 You’ve worked in your career to accumulate assets, fund your retirement and perhaps even build a legacy to pass on to the next generation. As you enter retirement, you may be considering just how to leave an impactful legacy for your loved ones. Traditionally, legacies are the types of things that are managed through an estate plan. Many people use trusts or wills to distribute assets to children or grandchildren. You don’t have to wait until you pass away to distribute assets to your kids and grandchildren, however. In fact, according to a study from Merrill Lynch, nearly 60 percent of those age 50 and older say they would prefer to give assets to loved ones today rather than in the future.1 You are allowed to give up to $15,000 per year to an individual without facing gift taxes. If you’re married, that exclusion amount is doubled, so as a couple you can gift as much as $30,000 without facing gift taxes. Also, gifts don’t count toward the exclusion if they’re used to pay for tuition or medical expenses.2 If there’s a chance your gift will exceed the exclusion amount, you may want to work with a tax and financial professional to develop a strategy. However, even if you aren’t going to hit the exclusion limit, you still may want to develop a strategy. It’s possible that your legacy may be best delivered after your death rather than as an early gift. Below are a few questions to consider: Could your loved ones use the money now? It’s possible that your children or grandchildren would be better served by receiving their inheritance now rather than in the future. For instance, maybe you have a grandchild heading to college who could use his or her inheritance for tuition. That gift may help them avoid student loans. Maybe you have a grown child facing financial difficulties, like unemployment or divorce. Or perhaps your children could simply use the windfall to pursue some big goals. There’s also the added benefit of getting to see your gift put to good use while you’re alive. Although it may feel good to know that your family will receive a windfall after you pass away, you may find it more satisfying to see how they use that money while you are relatively young and healthy. Is there a chance you’ll need it in the future? Before you embark on a gifting or early inheritance strategy, consider the possibility that you may need the money in the future. Most people enter retirement with more assets than they’ve ever had. It’s easy to assume that those funds are more than you will need. However, there are potential costs in retirement that may cause unexpected challenges. Fidelity estimates that the average couple will need to spend $280,000 on health care in retirement.3 The U.S. Department of Health and Human Services estimates that 70 percent of retirees will need long-term care, which can often cost thousands of dollars per month.4 If you haven’t addressed these risks, you may want to do so before you implement a gifting strategy. Will the gifts cause conflict in the family? Finally, think about what kind of issues your gifts could cause within the family. Have you provided financial help in the past to children or grandchildren? Will other children feel that the gift amount is unfair? Are there children or grandchildren who may not be able to handle the responsibility of a large windfall? These are important questions to consider. You want your gift to have a positive impact, not create conflict and tension. If there are risks associated with your gift, you may want to consult with a financial professional to develop a strategy. Ready to create your gifting plan? Let’s talk about it. Contact us today at Capital Management Group. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation. 1https://www.ml.com/articles/why-make-your-heirs-wait.html 2https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes 3https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs 4https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18274 - 2018/11/27
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 You likely know that long-term care is a possibility in the later years of retirement, but just how likely is it? And what kind of threat does it pose to your assets? Long-term care is extended assistance with daily living activities such as bathing, eating, mobility and cleaning. It sometimes includes medical treatment, but often the objective is simply to maintain a comfortable standard of living. According to the U.S. Department of Health and Human Services, today’s 65-year-olds face a 70 percent chance of needing long-term care in the future.1 Of course, even though care may be likely, there’s no way to predict the type or level of care you may need. That makes it difficult to budget or plan for long-term care costs. Below are a couple of important factors that impact long-term care costs, along with strategies to pay for the care. If you don’t have a plan in place, now may be the time to create one. A financial professional can help you get started. Type of Care Long-term care can be provided several different ways. You could receive assistance in your home, from either a family member or a hired in-home aide. You could also move into an assisted living facility where staff is readily available to help. Costs vary based on your location and the type of care you receive. In 2018, Genworth conducted a comprehensive study of nationwide long-term care services and found the following average monthly costs:2
Unfortunately, this care usually isn’t covered by Medicare. You may get partial, temporary Medicare coverage if the care is a result of a specific ailment and includes medical treatment. However, long-term care is usually needed as a result of a chronic condition, like Alzheimer’s. Often when people need care, treatment is no longer effective. The goal is simply to support the individual in his or her final months or years. That kind of custodial care usually isn’t eligible for Medicare benefits. Duration of Care Another important factor to consider is how long you will need the care. Obviously, the longer care is needed, the more it will cost. You can’t predict how long you’ll need care, but you can make an informed estimate. The U.S. Department of Health and Human Services estimates that a third of seniors will never need care, but 20 percent will need care for more than five years. Also, on average, women need care for 3.7 years, while men need it for 2.2 years.1 Consider the average costs above and the fact that you may need care for several months or even years. It’s easy to see how care could drain your assets, potentially leaving your surviving spouse or heirs in a difficult situation. Fortunately, you can take steps to minimize your out-of-pocket costs. Long-term care insurance can be an effective tool. You pay premiums today, and an insurer pays some or all of your long-term care costs in the future. Many insurers cover care provided in the home, and some even offer a death benefit for unused coverage. Ready to discuss your long-term care strategy? Let’s talk about it. Contact us today at Capital Management Group. We can help you analyze your needs and develop a management strategy. Let’s connect soon and start the conversation. 1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html 2https://www.genworth.com/aging-and-you/finances/cost-of-care.html Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18148 - 2018/10/17  Have you taken a loan from your 401(k) plan? Or are you thinking about cashing out the balance of a 401(k) from an old employer? It can be tempting to tap into your 401(k) savings, especially if you’re facing other financial challenges, such as credit card debt or medical bills. However, you may want to resist the urge to use your retirement savings today. New studies show that 401(k) loans and distributions may present a significant challenge. In fact, they may be creating a new retirement crisis. A study from Deloitte estimates that there will be more than $7 billion in 401(k) loan defaults in 2018 alone. The study also found that the loan distributions and the loss of future investment growth could create a $2.5 trillion shortfall for retirees.1 Plan cash-outs are another growing problem. These usually happen when people switch employers. Rather than roll their vested assets into an IRA, they cash out the plan and take a lump sum. Unfortunately, that eliminates future tax-deferred growth and creates tax liability. More than 40 percent of job changers cash out their plan, and in 2017 there were nearly $68 billion in cash-out distributions.2 The good news is you can avoid these risks with some planning. Below are some tips and guidance on both 401(k) loans and lump-sum distributions, and how to manage them to minimize your losses and tax liability. A financial professional can also help you implement a 401(k) strategy. Loans The best way to avoid 401(k) loan risk is to not take one. Of course, that may be easier said than done. If you’re facing a financial emergency, you may feel like a 401(k) loan is your best option. The truth, though, is that you probably have other options available. A financial professional can help you examine your budget and work out a strategy to overcome the challenge without threatening your retirement. If you already have a 401(k) loan, consider ways to accelerate the repayment schedule. Your plan administrator can likely increase your 401(k) deductions to pay off the loan faster. That will help you start increasing your assets again and put more of your deduction into your plan. Also, paying off your loan may help you feel more comfortable in switching jobs. Many 401(k) loan defaults happen when a person leaves an employer. They don’t pay off the loan before they leave, so the balance defaults and becomes a taxable distribution. By paying off your loan quickly, you can minimize that risk if you ever switch jobs. Distributions It used to be common for workers to stay with one employer for decades, possibly even their entire career. Those days are long gone. Today, more than 20 percent of 401(k) participants change jobs each year.2 With that job change comes a decision about what to do with your vested 401(k) balance at your old employer. It’s understandable why many people choose to cash out their plan. It can provide a one-time financial windfall to address more urgent, short-term financial challenges. However, a plan cash-out comes with significant costs. You lose all future tax-deferred growth on those funds. You’ll have to pay income taxes on the entire distribution. And, unless you’re over age 59½ or meet an exception, you’ll have to pay a 10 percent penalty. You can avoid all those costs by rolling your funds into an IRA. The rollover isn’t a taxable event, so you avoid taxes and the early distribution penalty. You can also continue to grow your funds tax-deferred and choose from a wide range of options for your goals and risk tolerance. Ready to implement a strategy to protect your 401(k) plan? Let’s talk about it. Contact us today at Capital Management Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation. 1https://www.thinkadvisor.com/2018/10/10/leakage-loan-defaults-to-spark-2-5-trillion-retire/ 2https://www.workforce.com/2018/02/14/retirement-account-bank-account-employees-cash-401ks-record-numbers/ Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18184 - 2018/10/22  You use insurance to protect yourself against a wide range of risks. You have insurance for damage to your home and car. You have life insurance to protect your loved ones if you pass away. You have health insurance to cover your medical treatment. You might even have long-term care insurance to guard against future health threats. But if you’re like many Americans, you may be missing protection against one of the biggest risks you face. It’s disability. According to the Council for Disability Awareness, 25 percent of working adults will face a disability that prevents them from working for at least a year at some point in their lifetime.1 Unfortunately, many workers aren’t prepared to face the threat. More than 50 million adults rely only on Social Security for disability protection. Fewer than half of American adults could cover three months of expenses if they were unable to work.1 Are you protected against disability? If not, you could be ignoring a sizable risk. Below are some pointers on why you could be vulnerable, and the impact disability could have on your life. A financial professional can help you further assess your risk and develop a strategy. Causes of Disability Many people assume that disability is caused only by accidents. If you avoid an accident or injury, you avoid disability. Simple enough, right? Not quite. The truth is that a wide range of medical issues can cause disability. Below are some of the most common long-term disability causes:2
As you can see, this list includes a variety of health challenges. It’s common for an individual to face one, if not more than one, of these issues through the course of a multi-decade career. Cost of Long-Term Disability Long-term disability can have a substantial impact not only on your health, but also on your financial stability. You’ll likely face ongoing medical bills. Depending on the severity of the injury, you may need to hire in-home health aides to assist with basic tasks. Most important, though, you may be unable to work. Consider how your financial picture might change if you’re unable to generate income for months or even years. Unfortunately, too few people are prepared for the risk. Many Americans have no disability insurance. While workers’ compensation may be available, that’s only for injuries suffered while on the job. Social Security also provides disability benefits, but the average monthly payment is only $1,197. That’s likely insufficient to fund your lifestyle. Disability insurance can be an effective, cost-efficient way to manage a sizable risk. Contact us today at Capital Management Group. We can help you analyze the risk and develop a management strategy. Let’s connect soon and start the conversation. 1http://disabilitycanhappen.org/disability-statistic/ 2https://www.benefitspro.com/2018/05/17/10-top-causes-of-disability-claims/?slreturn=20180917142631 Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18185 - 2018/10/22  If you’re nearing retirement, you likely have some big decisions ahead of you. Among those is what to do with your 401(k) plan. Given that your 401(k) may be one of your largest retirement assets, it’s important that you consider all your options. Your retirement could last decades. The decisions you make today regarding your 401(k) could determine whether those funds last through your lifetime. You have a few options available for your 401(k) after you retire. Each has its own set of advantages and considerations. Below are three of the most commonly used 401(k) strategies for retirees: Take a lump sum. One option is to simply cash out and take all your 401(k) funds in one payment. This option has the advantage of giving you a large amount of money and the freedom to do whatever you want to do with it. Going this route does come with some significant drawbacks, however. First, the distribution is fully taxable. And since it’s more than likely a large sum, it may put you in a higher tax bracket, forcing you to pay more than you otherwise would. On top of that, if you’re under age 59½, you’ll have to pay an early distribution penalty. Another disadvantage of taking a lump-sum payment is that you’ll lose out on future tax-deferred growth that you otherwise would have received if you’d left the money in the plan. Remember, you may need your funds to last for decades. You will likely need some growth to make that happen. Tax deferral can boost your growth and help you sustain a healthy account balance. Keep it where it is. There’s nothing that says you have to do anything with your 401(k) plan after you retire. You could simply keep it in your employer’s plan. This may be the simplest option. Since you know and understand how the plan works, you may feel more comfortable keeping your money there. You also might like the investment options the plan offers. Keeping the funds in your employer’s plan also lets you avoid taxable distributions or early distribution penalties. Leaving your money in your employer’s plan, however, could limit your options. You will only have access to the investment options in the plan. It’s possible that those options may not align with your risk tolerance in retirement. Also, if you have other investment accounts like IRAs, it could become difficult to manage them all. It can often be difficult to implement a cohesive, unified strategy across multiple accounts. What’s more, having a 401(k) in addition to other retirement accounts leaves one more account for your beneficiaries to track down after you pass away. That gives them another task and step of complexity during an already challenging time. Roll it into an IRA. Another option is to roll your 401(k) plan into an IRA. By doing this, you can avoid a taxable distribution or early distribution penalties. The funds in your new IRA will also grow tax-deferred just like they did in your 401(k). One of the biggest benefits of taking this option is that you can gain more freedom as to where you can invest your money. This can be a good option if you are looking for similar benefits but want more control of your retirement funds. Searching for a retirement planning strategy to fit your needs? Let’s start the conversation. Give us a call to discuss your goals with a financial planning professional today. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 16295 - 2016/12/19  Income is at the core of any retirement strategy. Simply put, your goal in retirement is to generate more income than you spend. That way you can preserve and increase your assets and make your savings last for life. If you can’t generate enough income, you may deplete your assets and face difficult challenges in the later years of retirement. A number of issues could threaten your retirement income. One is taxes. Another is inflation, or the gradual increase in prices from year to year. If you’re generating income from your retirement savings, you also may face market risk. A downturn in the market may threaten your ability to create income. One potential strategy is to create a stream of guaranteed retirement income using a tool called an annuity. Annuities are popular for a wide range of reasons, but one of the biggest is their ability to generate a guaranteed lifetime income stream. Below are a few ways you can incorporate an annuity into your retirement strategy: Annuitization Annuitization is a strategy that allows you to convert a portion of your retirement assets into a guaranteed income stream. The annuity company calculates a payment amount based on your premium amount and age. Generally, the older you are, the higher your income amount will be. You then receive the payment for the rest of your life. There are usually other payment durations available besides a lifetime income stream. For example, you could get payments over a set number of years. You could get an income amount for your lifetime and your spouse’s lifetime. Remember, though, that changing the duration will change the payment. The shorter the expected duration, the greater the payment will be. It’s also important to note that annuitization is usually a permanent decision. Once you convert your assets into income, you can’t reverse your choice. You no longer have access to the lump sum and instead have the regular payments. It’s always wise to maintain liquid assets as an emergency reserve. Interest There are some deferred annuities that pay regular periodic interest. These annuities are called fixed deferred annuities. You deposit a lump sum of assets and receive a fixed interest rate over a set period of time. After that period, your interest rate may fluctuate, but it will never go below a stated minimum rate. You can let your interest accumulate and grow your assets on a tax-deferred basis. However, you can also take your interest as income. These annuities have no market exposure, so there’s no risk of loss. A fixed annuity could be an effective way to generate supplemental income. Guaranteed Income Rider Some annuities offer optional benefits called riders. These benefits increase the annuity fee but also provide additional protection. One of the most popular riders is a guaranteed minimum income benefit. With this benefit, you’re allowed to withdraw up to a certain percentage of your contract value every year. As long as you stay within the guaranteed percentage, the withdrawal is guaranteed for life. That’s true even if your account value declines or is depleted. These benefits are commonly found on fixed indexed annuities and variable annuities. While each operates differently, both types allow you to increase your assets based on market performance. Variable annuities have market risk exposure, while fixed indexed annuities do not. Your financial professional can help you decide whether this benefit makes sense for you. Ready to develop your retirement income strategy? Let’s talk about it. Contact us today at Capital Management Group. We can help you analyze your needs and goals and create a plan. Let’s connect soon and start the conversation. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18087 – 2018/10/1  Very often, a retirement plan is only as good as the assumptions in the plan. You’ve likely made assumptions about your retirement income, your life expectancy and maybe even your need for medical care. One big assumption in many retirement plans is the amount of money you’ll spend each year after you retire. It’s a common assumption among many workers and even financial professionals that spending goes down after you stop working. This assumption is often used when calculating a retirement savings target. However, it’s not always true that spending goes down after you retire. Many retirees find their spending is much higher than they’d anticipated. Sometimes their spending even increases after they stop working. When you determine your retirement savings goals, it might be a mistake to underestimate your projected spending. There are many reasons spending may increase in retirement, and it’s important to take these factors into account ahead of time. Below are a few common reasons spending can increase in retirement: Medical Expenses For most, retirement brings a transition from employer-sponsored health insurance to Medicare. This transition can often be surprising for new retirees, especially those who had a robust employer plan. While Medicare is a valuable resource, it doesn’t cover everything. Fidelity estimates that the average retired couple will spend $260,000 on out-of-pocket medical costs.1 Those expenses include such things as premiums, deductibles, copays and certain health care services like dental and vision, which aren’t covered at all under Medicare. Even for the services that are covered, Medicare usually pays only a portion of the cost. That means you may have to pay the balance out of pocket. You can prepare for these expenses ahead of time by contributing to a health savings account, which can help you build up a tax-advantaged reserve to help cover your health care costs in retirement. You may also want to consider a range of supplemental insurance policies to help fill the gaps in Medicare coverage. Taxes Your taxes may not necessarily increase in retirement, but you could feel their impact much more acutely. While you’re working, your taxes are likely withheld from your paycheck, so you may be less aware of their true cost. During retirement, though, your taxes will come out of your Social Security, pension payments, retirement account distributions and other income sources. It’s important to be aware that you’ll have to pay taxes on much of your retirement income. Also, keep in mind that distributions from 401(k) and traditional IRAs are usually taxable. By planning ahead, you can ensure you’ll take these expenses into account and budget accordingly. Increased Spending Although you may not expect it, it’s common for retirees to see their discretionary spending increase in retirement. The combination of more free time and a substantial amount of readily available money can often lead to increased spending. Many retirees fill their newfound free time with travel, shopping, dining out and other activities that cost money. There’s nothing wrong with having fun, of course, but it’s important to be aware of your spending so that it doesn’t jeopardize your financial security in the later years of retirement. Preparing a budget that accounts for your projected income and expenses in retirement can help guide your spending decisions and ensure your spending remains within a reasonable limit. Ready to develop your retirement spending plan? Let’s talk about it. Contact us at Capital Management Group to learn more. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation. 1https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-in-retirement-rise Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 17749 – 2018/6/19  If you’re nearing retirement, you likely have some big decisions ahead of you. Among those is what to do with your 401(k) plan. Given that your 401(k) may be one of your largest retirement assets, it’s important that you consider all your options. Your retirement could last decades. The decisions you make today regarding your 401(k) could determine whether those funds last through your lifetime. You have a few options available for your 401(k) after you retire. Each has its own set of advantages and considerations. Below are three of the most commonly used 401(k) strategies for retirees: Take a lump sum. One option is to simply cash out and take all your 401(k) funds in one payment. This option has the advantage of giving you a large amount of money and the freedom to do whatever you want to do with it. Going this route does come with some significant drawbacks, however. First, the distribution is fully taxable. And since it’s more than likely a large sum, it may put you in a higher tax bracket, forcing you to pay more than you otherwise would. On top of that, if you’re under age 59½, you’ll have to pay an early distribution penalty. Another disadvantage of taking a lump-sum payment is that you’ll lose out on future tax-deferred growth that you otherwise would have received if you’d left the money in the plan. Remember, you may need your funds to last for decades. You will likely need some growth to make that happen. Tax deferral can boost your growth and help you sustain a healthy account balance. Keep it where it is. There’s nothing that says you have to do anything with your 401(k) plan after you retire. You could simply keep it in your employer’s plan. This may be the simplest option. Since you know and understand how the plan works, you may feel more comfortable keeping your money there. You also might like the investment options the plan offers. Keeping the funds in your employer’s plan also lets you avoid taxable distributions or early distribution penalties. Leaving your money in your employer’s plan, however, could limit your options. You will only have access to the investment options in the plan. It’s possible that those options may not align with your risk tolerance in retirement. Also, if you have other investment accounts like IRAs, it could become difficult to manage them all. It can often be difficult to implement a cohesive, unified strategy across multiple accounts. What’s more, having a 401(k) in addition to other retirement accounts leaves one more account for your beneficiaries to track down after you pass away. That gives them another task and step of complexity during an already challenging time. Roll it into an IRA. Another option is to roll your 401(k) plan into an IRA. By doing this, you can avoid a taxable distribution or early distribution penalties. The funds in your new IRA will also grow tax-deferred just like they did in your 401(k). One of the biggest benefits of taking this option is that you can gain more freedom as to where you can invest your money. This can be a good option if you are looking for similar benefits but want more control of your retirement funds. Searching for a retirement planning strategy to fit your needs? Let’s start the conversation. Give us a call to discuss your goals with a financial planning professional today. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 16295 - 2016/12/19  Is retirement quickly approaching? Are you currently exploring tools and products that can help you enjoy a financially stable and comfortable retirement? From IRAs to insurance to investment vehicles, you have a broad range of tools and products at your disposal. An annuity is one such tool. Annuities are often used to generate income, minimize taxes, manage risk and more. There are several types of annuities, and each is used to achieve specific objectives. One increasingly popular type is a fixed indexed annuity. These annuities are unique in the way they offer growth potential while also limiting downside risk. Fixed indexed annuities can also be used to create a guaranteed* lifetime income stream. Below are a few common questions and answers about how to use a fixed indexed annuity to protect your financial stability in retirement: Can your assets grow in a fixed indexed annuity? A fixed indexed annuity is a deferred annuity, which means your funds inside the annuity have an opportunity to grow and accumulate before the contract is annuitized and converted into income. Deferred annuities are categorized based on the way the funds accumulate. There are fixed annuities, which pay interest, and variable annuities, in which growth comes from market returns. Variable annuities often have downside market risk. Fixed indexed annuities offer the safety of a fixed annuity with some potential for growth. Your growth comes from interest payments. However, your interest rate is based on the performance of a market index. If the market performs well, you may receive more interest. If it performs poorly, your interest rate could be lower. In most fixed indexed annuities, you don’t have downside market risk. Even if the index has a negative return, you won’t lose money. That’s because most fixed indexed annuities have what’s called a guaranteed* minimum interest rate, which is the least amount of interest you can receive in any given period. In this way, a fixed indexed annuity can often serve as a protective tool against loss. What fees will you pay in a fixed indexed annuity? Annuities are often perceived as high-cost financial tools. However, the cost of an annuity often depends on the specifics of the contract. Some annuities come with significant fees, while others may have minimal expenses. Most annuities do have something called surrender charges. These are penalties you pay if you surrender your contract or take a sizable withdrawal during a specified surrender period, usually the first few years after you open the policy. However, you only pay the surrender penalty in those instances. Fixed annuities often have minimal fees or none at all. Some policies offer optional benefits and features that may provide greater protection but also come with increased cost. Make sure you understand the costs of your contract before moving forward. Can I take income from my fixed indexed annuity? There are a few different ways to take income from a fixed indexed annuity. One is to annuitize the contract. When you annuitize a policy, its value is converted into an income stream that’s guaranteed* by the insurance company. The amount of income is based on the value, your age and other factors. Another option is to take systematic withdrawals. This may be preferable to annuitization, because withdrawals don’t require you to sacrifice your contract value. Some policies even have additional options that guarantee* your withdrawals for the rest of your life. Ready to learn more about whether a fixed indexed annuity is right for you? Let’s talk about it. Contact us today at Barry Levie Financial. We can help you analyze your needs and identify the right strategies. Let’s connect soon and start the conversation. *Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 17749 – 2018/6/19 |
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