Annuities That Help You Qualify for Medicaid and Protect Your Assets
Long term health care costs remain high and growing. Because of this retirees with significant assets should plan for their potential Medicaid eligibility. A Medicaid qualified annuity can play a part in this planning when one spouse has to enter a nursing home leaving the other one at home. Medicaid picks up the long term care cost of elderly who are impoverished. Long term care is very expensive and can eat up savings fast. The elder may not be able to leave a legacy to their children. Medicaid is a federal program but handled at the local level by your State. State restrictions and regulations on Medicaid vary so you always need to be aware of your own states’ Medicaid policies. Nevertheless, simply giving your assets away and then immediately applying for Medicaid is unacceptable under federal rules . To be safe you need to irrevocably transfer assets 60 months prior to applying. Anything shorter will prompt your state Medicaid office to attribute those assets to you and require you to pay your Medicaid monthly rate (state dependent) until all those assets have been exhausted. Only then will Medicaid foot the bill. If you still have substantial assets, you can [...]
Categories: fixed annnuities, Medicaid annuity Tags: Medicaid annuity
Creditor Protection and Other Protection of Fixed Annuities
What Protections Does a Fixed Annuity Offer? Asset protection is an important consideration when deciding on retirement investments. One investment of particular interest to retirees is the fixed annuity. Annuities are geared to protect you from running out of income while you’re living. But because a fixed annuity is an insurance product, it has special protections afforded insurance over the years. So, beyond protecting a lifetime income for you let’s, summarize some other protections that a fixed annuity offers you. While you’re living, a fixed annuity offers you 3 protections. They are protection from · Market fluctuations: Because fixed annuities offer guarantee of principal and an interest. You’re protected from the loss in principal and earnings that stock and bond market investments are vulnerable to. · Current taxation of annuity earnings: Since fixed annuity earnings are tax-deferred, they’re not reported on your tax forms. This keeps your fixed annuity investment off your tax records until you withdraw money from them. This affords you a privacy feature. · Lawsuits: Annuities are generally[1] not liable to attachment or garnishment in favor of any creditor of the person insured under the contract,. i.e. annuities offer creditor protection Because your annuity is a contract [...]
Categories: creditor protection Tags: creditor protection annuities, prospectmatch
Ladder Annuities for Potentially More Income
If you’re 70 and living off your income from a Certificate of Deposit (CD) you may find it more advantageous to switch to a laddered annuities for more income. Let’s consider how. A $100,000 5yr-CD paying 5% gives you an annual taxable income of $5,000. At a 25% income tax rate, you’re left with $3,500. Of course you’re also left with your $100,000 too. But if you need more income, and you don’t want to get locked into any current income rate, you may consider investing your $100,000 into a set of annuities. Laddering these (i.e. stagger when begins its income stream) allows you to follow income rates if they go up (or down). Laddered Annuities Option We’ll assume you’re 70; and with your $100,000, you buy 5 annuities each for a single premium of $20,000. The first will be a Single Premium Immediate Annuity (SPIA) for a 5 year payout term. The four others will be Single Premium Deferred Annuities (SPDA) geared to produce a payout after 5, 10, 15, and 20 years respectively. Let’s consider what sort of income you’d generate in this case. Refer to the table. These are hypothetical examples and all fees have been ignored (immediate annuities [...]
Categories: annuity ladder Tags: ladder annuities, prospectmatch
Revealing your earnings on an Immediate Annuity
Understanding the earnings your money generates for you in an immediate annuity helps your evaluate your investment. A single premium immediate fixed annuity (SPIFA) gives you a fixed monthly payment for the term of the annuity. That term may be a certain number of years or for the remainder of your life. The amount the insurance company will pay you depends on the amount of premium you pay and prevailing interest rates in addition to expenses and your life expectancy if it’s a lifetime payout. Companies will quote you their monthly payout to you but not the interest rate (interest rates on immediate annuities are typically 2%-4%). Nevertheless, since all earnings of the company are dependent on interest-based investments, higher prevailing rates will allow them to make higher monthly payments – and vice versa. Earnings and taxation of your investment What you earn is the excess of payouts over the premium you pay. Every payout is considered part earnings and part return of premium. The fraction of each payout that’s taxable is the ratio of the total excess payout to the premium. To illustrate let’s take a hypothetical example of the payout over a 10 year term certain to illustrate [...]
Categories: immediate annuity Tags: immediate annnuity
Die Broke
How Do I Organize My Money to Spend My Last Dollar the Day I Die? asked the investor And the advisor said, “That’s no problem, Sir. What day will that be?” Not knowing when we’ll die means making sure we arrange our finances to produce income for as long as we live. Aside from being able to live off just the earnings of our investments, only social security, pensions and annuities can pay you a lifetime income. We would all like to have jut enough money to last until our last day and die broke. While that seems like a wild idea, it’s doable. Social Security gives you a lifetime income because the government can compel taxpayers to pay for it. And, if things get tight, they can print the money necessary to pay you. And it stops the day you die. If you do get a pension, it’s likely being paid by an insurance company in the form of an annuity. As long as the insurance company remains solvent (large companies such as Prudential and New York LIfe lent money to the federal government during the Depression), you receive income for life that stops the day you die. If you like that idea, making [...]
Categories: annuitization, immediate annuities Tags: die broke, prospectmatch
