Retirement Income Strategies
Retirement income plans are not just for the wealthy. As retirement nears, the traditional strategy has been to move growth-seeking products to more conservative, fixed-income products. According to a recent study, for a married couple age 65 there is now a 50 percent chance that at least one spouse will live to age 94. This means that you may need to plan for your retirement savings to potentially last 25 to 30 years.
One drawback to a longer life is the greater possibility of outliving your savings – creating all the more reason to develop a retirement income strategy designed to last a longer lifetime. Sixty-one percent of Americans surveyed said they were more afraid of outliving their assets than they were of dying.
A significant loss in the years just prior to and/or just after you retire could negatively impact the level of income you receive over the course of your life. In fact, if a loss occurs earlier in life, there is also the chance that you may have more time to recover (versus a loss occurring later in retirement). Why? Simply because a smaller pool of assets is left to sustain you throughout your retirement years and your assets may not have as much time to recover.
We can help you design a guaranteed* retirement income strategy that incorporates insurance and annuity vehicles to create opportunities as well as guarantee* income throughout your retirement.
Click here to view the Consumer Guide. Prepared by Ernst & Young Insurance and Actuarial Advisory Services practice. The analysis uses the Annuity 2000 mortality table with Scale G2 mortality improvements. State of the Insured Retirement Industry: 2012 Recap and a 2013 Outlook, Insured Retirement Institute
*Guarantees are backed by the financial strength and claims-paying ability of the issuing company and may be subject to restrictions, limitations or early withdrawal fees. Annuities are not FDIC insured.
IRA & 401(K) Assets
When you change jobs or retire, there are four things you can generally do with the assets in any employer-sponsored retirement plan:
- Leave the money where it is
- Take the cash (and pay income taxes and perhaps a 10 percent additional federal tax if you are younger than age 59½ )
- Transfer the money to another employer plan (if the new plan allows)
- Roll the money over into an IRA
Rolling over from one qualified plan to another qualified plan allows your money to continue growing tax-deferred until you receive distributions in retirement. We can help you determine if a rollover is the right move for you.
If you determine to cash out of an IRA, we can help you find suitable vehicles to help you reach your retirement income goals.
In the past, retirees could typically count on three sources of retirement income that divided roughly into thirds. The three sources of income have traditionally been government funded Social Security, employer-sponsored components and individual savings. With this traditional scenario, both the government and employer-sponsored components of the strategy were considered predictable—reliable income sources that may also be adjusted for inflation, like Social Security benefits. Only one-third of the plan, individual savings, was the responsibility of the individual.
Today, however, due to employer-sponsored plans evolving from guaranteed pension payouts to more defined benefit contribution plans, which generally result in a payout in retirement based upon level of individual participation, the majority of the burden for retirement income seems to have shifted to the individual. For this reason, you may want to consider a guaranteed* fixed income component to your retirement strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed*.
An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed* payout options.
Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals can reduce the value of the death benefit, and excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to fifteen years of the contract. Withdrawals will reduce the contract value and the value of any protection benefits, and because they are designed as a long-term retirement income vehicle, annuity withdrawals made before age 59½ are subject to a 10 percent penalty fee, and all withdrawals may be subject to income taxes.
* Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by carrier. Annuities are NOT FDIC insured.
Your investment advisor is not permitted to offer, and no statement contained herein, shall constitute tax, legal or accounting advice. You should consult a legal or tax professional on any such matters.
Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Accurate Advisory Group or truAdvice, LLC.
If you would like to learn more about Accurate Advisory Group or would like to schedule a complimentary, no-obligation consultation, please contact us today!
We understand how important it is for you to have a trusted professional you can count on and one who will provide the accurate information you need and the respect you deserve.
Accurate Advisory Group can be that professional you trust. We are dedicated, experienced and understand your need for integrity.