Millions of Americans depend on annuities for retirement saving, protection, and income. If you are considering an annuity for retirement, the right annuity contract can help make a difference in you reaching your goals. But first, you need to make sure that an annuity truly fits your financial situation and objectives.
The search starts with making sure that you have a solid insurance company issuing your annuity contract. Why is this so crucial? Read More
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Most public discussions and financial media on retirement planning cover accumulating assets and building up savings. They focus on the question of how to achieve a bigger nest egg. But retirement isn’t about accumulating assets — it’s about setting lifestyle goals, securing income to pay for those goals, creating protection strategies to safeguard your money, and managing risks.
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Inflation may not be the most exciting topic, but nowadays retirees may experience it first-hand for as long as 30 years or more. They can see its real effects on the purchasing power of their money over such an extended period.
Just think of what has happened to the cost of buying a new home over the past 30 years. Inflation has run rampant, and it can have such a big impact on retirement spending that it even warrants protection against it as part of an overall financial plan. Read More
An endless parade of financial articles talks about saving enough for retirement and minding your retirement budget. But what about having more than enough money for your lifestyle goals? Just accumulating sufficient savings to last through your entire retirement is only part of the picture.
Decumulation, the Final (Retirement) Frontier
“The decumulation of assets in retirement is obviously a much more complex problem than accumulating assets before retirement,” said Emmanuel Roman, CEO of PIMCO, in an interview with Advisor Perspectives. He continued:
“Because of its complexity, decumulation is unlikely to be solved with a single solution; we’re going to need to combine a number of good ideas from different corners of the industry to solve this problem. To make a significant difference, one should start with an important problem. A big one is how to protect retirees from sequence-of-returns risk, or the risk related to the timing of retirement.” Read More
Does it make sense for you to buy an annuity at age 60? How about when in your 60s in general?
It really depends on the annuity and what it would do for you. An annuity should solve specific problems in your retirement plan and cover any gaps with its contractual guarantees.
Tens of millions of people depend on annuities and their guaranteed promises for retirement. While you may be considering an annuity while in your 60s, the ages of those who buy annuities tend to be across the board.
Some buy fixed-type annuities in their 40s so they can accumulate money alongside retirement accounts or an employer plan. Others use annuities for income in their 70s, or even later, so they have dependable guaranteed cash-flow. Several annuity buyers fall somewhere in between those age ranges.
Now, what situations might make sense to purchase an annuity in your 60-somethings? Read More
Are you looking at different annuity rates for your retirement goals? Generally speaking, an annuity rate is the percentage at which money inside an annuity grows annually. While a majority of annuity rates have to do with growth potential, not all rates do.
Many advertisers push different annuity rates online, but these rates can have different meanings. Those rate distinctions differ largely along the various types of annuities and what each type offers to you.
Some annuities, like immediate annuities, will give you rates that are tied to income payouts. Since immediate annuities are designed to pay you income right away, that makes it pretty straightforward. Other annuities are more ‘income for later’ and come with rates like “payout percentages” depending on the type of payout option you choose.
Annuity rates usually vary from one life insurance company to another. What’s more, rates are tied to current interest rates. So when current interest rates change, annuity rates tend to move with them. Read More
Do you have a variable annuity and are you looking for alternatives to it? Not sure about what options might make sense for your situation?
Many people buy annuities for different retirement goals, but variable annuities tend to be bought more than other types of annuities. However, this is likely to change in the near future. What is driving this shift is that people are on the lookout for alternatives to variable annuities.
Why? Variable annuities offer the most growth potential of all annuities. But they also have the most exposure to market risk.
What’s more, while this isn’t universally true for all of them, many variable annuities are also fee-heavy and expense-heavy.
According to the SEC, just one annual charge for life insurers managing longevity risk – called a mortality and expense charge – can add up to 1.25% per year in variable annuity contracts. Other research by groups like Morningstar has also found that cumulative fees and expenses in a variable annuity can be in excess of 3 percent.
Depending on their needs, people may be interested in alternatives ranging from annuity contracts with less market risk to financial vehicles that aren’t even annuities at all. Read More
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:
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
At some point or another, you may have heard of the “Great Wealth Transfer.” The baby boomer generation will be leaving trillions of dollars to their heirs over the next 30 years.
IRAs, qualified employer retirement plans, taxable investment accounts, annuities, and life insurance will be among the numerous assets that provide a legacy for generations to come.
Depending on the situation, some methods of wealth transfer may be more advantageous than others. People who work with advisors specializing in legacy planning strategies can save a great deal of time, confusion, and money in figuring out what makes sense for their goals.
Strategic guidance from their financial professional, in conjunction with high-quality estate planning legal counsel, can help ensure the smooth transition of their wealth to their heirs. Read More
Balancing risk in your portfolio is a fundamental at all ages, but it’s particularly important the closer that you are to retirement. As the old saying goes, even the best-laid plans can go to waste.
Market risk and its unpredictable timing aren’t the same for everyone. Should your investment holdings take a hit in your late-career years, it could very much throw your retirement plans off-kilter.
Up until this point, you may have adopted an investment strategy that had growth and wealth accumulation as your top goals. But these priorities tend to change as you get closer to retirement. Read More