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
Financial planning for retirement, or “post-retirement planning,” doesn’t end once you retire. Even if you have accumulated enough money for a secure retirement, your plan will require ongoing checkups to confirm that everything is going smoothly.
You will have to continue to make changes and adjust your plan as time goes on. Retirement can last as long as one-third of someone’s lifetime, as medicine, wellness, and technology have seen tremendous progress in recent decades.
In other words, having an ongoing plan for this phase of life is quite crucial. You may also experience more changes in retirement than you have previously, as your abilities and health evolve over time.
Your retirement planning strategies will need to be reviewed and updated on an ongoing basis. Conducting annual reviews of your financial plan, at a minimum, and making changes as necessary is a solid course of action.
Here are some ‘moving targets’ that are likely to change in your retirement years. Read More
Paying the bills after you retire is quite different from during your career. After all, the income you receive will come from a variety of sources, as opposed as to earned income or a bimonthly paycheck.
Social Security, your own investment portfolio, a pension (if you are lucky), and maybe even part-time work can be sources of income that help pay for your retirement lifestyle.
The trick is therefore to maximize the total amount of income that you receive. But many Americans worry that they won’t have enough income during retirement to meet their needs.
The Alliance for Lifetime Income conducted a survey of 3,119 adults regarding their financial readiness for retirement. Eight in 10 (80%) of them expressed at least some level of concern that they won’t have enough income after they retire.
The survey revealed that 18% of the respondents were extremely worried about this. Meanwhile, 26% were “moderately” concerned and 36% were “somewhat” concerned about this issue.
Here are six key steps you can take now to avoid these concerns and maximize your income. You don’t have to wait until you are retired to start planning out the rest of your life. Read More
When you are still working, a rock-solid financial plan will do wonders for helping you accumulate money for retirement. This strategy will laser-focus on growth and accumulation as top goals. With a financial advisor’s help, you could stay on track with your plan and gradually build your savings for later years.
But things change as you near retirement. This period is called the ‘retirement red zone‘ for a reason. It’s a time when new planning is needed. Your financial plan will need to change gears, in some ways, in its focus from growth to retirement income.
This can be tricky in some cases, as today we face different challenges in retirement than those before us did. Longer living is one such issue now.
It’s a very real concern for many retirees, as one study by Allianz Life found. In the study, six in 10 retirees ranked running out of money while they are still living as a greater fear than death itself.
Just like the plan for growing your money during your career, an income plan can help you maximize your lifetime cash-flow. In turn, you can better enjoy the hard-earned fruits of your lifetime of work.
Many years of hard work brought you to this point. Now it’s time for your money to work and let you enjoy a comfortable, lasting lifestyle. Read More
If you talk to people who have been retired for at least 15 years or more, they will often talk about the major ‘stealth’ expenses that can arise after you stop working, such as a medical condition or major home repair.
Statistics show that one in five retirees and one in four retired widows will get hit with at least four major financial shocks after they stop working. These numbers could be fairly eye-opening for most pre-retirees. Or, at least, they can make them take a second look at their retirement plans.
The numbers also reflect that 28% of retirees and 13% of widows haven’t experienced any financial shocks yet. But they are the exception and not the rule. It’s prudent to think about any and all ‘surprises’ that can happen during your retirement years.
Not only does proactive planning give you a longer window for anticipating “stealth expenses” and setting reserves in place for them. It can also help you reduce the impact of these risks when you have to deal with them.
For example, you might take a tax hit from having to make a sudden withdrawal from your portfolio to cover an unanticipated health scare.
Here’s a look at some surprise expenses in retirement that may come your way — and how you can prepare for them. Read More
The modern financial landscape for today’s retirees is quite different from that of prior generations. Corporate pensions are disappearing, and the Social Security program faces new pressures from record-breaking numbers of people retiring.
Annuities have steadily emerged as a solution to these retirement income challenges. But up until some years ago, many retirees eschewed the use of annuities. Why? Because in order to get a guaranteed lifetime stream of income, they had to annuitize their contracts.
In order to do this, they had to effectively forfeit control of their money for the rest of their lives. Thankfully, life insurance companies have innovated and come up with a new benefit that gives more flexibility: an annuity income rider benefit. 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
Just Like You
Hear from others who had financial challenges, were looking for answers, and how we helped them find solutions. Learn More
Sign Up for Our Newsletter
Get a monthly email on the latest news, tips, and practical strategies involving your retirement and money.
Among many other topics, learn how you can make your money last for as long as you need it, can protect your wealth against current and evolving risks, can maximize your income, and can stay retired comfortably.
