In the last decade, two major market crashes have occurred, causing many working professionals to worry about the long-term safety of their investments. While many have access to retirement saving plans like 401(k) plans, the limits on contributions, costly tax implications, and exposure to market risks make 401(k)s less appealing for conservative-minded savers.
Recently, “IUL,” or indexed universal life insurance, has emerged as an alternative to the 401(k). It’s important to note that IUL is not an investment strategy but a type of permanent life insurance. Be cautious of discussions that treat IUL as an investment vehicle, especially compared to a 401(k) plan.
IUL might appeal to retirement savers, including younger professionals, because of its tax-efficient advantages over the 401(k) and other benefits. These advantages include protection from market downturns, greater flexibility with contributions and accessing funds, and improved tax treatment of future income. However, the suitability of any financial product always depends on the individual client’s needs, circumstances, and objectives.
Here’s a brief overview of indexed universal life insurance and how it differs from a 401(k) as a wealth-accumulating option. Read More
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
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
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.
When you near retirement it’s an important life transition. Your approach to money matters will probably change. 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
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
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.
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.
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. Read More
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. Read More
Start a Conversation About Your Retirement What-Ifs
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
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
Stories from Others
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Hear from others who had financial challenges, were looking for answers, and how we helped them find solutions. Learn More
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