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
Keep Pace With Inflation in your Life Annuity
For millions of Americans, a life annuity can provide safety of principal and tax deferral. However, one disadvantage inherent in most life annuities is their inability to keep up with inflation over the long-term. For example, assume that you invest $100,000 into a single premium immediate life annuity. as an example, a current contract from a major annuity company would then pay out $658.59 per month, for a total of $7,903.08 for the year. The problem is if the rate of inflation is 3%, then the purchasing power of these payments will decline from one year to the next. Obviously, $7,903 will not buy in a future year what it can now. Imagine how you feel twenty years from now when the purchasing power of your life annuity is reduced by 47%! One way that life annuity buyers can deal with this problem is to purchase a cost-of-living rider in the contract. This rider is designed to ensure that the income from the annuity stays abreast of the rate of inflation over time. However, these will be a trade off in that less income may be received today. For example, the same immediate life annuity contract with a 3% inflation [...]
Categories: life annuity Tags: cola rider, cost of living, inflation, life annuity, prospectmatch
How to Possibly Cover Those Fixed Expenses
Even the best experts can’t predict how certain investments will perform or the income that you’ll see from them. Nevertheless, you might need a set amount of money each month to pay non-discretionary expenses like mortgage payments, auto loans, and life insurance premiums. Frequently these monthly outlays are fixed for a number of years. To pay these predictable expenses, you may want to consider a fixed, immediate annuity to provide a steady stream of income for your lifetime, your spouse’s lifetime, or the duration of the loan. And if you don’t like paying taxes, you may like the idea that part of that regular check from an immediate annuity is a tax-free return of your investment. If you find comfort from social security check, having the fixed income stream from a lifetime immediate annuity is quite similar. But what about expenses that you will always have and most likely will go up each year, such as real estate taxes, auto insurance, or homeowner’s premiums? Some immediate annuities offer several options to meet your future needs too, including an inflation protection rider that will let your income rise annually. Ability to make payments based on claims-paying ability of Annuity Company. Not [...]
Categories: immediate annuities, immediate annuity Tags: immediate annuity
Three Sources of Senior Citizen Retirement Income
Do you want to be a dependent senior citizen? You likely are according to this conclusion by the Economic Policy Institute, “For the typical person approaching retirement, the value of expected future Social Security retirement benefits represents the largest single source of wealth.” While this may be true, it’s a situation you don’t want to be in–dependent on the government and its political whims to determine your level of senior citizen retirement income. The more you can control and rely on your other sources of retirement income, the more independent you will be. Let’s discuss the ways in which you become independent with respect to your senior citizen retirement income. If you have a home, use a reverse mortgage when you need it. Most seniors are simply ignorant about how reverse mortgages work and then act out of ignorance. The other option is to find out how they work. A revrse mortgage simply allows you to tap the equity in your home as an income source. Right now, your home equity earns nothing, 0%. Would you keep money in the bank at 0%? Of course, when you die with a reverse mortgage, the equity in your home will be reduced [...]
Categories: charitable gift annuity, immediate annuities, retirement income Tags: senior citizen retirement income
Fixed Immediate Annuity Can Eliminate the Required Minimum Distribution Calculation
Do you own an IRA, hold a Keogh, or still have assets in a qualified retirement plan that was offered by a previous employer? Then perhaps now you have to think about the best way to withdraw the funds, as the IRS requires at age 70½, while making sure that you don’t outlive your income. One choice is to remove the money all at once and pay the tax. That step, however, may put you in a higher tax bracket is is usually not wise. Another option is to go along with the government’s guidelines and calculate the Required Minimum Distribution that you must withdraw each year after you turn 70½. But what if there was a way to not have to do those calculations and also not worry about tax law changes and market fluctuations that could affect retirement accounts every year? A tax-qualified, fixed immediate annuity will spread the tax liability over your projected lifetime and automatically satisfies the IRS requirements, so you will never have to calculate the required minimum distribution. A check will arrive every month, or whichever schedule you select, for the rest of your life—no matter how many years that might be (guarantee [...]
Categories: fixed annnuities, immediate annuities Tags: fixed immediate annuity, required minimum distribution
Financial Worries? Some Solutions for Seniors
Do you find yourself worrying about your finances? While you may think of your situation as unique, you may in fact be among the majority of seniors wtih financial worries. A recent survey by the publishers of Senior Market Advisor Magazine revealed several seniors’ responses to the question “How much do you worry about money?” A little 45% More than I should 27% A lot 20% Keeps me up at night 5% Never 3% Source: Senior Market Advisor, Senior Survey 2005 (July 2005) If the same poll were taken today, there would likely be many more who answer that financial worries are at the top of their worry list. Notwithstanding these statistical findings, financial worries do not have to control you. A more secure retirement is possible, with smart and prudent financial planning solutions to these common retirement worries: Retirement Savings Shortfall Upon reaching retirement, some seniors are surprised to discover that their retirement savings will come up short–an obvious source of financial worry. Instead of pursuing leisure activities, they find that they must curtail their spending habits in order to make their savings last. However even in retirement, you can put your savings to work for you with [...]
Categories: immediate annuities, retirement income Tags: annuitize, financial worries, financial worry, immediate annuity, retirement income
Javelin Marketing: Immediate Annuity Revamped for Modern Times
The word “annuity” brings to mind different meanings for many investors. That’s because there are different types of annuities designed for different purposes. One of these is the immediate fixed annuity, which can provide an immediate stream of cash payments over a lifetime or a defined period of time. If the investor has chosen a lifetime payout retirement option, he or she typically pays a single premium to an annuity company. In return, the company agrees to pay the investor regular and ongoing cash payments for life, or for a lesser amount to continue over the life of both spouses. Although many investors choose to receive monthly payments, it is also possible to receive quarterly, semi-annual, or annual payments as well. Assuming the payments are structured over a lifetime, the investor is provided with a lifetime income he or she cannot outlive. Such an investment is useful for investors requiring additional retirement income, for support of a community spouse in the event the other spouse is in need of nursing-home care and is seeking to qualify for Medicaid (immediate annuities can be treated as exempt asset in some states), for making lifetime payments to cover long term care needs, or [...]
Categories: immediate annuities, life annuity Tags: immediate annuity, lifetime income
Fixed Immediate Annuities Can Offer Flexibility for Your Future
Stability and safety are important to many seniors, and these are only two of the reasons why immediate annuities are popular investments. A check arrives every month and part of the income is considered a tax-free return of your principal. As long as the annuity company is financially sound, the payments will continue for the life of the contract (annuities are guaranteed by the claims-paying ability of the issuing company). However, consumers sometimes believe that immediate annuities are illiquid, irreversible investments, and cannot provide for future lifestyle changes. Nonetheless, there are some immediate annuities with options that may add flexibility to your financial plan. Immediate annuities can possibly include an option that would allow you to receive extra cash at specific anniversary dates. For example, this might be at the 5th, 10th, or 15th anniversary of your investment. Exercising this option will reduce your future payments (the distribution may be fully taxable, so consult with your tax professional). Suppose you needed money to cover an emergency, like paying for caregivers or a home repair. Some annuity companies will let you take up to six payments at once. You would not, however, receive checks for the following six months (payments may [...]
Categories: fixed annnuities, immediate annuities Tags: fixed immediate annuities
Will you Outlive Your Money?
Could underestimating your longevity mean you’ll run out of retirement money? At age 65, the average life expectancy is 81.8 years for a man and 84.8 years for a woman. At age 75, the average life expectancy is 85.5 years for a man and 87.6 years for a woman. Note that as you grow older, you’re expcted to live longer! With recent advances in medical science, it’s no longer a stretch to think that you could live to be 100. In fact, the US Census Bureau projects that by 2050 there will be nearly one million centenarians. No one wants to die sooner, so that’s great news. The problem: If your retirement plan doesn’t recognize the possibility of a long retirement, then you could potentially outlive your money. But read on for a solution. Consider the following hypothetical example. Assume you’re 64 years old and earn $60,000 per year. You plan to retire next year at age 65. You’ve accumulated $1,000,000 in retirement savings, which you think will return a hypothetical six percent per year throughout your retirement. And, you have a $60,000 annual retirement need (excluding Social Security). If you have a 15-year retirement from ages 65 to 80, [...]
Categories: immediate annuities, life expectency, lifetime income Tags: immeaite annuity, lifetime income, longevity
Ladder Annuities for Control over Interest Rate Fluctuations
One major advantage of an immediate fixed annuity is the security of a guaranteed income. You can count on those regular monthly payments. If returns on other investments diminish–because of a fall in interest rates or a stock market slump–your annuity payments remain steady. Offsetting this advantage is if interest rates are down when you purchase your annuity, your monthly payments will be less and may not keep up as easily with inflation. Is there a way to offset this situation? First, realize that once your immediate annuity begins, it is irrevocable. You cannot change your mind; there’s no lump-sum repayment provision (there are a few companies that offer commutation–the ability to get your principal back at a discount). So, shop for the best deal when you buy. The amount of your monthly annuity check is based on the size of your investment, your age, and what the insurance company estimates it will earn on their contract with you. But realize, too, that the monthly payment on the same size investment can vary significantly from company to company. Get several different proposals to ensure you are getting a good deal. Do not let anyone rush you into making a purchase. The consequences [...]
Categories: annuity ladder, immediate annuities Tags: annuity ladder, laddering annuities
