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Are you disappointed by CD rates at your financial institution?
As you know, today’s low interest rates at banks are insured by a federal agency. But what you may not know is that banks are making more money than ever by charging good people like you 18% to 20% or more on your credit cards and 12% to 13% on your personal loans while only paying you a lousy 1% to 2% on you CDs (a/k/a/ Certificate of Disappointments!)
If you are not satisfied with the current status quo, its definitely time to move to a different playing field that is being called one of the “safest retirement strategy” of our time. Fixed Indexed Annuities (FIAs) offer you a guaranteed growth rate with the ability to take advantage of different interest crediting methods to achieve various rates of market growth while never participating in market losses ever again! FIAs offer principal protection and potential tax-deferred interest to help you accumulate savings faster and there are no up front ales charges. Many FIA’s still offer signing bonuses (some up to 20%). Some new types of FIAs offer chronic care benefits, and several income options to receive income as a single payment, regular payments over a specific period of time, or even as income for life. They also offer a death benefit which can be passed onto your beneficiaries if you pass away before you start receiving annuity payments. (Beware: distributions over your free annual withdrawal may be subject to a surrender charge and are also subject to ordinary income if taken from a Qualified Plan, and if taken before 59 1/2 years of age, a 10% federal penalty may apply.)
With the sense of insecurity arising out of the state of the Social Security program, more responsibility for retirement planning is shifting to individuals. According to a report by Mary Willams Walsh published in the March 2010 issue of the New York Times, Social Security payouts in 2010, exceeded the amount paid in by workers for the first time since 1983. (http://nytimes.com/2010/3/25/business/economy/25social.html)
For those of you who have a negative perception of annuities, you will be surprised by some results from the 2010 Allianz “Reclaiming the Future” study: 80% of annuity owners are happy with their purchase because of the safety, security, and protection factors. This ranks 2nd highest in satisfaction among all financial products. Yet, 46% of respondents said their financial professional had not presented annuities as a retirement option! It’s time to get over your bias and start getting accurate information about annuities, so you can make a more informed decision about financing a portion of your retirement through FIAs. (Watch for my post about Fixed Indexed Universal Life policies to understand more about tax-free retirement planning.)
Today’s annuities aren’t like the ones introduced even a decade ago. To learn more about annuities, how they work, and how important they an be to a solid retirement plan as well as disspell some myths and get the truth about annuities watch some helpful videos called the ABCs of Annuities.
Call us today to help you create a safer retirement plan and a better day tomorrow!!!
Retirement Time Line Ages 50-70 1/2
This article provides a general overview of a retirement time line without enumerating all the pros and cons surrounding the age specific decisions. Many people think major retirement decisions coincide with your 65th birthday. In reality, many important decisions begin as early as age 50. Actually, you are never too young to start developing your long term financial objectives. “If I knew then what I know now …” is a phrase often spoken by seniors who would have done things differently if they had been more informed young enough to make intelligently planned decisions versus emotionally charged emergency ones in reaction to sudden life changing events.
Age 50: During the year in which you turn 50, you can begin to make catch-up contributions (beyond the normal contribution limits) to a 401(k) and many other retirement accounts.
Age 55: During the year in which you turn 55, you may receive amounts from an employer’s retirement plan without the 10% federal tax penalty if you separate from the service of that employer.
Age 59 ½: You may begin taking withdrawals from a retirement account without the federal 10% tax penalty, but be prepared to pay the taxes on the account’s growth at your current tax bracket. Of course, the more you leave in, the more the funds grow tax-deferred.
Age 62: You may be eligible to begin receiving Social Security (SS) benefits. However, by choosing to begin drawing SS before your Full Retirement Age (FRA), you would receive a permanently reduced monthly benefit.
Age 65: You are eligible for Medicare on the first day of the month you turn age 65. If you do not enroll during that month, and wish to enroll later, you may be required to pay a higher premium.
Age 66: If you were born between 1943 and 1954 you reach FRA at age 66, and are entitled to 100% of your SS benefits. If you were born in 1955 to 1959, add two months for each year to calculate your FRA.
Age 67: If you were born in 1960 or later, your FRA is age 67.
Age 70 ½: You must begin withdrawing your Required Minimum Distributions (RMDs) from most retirement accounts or incur significant tax penalties.
It is imperative to work with an independent knowledgeable financial professional or tax advisor to discuss your own retirement time line and specific objectives so you understand all your options and gain a clear picture of your retirement readiness.
Filomena Day, a former CPA, with 40 years of accounting, financial and coaching experience with individuals and businesses, works with people from ages 25 to 65 who would like to plan for a more comfortable retirement with tax free strategies. Call or write to be on her mailing list for free quality newsletters or to ask about her VIP Money Makeover program.
Pursuant to IRS Circular 230 this article is not intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement.
Baby Boomers Challenged by Medicare Info
According to a Bankers Life and Casualty Company Center for a Secure Retirement survey an alarming high percentage of American baby boomers are uninformed about Medicare. The results are surprising since boomers say health care expenses and illness are their top financial concerns in retirement.
While the Banker Life survey found 56 % of baby boomers admit to knowing little or almost nothing about the Medicare program, one in seven erroneously believe the program is free. Nearly 75 % of boomers did not know Medicare requires monthly premiums, co-pays and deductibles. Furthermore, 62 % of baby boomers do not know what Medicare covers for doctor and hospital visits and 80 % under age 65 did not know whether it covers long term care.
A similar survey by the National Council on Aging, Washington, and UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH), (500 U.S. baby boomers ages 60 to 64 AND 1,000 U.S. residents ages 65 and older were surveyed.) found that only 36 % of the survey participants over age 64 – and just 23 % of the participants ages 60 to 64 – understand Medicare well enough to know that Medicare Part A is the Medicare program component that covers the cost of hospital care.
About 50% of the seniors, and just 37% of the boomers, said they were familiar with the Medicare Part D prescription drug program doughnut hole – the gap between where routine drug benefits end and catastrophic coverage begins.
Fifty seven percent of boomers surveyed stated they were uncertain of the future of Medicare, and 24% said they expect to see major changes in the program.
It appears that baby boomers don’t understand Medicare, think Medicare is in for major changes and may be reluctant to pay enough attention to it until they absolutely need to know about it when they are nearing their own retirement. Personally, I only became concerned when my parents reached 65 years of age almost 20 years ago, and still didn’t understand enough about it until I was certified by UnitedHealth Group to offer Medicare Supplemental Plans in 2008. What do you think about the program and its future?
