Did you know about the new Secure Act which allows you to wait longer before you have to start withdrawing money from your qualified retirement accounts, such as your 401(k) or IRA? I thought to share with you this week’s article because it explains that “the new age limit for required minimum distributions (RMDs) is now 72, up from 70½. The change applies to those turning 70½ after Jan. 1, 2020. This delay gives your money a bit more time to grow in a tax-sheltered account while postponing your tax bill.” Did you also know “even if you have more time to wait, it’s still crucial to take your distribution on schedule. If you miss your RMD, you will end up owing a 50 percent penalty on the amount. That’s on top of the ordinary income tax you must pay on the money you withdraw.” (Read more about calculating your RMD in this week’s article.) Call us if you need any help understanding how the changes impact on your retirement savings plan. We’re always here to help.
I read an article this week that I thought to share with you as it expressed something I’ve been reflecting on. The author, connected with Harvard, wrote that “For many people, retirement is a key reward for decades of daily work—a time to relax, explore, and have fun unburdened by the daily grind. For others, though, retirement is a frustrating period marked by declining health and increasing limitations”. In our business we find that one of those increasing limitations can relate to having less income in retirement. Call us if you are concerned about that. We might have some ideas that can help increase your income and reduce your financial limitations when you do retire. We’re always here to help.
You may have heard about annuities elsewhere, but we thought it useful to send you a link to a Yahoo Finance article that does what we think is a good job of explaining that “Fixed indexed annuities might be suitable for an investor who still wants to minimize risk but wants the potential to earn a higher rate of return.” Annuities are contracts you sign with an insurance company to pay a premium for guaranteed income later. If you are trying to determine which kind of annuity is best for you, give us a call and we can help explain some of the difference between the various kinds. We’re always here to help.
I read an interesting “framing paper” written by two learned scholars from Brookings Institution and Kellogg School of Management. The question they addressed revolved around the change in what they called the “retirement paradigm”. I thought you might like to read their paper. They discuss “the risk faced by retirees and offer tractable solutions to improve the American retirement.” One suggestion they make are “policies that can help expand the market and encourage, or nudge, people towards buying annuities.” Their rationale behind this ‘nudge’ is worth reading. Let us know if you have any questions, we are always here to help.
I thought to share with you this week’s article because it provided an abstract of a study done that concludes that “a disturbingly large number of investors think they are on a path toward a comfortable retirement, but they are unlikely to reach their destination due to their unrealistically optimistic growth forecasts for their retirement savings”. Call us if you are evaluating your retirement plan, we may have ideas for obtaining an income that will continue over your lifespan, regardless of what happens in the market. We’re always here to help.
The Brookings Institute recently published a study where they reported that “in a recent nationwide poll, 73 percent of Americans said they do not have the financial skills to manage their money in retirement. Converting retirement savings balances into a stream of retirement income creates difficult choices. The necessary decisions – made in the presence of uncertainty about investment returns, future healthcare expenses, lifespan, and other factors – must balance the twin desires to boost current living standards and to avoid outliving one’s assets. For many people, the solution will involve some form of guaranteed lifetime income – benefits that will be paid regularly as long as the individual survives. Social Security benefits, for example, provide lifetime income, as do payments from defined benefit (DB) pension plans. However, Social Security only provides a modest income for most people, and DB pensions are disappearing in the private sector.” The solution – according to them needed to involve an annuity. Call us if you would like to know more about income streams you can’t outlive. We’re always here to help.
This week’s article reminds us “given that an employee may have worked for several employers, who may have merged, sold their plans, or gone bankrupt, it is very difficult for the average person to know where to get help in finding out whether or not he or she is receiving all of his or her pension benefits.” If this strikes home for you, we want to let you know of a program that assists older Americans in accessing information about their retirement benefits and helps them to negotiate with former employers or pension plans for due compensation. Click on this week’s link and take a look. If you need any help, call us. We’re always here for you.
As you enter a new year thinking of the changes you will make in the months to come, I thought to share with you an article that discusses differences that may relate to decisions you will make in your retirement planning. This week’s article tells us “Both annuities and life insurance should be considered in your long-term financial plan. While both include death benefits, you buy life insurance in the event you die too soon and an annuity in case you live too long. In other words, life insurance provides economic protection to your loved ones if you die before your financial obligations to them are met, while annuities guard against outliving your assets.” Call us if you would like to talk about this. We’re always here to help.
During this holiday season it is important to take a moment and acknowledge that no matter where we are in our retirement planning, we are joined together with gratitude at celebrating the beginning of a new year. We remain committed to working with you planning a better retirement, where your future years are less stressful, and you feel better about your retirement strategies. Call us, we are always here to help. Happy Holidays.
This week’s article discusses something we don’t always focus on when it comes to our retirement objectives; we want both growth and income. While for sure we don’t want to lose any of our initial investment in whatever product we choose, we still want it to grow. A fixed-index annuity offers “both a potential source of guaranteed income in retirement and a growth vehicle that may outperform bonds — without the risk of loss of the initial investment.” Call us if you are still researching how to get all that you want with your retirement money. We’re always here to help.