your post-career years, you may have heard or read about those “safe money and income strategies.” If you have, you may be wondering exactly what they are and whether they are right for you in your current financial situation.

What Are Safe Money and Income Strategies?

This sort of strategy follows a retirement school of thought that emphasizes income, safety, and protection. At its core, a safe money and income strategy can:

• Pay regular predictable income to you for as long as you live.
• Protect your hard-earned retirement assets.
• Grow your money with a guaranteed interest rate.
• Possibly earn more interest above a certain minimum rate.

Many fixed-income assets can serve as its lynchpin, from fixed-type annuities to bonds or Treasury securities. However, only annuities can truly pay you a guaranteed lifetime income.

What’s more, historically low interest rates have made it that much harder to live off of the interest from corporate and municipal bonds, CDs, Treasury securities, and savings bonds.

This isn’t to say that these instruments can give you some yield for dependable retirement income. It’s just harder in this lower interest rate environment. Read More

Some index-based financial products have a “floor,” or the maximum value you would lose if the index went down. In a fixed indexed annuity, the floor is expressed as a guaranteed minimum interest rate. This floor is usually set at at an annual rate of 0%, meaning that even if the index decreases in value, the interest to be credited won’t be negative.

Essentially, the annuity floor will consist of your annuity’s accumulation value plus the guaranteed minimum rate. You can never lose money due to any index declines. But your money may lose value in the times of index losses, if the indexed annuity contract has optional rider fees or you pay a surrender charge for early withdrawals.

If you are researching fixed index annuities to see if annuities may be for you, it’s helpful to have a good knowledge of the essentials. Let’s get started with a more in-depth discussion of a fixed indexed annuity, some of its common features, and how the floor guarantee may work. Read More

Annuities are a growing option for retirees looking for relatively ‘worry-free’ places where they can place their money without too much stress. There are many different types of annuities. But all annuities can fundamentally be divided into two main categories: immediate and deferred annuities.

By definition, an annuity is when someone puts a single lump-sum payment or a series of payments into a contract offered by a life insurance carrier. At a later point, this person starts receiving a stream of income from the annuity contract. The income stream can be for either a set period or the rest of their life.

So, what are the key differences between a deferred and immediate annuity? Here’s a quick look at the overarching distinctions. Read More

Chances are you have heard of annuities at some point. When they have a clear role in your plan, they can be an excellent part of a retirement strategy. If you are in your 50s, you might have thought at some point or another: Does an annuity make sense in your 50s, even when retirement might seem still quite a few years away?

Well, the answer rests on three primary factors: when you plan to retire, what your timeline is from now until then, and what you would use the annuity for. Read More

When the World War II generation finally retired, many former workers were able to count on a secure corporate pension to supplement their Social Security income. This pension income lasted for as long as they lived. Then it often continued to pay the surviving spouse after the initial recipient had passed away.

But pensions have largely disappeared from the corporate landscape. In turn, this has left an unexpected hole in the retirement plans of many retirees.

However, many people have found an alternative in annuities as a way to generate guaranteed income that they can count on every month. Annuities can provide a type of privately-funded pension income in a manner unlike any other type of financial instrument in the marketplace today.

Annuities are designed to pay a stream of guaranteed income for as long as someone lives. This holds even if someone receives more money from the insurance company than what was in their annuity contract. Read More

Annuities can certainly strengthen your retirement plan even while interest rates are low. Among other things, they can add more predictability and stability to what you already have.

But what can you do when interest rates are at rock-bottom? In response to the economic fallout from the coronavirus pandemic, the Federal Reserve has dropped the target rate for its benchmark federal funds rate (its overnight lending rate to banks).

Now the target range for this rate is zero to one-quarter percent. The last time the Fed did this was during the financial crisis. In 2008, it dropped the rate to the same target range, and this didn’t change course until December 2015.

The pandemic had an unprecedented impact on the economy. It put tens of millions of people out of work in just weeks and left many sectors basically on standstill. Read More