6 Reasons Why Retirees Outlive Their Income And A Formula That Guarantees Income For Life

Lifetime Income Formula For Retirees

A secure income in retirement is your most important financial asset!  If you take away the income, you are toast!

Retirement income used to be so easy!  You would put money into a fixed product, live off the interest and be happy!  Oh, how times have changed!

Historically low interest rates and two major economic meltdowns since 2000 have totally changed retirement income planning!

In fact, today we find there are six reasons why retirees are outliving their income: 

  1. Buying the wrong productsthe old fixed and/or growth product approaches don’t work anymore.
  2. Using the wrong strategies-interest only and/or systematic withdrawals work best during higher rates and rising markets which don’t currently exist. 
  3. Volatile marketsmost retirees take more risk for their income than they should. 
  4. Longevity your money may have to last 30 years or more!  
  5. Inflation-failing to factor in annual increases in the costs of living. 
  6. Taxes-failing to factor in taxes.

Successful lifetime income planning today requires a new formula!

There are six steps you must follow today for lifetime income success: 

  1. Budget-you must know what it cost to be you.
  2. Product/Strategy-your needed income must be guaranteed.
  3. Inflation/Taxationyou have to calculate an annual inflation rate and taxes on top of your needed income. 
  4. Lifetime-The income you need must be guaranteed to last for your lifetime.
  5. Can’t Go Down-your income can’t go down, no matter what.
  6. Can Go Up-your income must have the ability to rise in the future.

When you apply the lifetime income formula, you don’t have to worry any more about your income!  You will have less stress and more time to focus on what’s important to you and more enjoyment in your retirement

Rick Kelly is a Certified Senior Advisor with Futurity First-Summit Financial Group in CO.  He helps retirees to secure and defend their retirements.  To request A FREE COPY of his “Lifetime Retirement Income Tool Kit” email him at rickkelly@ffig.com or call his toll-free 24-hour resource line right now at 1-877-596-8233.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which products/investment(s) may be appropriate for you, consult with your attorney, accountant, financial advisor or tax advisor prior to investing.

Seven Year-End Financial Strategies You Should Use To Maximize Your Money And Secure Your Retirement…

Time To Ready Your Finances For Next Year!

The year end is here!  Yes, it’s one of your busiest times of year!  However, it’s also wise to take a few minutes and implement some year-end financial strategies that can make a huge difference for your finances and financial security!

1.  Call your tax professional to discuss the following:

  • Income taxes you pay on investment earnings and Social Security Benefits
  • Harvesting for tax losses
  • Tax Credits
  • Donations
  • Gifting

2.  IRA Owners 70 ½ and older, take your 2015 RMD before years end!  The penalty is 50%!

3.  Calculate what it costs monthly to live your desired lifestyle; do your budget.

4.  Review your monthly income sources (your most important asset).  Is your income secured against potential adverse market conditions, low rates and inflation?  Moving forward, will your income allow you to live your desired life style regardless of these conditions?

5.  Take inventory of your assets.  Reevaluate your risk tolerance levels and identify those assets that no longer meet your acceptable levels of risk/reward.  Assign a purpose for the assets in your portfolio-Liquid, Income, Portfolio/Savings, Risk and Estate.   Review your returns and the tax efficiency of your assets; identify those assets that are not performing at the required levels.  Re-position those assets that cause you worry and lost sleep.

6.  Review your risks:  Health care/prescription and the potential costs of long term care confinement.  Identify what income and assets you would use to pay for these costs.  Consider and compare some care policies if you find a potential shortage in either or both areas.

7.  Make sure your estate documents are up to date (Will, Trust, Living Will, POA, Medical POA).  Confirm your assets are registered properly; the correct owners and beneficiaries.  If your estate exceeds the $5.43 million level, discuss the trust options with your attorney that can eliminate potential estate taxes.

Yes this exercise can seem like work this time of year, however it can help you reduce taxes, increase returns, increase income, maximize your estate and provide peace of mind!!!

Rick Kelly is a Certified Senior Advisor with Futurity First-Summit Financial Group in CO.  He helps retirees to secure and defend their retirements.  To request A FREE COPY of his “Year-End Tool Kit” email him at rickkelly@ffig.com or call his toll-free 24-hour resource line right now at          1-877-596-8233.

How To Reduce Or Eliminate The Taxes You Pay On Your Social Security Benefits

Many retirees today are paying taxes on their Social Security Benefits!

Because most retirees live on fixed incomes, this expense has a really negative impact on the quality of lifestyle!

In 1984, the IRS passed legislation that made up to 50% of Social Security Benefits taxable. Single tax return filers that have income between $25,000 – $34,000 and joint tax return filers that have income between $32,000 – $44,000 are included.

In 1993, the IRS passed additional legislation making up to 85% of Social Security Benefits taxable. This legislation affects single tax return filers that have income exceeding $34,000 and joint tax return filers that have income exceeding $44,000.

To calculate the taxable amount of Social Security Benefits, three categories of income are included:

  1. All income from pensions, wages, interest, dividends, capital gains, rents, royalties, etc.
  2. All interest from tax-free investments.
  3. 50% of the actual Social Security Benefits.When the three categories added together exceed the thresholds, Social Security Benefits become taxable.

For example, assume a single tax return filer has the following assets and annual income:                                                               Assets                                       Income

Bank Savings

$300,000 @ 2.00%

$6,000

Tax-free Savings

$100,000 @ 2.50%

$2,500

Mutual Fund Savings

$180,000 @ 2.80%

$5,040

Pension

__________

$14,760

½ Social Security Benefits

 __________

$5,100

Total

$580,000

$33,400

The total income adds up to $33,400 which exceeds the $25,000 threshold. Using the IRS Formula, $4,200 of the Social Security Benefits are taxable.

However, the good news is that there are strategies where retirees can reposition some of their savings from taxable and tax-free investments into tax-deferred savings and pay little or no tax on their Social Security Benefits.

For example, if $365,000 was repositioned into tax-deferred savings at 3%, the taxes on Social Security Benefits would be eliminated, but still earn interest of $10,950!

If you are paying taxes on your Social Security Benefits, review your sources of income. Frequently, the earnings from bank, investment and tax-free savings are the reason and a simple reposition of assets into tax deferred savings can fix your tax problem!

Rick Kelly is a Certified Senior Advisor with Futurity First-Summit Financial Group in CO. He helps retirees to secure and defend their retirements. To request A FREE “Social Security Worksheet” call his toll-free 24-hour resource line right now at 877-596-8233 or email him at rickkelly@ffig.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which products/investment(s) may be appropriate for you, consult with your attorney, accountant, financial advisor or tax advisor prior to investing.

Fixed Index Annuities… Are They A Good deal?

Wise Decisions Make for A Secure Retirement

Fixed Index Annuities(FIA’s)…Are They A Good Deal?

By now, most of you have heard about Fixed Index Annuities (FIA’s)!

The baby boomers, and they don’t even know it, have made FIA’s a very hot topic for at least the next two decades!

The need for certainty, protection against market loses, tax advantages, return potential without market risk, estate planning advantages, and guaranteed income streams make the FIA an attractive story!

The question is, are they a good deal?

Today’s version of FIA was introduced in 1995. Since that time dozens of companies have brought their version of FIA to the market and there will be many more to follow.

The primary reason FIA’s get so much attention comes down to one word: defense. Most pre and current retirees want to defend their principal against market losses, they want to keep pace with inflation, they want to defend against taxation and they want to defend their income. Hence, the insurance industry eagerly introduced the FIA!

The FIA is actually a fixed annuity. The principal is guaranteed and there is a guaranteed minimum.

However, the difference between FIA’s and traditional fixed annuities, is how the returns are paid. Your actual returns are based on the performance of a stock market index, like the S & P 500.

What is most intriguing about the FIA, is the combination of principal guarantees and stock market-linked returns. Most all conservative retirees want to earn more than the 2% – 3% rates currently available. However, they do not want to risk their principal.

With the FIA, if the market is negative or crashes, the worst case is a minimum of a zero return. If the market performs well, the potential returns can be higher.

For pre and current retirees who are considering purchasing an FIA, it’s very important to compare the different plans that are available.

Step 1:

Compare the method in which the returns are calculated (Index Method). There are several methods including: Point to Point, High Water Mark, Averaging, Trigger and Annual Reset. The Index Methods are very competitive and will perform differently based on market conditions.

Step 2:

Compare the plans for participation rates and caps. Participation rates refer to the percentage of the index return the policy will pay. For example, assume that the index has a return of 10% and the policy has a 45% participation rate. The policy would pay 4.5%. Caps refer to the maximum return the policy will pay. For example, some policies will pay a maximum return of 7.75%, even if the index returns are higher.

Step 3:

Check for fees. FIA’s can have zero fees but, depending on attached riders, can have annual fees. It’s vital that you if there are any fees and what they cost.

Step 4:

Compare the terms and withdrawal features. Most plans have terms that last five to ten years and the withdrawal features vary by plan. Some plans will allow for annual withdrawals of 10%, while others use an annual vesting schedule based on earnings.

Step 5:

Choose an insurance company that has high quality investments and is highly rated from all five major rating services: A. M. Best, S & P, Duff & Phelps, Moody’s, and Weiss.

The FIA can be a good deal for those consumers who want guarantees of principal, tax advantages, defense against market losses, and potential for higher returns. However, before you purchase, do your homework! The process proceeds the results! Compare, compare, compare.

Rick Kelly, CSA is Certified Senior Advisor with Futurity First in Colorado. He specializes in helping pre and current retirees to secure and defend their retirements. You can receive a free copy of his report “The Annuity Educator” and “Pinnacle List” by emailing him at rickkelly@ffig.com or  by calling his 24 hour-resource line at 877-596-8233.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which products/investment(s) may be appropriate for you, consult with your attorney, accountant, financial advisor or tax advisor prior to investing.

Fixed Annuity Wisdom: Avoid The Costly Mistakes

Wise Decisions Make For A Secure Retirement

Are you considering the purchase of a fixed annuity to help secure your retirement?  Do you want to avoid the most common and costly mistakes?

With so many annuity plans on the market today and so many people trying to sell them, it can be overwhelming trying to decide on which annuity actually best meets your needs!

The good news is that there is a Five-Step Process that you can follow that will help you make a wise decision!

The Five-Step Process:

There are five different styles of Fixed Annuities (FAs) available today: MYGA, Traditional, Combination, Index, and LTC. All five styles guarantee your principal and a minimum interest rate. However, the actual interest you earn is based on the style you choose.  

Step 1: Decide which style best fits your needs.  FAs offer several different withdrawal features including: Interest-Only Withdrawals, Lifetime Income Withdrawls,10% Withdrawals, Cumulative 10% Withdrawals, Systematic Withdrawals, Return of Premium Guarantees, Nursing Home Withdrawals, and Hospitalization Withdrawals.

Step 2: Decide what withdrawal features you will need to access your money.  FAs have early withdrawal charges that last for different terms (The surrender period). At the end of the surrender period, you have 100% access to your money without any charges. The early surrender terms can last anywhere from three years to ten years and even beyond.

Step 3: Decide how long of a term you want.  Not all insurance companies are created equal. Search for the most competitive companies offering the combination of interest rate styles, withdrawal features, and term lengths that you want.

Step 4: Compare FA plans side by side. The safety of the insurance company is a key issue. The safest insurance companies have top ratings from the rating services (A. M. Best, S & P, Moody’s, Fitch, and Weiss). A long track record and a conservative investment portfolio are also vital. Avoid companies that have high percentages of junk bonds.

Step 5: Choose safety first! Don’t chase returns with lower rated companies.

 If you’re going to purchase and annuity, follow this Five-Step Process to help you make a wise decision!

Rick Kelly is a Certified Senior Advisor with Futurity First-Summit Financial Group in Colorado. He helps retirees secure the five pillars of retirement. To request A FREE COPY of his Special Report, “The Annuity Educator,” call his toll-free 24-hour resource line right now at 1-877-596-8233 or email him at rickkelly@ffig.com.  You can also visit Rick’s site at www.futurityfirst.com/rickkelly

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which products/investment(s) may be appropriate for you, consult with your attorney, accountant, financial advisor or tax advisor prior to investing.