Millions of Americans depend on annuities for retirement and for tax-advantaged accumulation. But if you are considering one, you might be unsure about which questions to ask about an annuity. Beyond that, you also want to be able to judge whether a specific annuity product is right for you.
Essentially, an annuity is a contract between you and a life insurance company. The contract provides tax-deferred growth for your money and different choices for your payout options: a lump-sum payment, income for life, or income for a set period.
Most annuities are started with money from retirement accounts — 401(k) plans, IRAs, or Roth accounts. But you can also purchase an annuity with personal savings or proceeds from a transaction like a home sale. The money you use to begin your annuity contract will have its own tax implications, so keep that in mind as you consider your options.
Determining what annuity is right for you is up there with other important retirement decisions. After all, these are your life savings.
You want to be sure that you bought the right annuity contract — if indeed it does make sense for you — and that its unique features and benefits solve for the existing gaps in your portfolio.
Here are some questions to ask about annuity options that can help you narrow down your choices to the right fit. Read More
Many Americans worry about whether they have saved enough to have a comfortable retirement. But, surprisingly, most haven’t actually crunched the numbers to estimate how much money they will need in retirement in order to live comfortably.
According to a survey by the Employee Benefit Research Institute, just 42% of Americans have attempted to calculate how much money they might need for retirement. In other words, almost 60% haven’t estimated how income they might require.
A Gap Between Retirement Confidence and Readiness?
In the survey, just 3 in 10 people said they have tried to estimate how much they might pay in healthcare expenses during retirement. These are sobering findings, considering that many people report they are confident in knowing how much money they need to live comfortably in retirement.
Six in 10 (67%) said they were “somewhat confident” about their understanding of their income needs. As for higher levels of assurance, two in 10 (23%) said they were “very confident.”
However, as the Employee Benefit Research Institute’s other findings show, the vast majority of retirement savers haven’t actually calculated how much money they might actually need. This could set retirement savers up for a future of unnecessary stress – and even reduced lifestyles. Read More
Healthcare spending in retirement has already been a hotbutton financial issue for some time. But the Covid-19 pandemic has turned the healthcare industry on its head.
According to an article on healthcare publisher FierceHealthcare.com, PricewaterhouseCoopers says it’s hard to tell what may be ahead for future healthcare spending. The professional services firm recently unveiled a new report on medical costs for employer-based health insurance plans, which had new some firsts.
For the first time ever in 13 years of doing this, PwC ran scenario-based analysis for its healthcare projections — instead of a single overall projection for medical costs. Read More
Retirees today face a host of financial challenges that previous generations didn’t. The exit of guaranteed pensions from the private sector, coupled with increasing lifespans, has left many older Americans scrambling to make ends meet.
Not only that, there is often the need to start providing care for elderly parents or other relatives who have become unable to perform one or more of the activities of daily living (ADLs).
Paying to have this type of support professionally can be a financial burden for those who don’t have any insurance to cover them. But providing the care yourself can be equally burdensome in other respects.
Nationwide Retirement Institute conducted a comprehensive survey on caregiving and how it affects the lives of the caregivers. The survey researchers looked at those who were in the middle of their careers. These folks are commonly referred to Gen Xers or the sandwich generation.
The survey was designed to find out how they fared in retirement when also dealing with the challenge of caregiving for loved ones. Read More
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
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
Start a Conversation About Your Retirement What-Ifs
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