An income-rich retirement takes diligent effort to reach. Living well in the golden years means you have to start saving early. Over the years you save and invest some of your income in tax-advantaged retirement accounts, like a 401(k) or a Roth IRA. When retirement starts to draw near, it’s time to create an air-tight financial plan that generates the income that would make your ideal retirement possible.
But, if you’re like the majority of Americans, you may not have planned for a big-ticket item that can derail even the best-laid retirement plan: the nest-egg-depleting cost of long-term care.
We know from recent studies that we are living longer than previous generations. However, most of us have our blinders on when it comes to planning for long-term care (LTC). A study by Northwestern Mutual revealed that 56 percent of Americans say that saving for LTC is one of their top financial priorities. But a whopping 73 percent haven’t planned for this need. Read More
Have you heard of a “market value adjustment” when researching annuities? A market value adjustment is a contract feature that comes with annuities of the fixed variety. Generally you will find it attached to traditional fixed annuities and indexed annuities.
A contract with this feature is called a “market value adjusted annuity,” or an MVA annuity for short. MVA annuities tend to offer higher interest rates than regular fixed annuities do.
With a market value adjustment feature in the contract, the insurance company shares some of its investment risk with an annuity policyholder. In exchange, the policyholder may enjoy more chances for growth potential than a regular fixed contract may provide. That being said, the market value adjustment factor applies typically to excess contract withdrawals and surrender charges. And depending on the interest rate environment, an MVA may be positive or negative, which can increase or decrease a surrender charge amount.
The insurance company uses the market value adjustment factor as a safeguard against annuity contract surrenders and, in turn, to maintain its financial strength. That way it can maintain its contractual guarantees and promises made to its annuity policyholders.
Let’s look more at what a market value adjustment involves — and how it may be beneficial or negative. Read More
What are the chances of living to 100? You may be surprised. Although people reaching 100 and beyond is rare, more Americans are joining the ranks.
In 2010, the U.S. Census Bureau found 53,364 centenarians – or those fabled few who have attained age 100 and up – were living in the United States. A later study by the CDC estimated that the “100 and up” crowd had grown over 40 percent, or to 72,197 centenarians, in 2014.
Over the past few years, numerous studies have revealed that, in general, we are likely to live longer than previous generations did. In turn, that is changing people’s expectations of the golden years.
Apparently, we have gotten the message that we are likely to have many more years to enjoy than we may have previously expected. A newly released study from the Transamerica Center for Retirement Studies reveals that today’s workers are already thinking in terms of longer lives.
Their 2017 survey of more than 6,000 workers across the United States asked: “What age are you planning to live to?” Those who provided an answer to the question are planning to live to age 90 (median). Another 14 percent plan to live to age 100 or older, a finding which is even higher among millennials (18 percent). Read More
People depend on life insurance for many reasons. Some households use it for income protection, as they have children or other dependents for whom they provide. Retired and middle-aged working individuals may use it for legacy or estate planning goals. It could be part of a broader legacy or estate plan, as the tax treatment of life insurance allows for an efficient transfer of wealth to loved ones.
Depending on your goals, life insurance comes in many forms, and one is Single-Premium Indexed Universal Life Insurance. It’s also known as “Single-Premium IUL,” or even just “SPIUL.” Let’s take a closer look at this universal life insurance option and what it might have to offer. Read More
You may have invested a fair amount of time crafting your retirement plan. Your financial plan might include an annuity that could both maximize your lifetime income and maximize the potential payout to your chosen beneficiaries. But you may not have focused on the options that your beneficiaries have when choosing how to take their payout.
So, what are the annuity beneficiary payout options and how do they work? Let’s find out. Read More
It’s relatively straightforward to know how much insurance you might need for certain valuables, like a car or your home. But many people don’t know the answer to this question: “How much life insurance do I really need?”
If you find yourself in these shoes, you aren’t alone. According to a study by Life Happens and LIMRA, 40% of people haven’t bought life insurance, or more of it, because they are unsure of how much or what type to buy.
Whether you are retired or still working, life insurance can help solve for many issues. For young to middle-aged couples with dependents, it may be a source of financial protection, income replacement, or supplemental liquidity.
And for households of retirement age? Life insurance can let you enjoy tax-advantaged income, pass a legacy to heirs in a tax-efficient manner, mitigate tax burdens upon death, and even provide much-needed liquidity for post-death expenses.
Here are some helpful basics to consider as you research how much life insurance may be right for you. Read More
Scottish poet Robert Burns famously wrote, “The best-laid plans of mice and men often go awry.” No doubt you likely have a plan for your retirement, even if you might not have a formal written financial plan.
You may know when you want to retire and what you’ll be doing afterwards with your newfound freedom. You may even have a roadmap to get you there.
Now imagine that a big hand reaches down from the sky, crumples up your roadmap, and tosses it aside. But wait, you protest! Too late, your circumstances have changed forever. While that sounds like a stretch, just being caught off-guard with your retirement plan would be less than pleasant, huh?
This is essentially what happened to half of the retirees in The Retirement Preparedness Study from Prudential Retirement. When surveyed, 51 percent said they retired earlier than planned. Sounds good, right? A chance to get to that retirement wish list sooner?
Not exactly. Only 23% retired earlier than planned because they wanted to, either because they had enough money to retire, wanted to retire, or were simply tired of working. Everyone else was dealt an unplanned event, either partially or fully out of their control:
46 percent retired earlier than expected due to health problems
30 percent were laid off from their jobs or offered an incentive package to retire early
11 percent were forced to leave work to care for a loved one
For that 51 percent, their “best-laid plans” went awry, forcing them to adapt to a future they hadn’t foreseen. Read More
Fixed and variable annuities may be appealing for a number of reasons – especially guaranteed income. Yet many people find it hard to discern what may be good annuity options for them. And that’s as their fear of running out of retirement money remains strong.
Americans are more afraid of running out of money in retirement than they are of dying, according to a well-quoted statistic from Allianz Life. Of 3,000 people surveyed, 63% said they feared not having enough retirement money for life over leaving this Earth. That was the highest percentage of those who mentioned their financial concerns in the survey.
Fears like this are what drive Americans to look for dependable income-paying vehicles. When shopping around for income solutions, many investors find annuities to be of interest.
If you are considering an annuity for your portfolio, it’s important to understand everything before you make a decision. Knowing what a fixed versus variable annuity is, will be a good starting point.
Let’s look at some of those distinctions now. Read More
Editor’s Note: This is Part 2 of a two-part series on retirement risks that we should definitely plan for. For more information on retirement money mishaps and how you can enjoy a comfortable retirement lifestyle, you may find helpful answers in The New Retirement Report.
In the first half of this series, we discussed 5 of the 10 Retirement Risks you need to plan for. With apologies to the Late Night Show and Late Show, no Top 10 List would be complete with a stop at the halfway point. So, without further ado…. Here are 5 other retirement risks that retired and working-age investors should definitely heed.
As you read through this list, you may want to consider the strategies your plan has to manage these risks. If you are unsure or would like more confidence in your plan, a retirement-knowledgeable financial professional can help you. Their guidance can help identify potential financial gaps, clarify your needs, and solve for those shortcomings. Read More
Editor’s Note: This is Part 1 of a two-part series on retirement risks that we should definitely plan for. For more information on potential retirement money mistakes and how you can enjoy a comfortable retirement lifestyle, you may find helpful answers in The New Retirement Report. You can find Part 2 of this series here.
Top Ten Lists were a signature of David Letterman’s Late Night and Late Show legacies. Now that he’s 70, if Letterman were to prepare such a list today, it might look something like this: “The Top Ten Retirement Risks I Didn’t See Coming, But Should Have.”
While three decades on TV may give Dave the aplomb to tackle top retirement risks with more leniency, this isn’t the case for everybody. Not everyone can be blasé about what they face as they enter and move through retirement. To help you look ahead—and plan accordingly—we offer these Top Ten Retirement Risks You CAN See Coming. Read More
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