Annuities

IRA, TSA, 401K, 403B… you may have heard of these types of accounts and you many be contributing to one right now. If you are, good for you! If you aren’t, that is OK too! These accounts are known as tax-deferred plans and are good for 3 reasons:

• Reduce your tax liability in the year you are contributing to the plan
• If your company matches your contribution, it’s free money to you!
• It is an account you can draw from when in retirement

How do these relate to annuities? Well, annuities are also tax-deferred plans, but they can help your money last longer. If you have contributed to a tax-deferred plan at a prior employer or are nearing retirement, your money is most likely in stocks, bonds, mutual funds, etc. Having your money be flexible with the market is good while you are young as it is easier to bounce back should the market tank. However, if you don’t like your money being tied to the market, or are nearing retirement (within 15 years), your retirement plan should be placed into a plan that is fixed, not variable.

A fixed indexed annuity allows for your money to grow, but guarantees it won’t lose value. Here are some important features to a fixed-indexed annuity:

 

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Life Insurance

Most people do not think of life insurance as a means for retirement, however, it definitely can be! Life insurance is most notably known to provide a death benefit to family when an insured loved one passes on. There is much more to life insurance while the insured is still living that can be useful in retirement.

Here are some living benefits of life insurance:

• Tax-free retirement income

  Through an indexed universal life insurance policy, you can overfund the life insurance policy now, and then take the money out of the account at a later time TAX FREE.

• Chronic illness rider

  In place of a long-term care policy, can help if an insured cannot perform 2 of the 6 activities of daily living (ADL’s) – bathing, continence, dressing, eating, toileting and transferring

• Critical illness rider

  Can help if an insured has a specific medical condition (heart attack, stroke, cancer)

• Terminal illness rider

  Can help if an insured is diagnosed as terminally ill and has a life expectancy of 24 months or less

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