Retirement Planning Made Easy
Author,: Randy Taylor, Lic. # 0643596,
Calif. Retirement specialist since 1983.
Published in financial periodicals since 1998.
Copyright, Creative Commons Licensing. This article
may be copied or re-distributed as long as it is copied in
it’s entirety and not altered in any way.
The Problem: How Can I defer taxes on my retirement until needed, spend it all and still pass on a financial legacy to my children income tax free?
The solution: Combining the benefits of two safe financial vehicles to do all of the above.
Step #1: Making sure that you will accumulate saving tax-deferred without losing any of your current funds to bad investments, taxes, or stock market fluctuations.
Step # 2: Keeping the savings accounts safe while deferring taxes on future income received.
The closer that you get to retirement the more important it becomes to keep all or most of your
nest egg safe so that it will be there when you are no longer working and need it the most.
Annuity savings accounts are often the best solution if your goal is future income payments.
Why choose an annuity savings account instead of a bank c.d. or possibly a bond?
This is easy! Annuities are designed specifically for retirement purposes and offer 3 major benefits for the retiree:
1.) Income tax deferral on all interest until it is received.
2.) Guaranteed safety of principal and a minimum interest rate if held
3.) Any unspent funds pass to your heirs at death without the need of a will or trust.
There are approximately 1.200 insurance companies to choose from in most states. (1,274 in California for example) You will want to find a company that has minimal exposure to junk bonds so that they can stay competitive while you are growing your account.
What type of annuities are best for retirement and which product features should you consider?
1.) Variable annuities are best suited for those that want maximum upside growth potential but may not offer safety of principal as a result
2.) Fixed Indexed annuities have minimum interest rate guarantees and no exposure to decreases with the market drops if they are used specifically for retirement purposes.
#3) How to provide an income tax free account for your children after you have passed away.
A simple solution would be to buy a life insurance policy equal to the value of your retirement account projection payable to your children. This gives you “permission” to spend everything you own on your retirement since the children will still get theirs income tax free when you are gone.
Both of above alternatives offer an option to have a guaranteed level & in some cases and increasing income payment for life that is often higher than bonds. For a 65 yr. old this could be in the 6% range for life, even if the entire account is spent. The variable annuities might pay out approximately 1% less but offer more money if you cash the account in in 1 lump sum. These alternatives involve paying from .75 of 1 % to 1.5 % approximately in exchange for lifetime payments should the product itself perform poorly.
Summary: This is not meant to be specific legal, tax, or investment advice but is offered up rather for entertainment purposes and a different point of view. An honest and experienced multiple company insurance broker or financial planner can help you with this. Do not make any purchases or transfers of any type before sitting down with your advisors.
I personally am still accepting new clients in the California area for those that would like a second opinion of life insurance, annuity savings accounts, or legal shield/ identity shield programs.
I can be reached at the links below. If you find this article helpful; please share it in it’s entirety without alteration via social media.
Photo above from Sheboygonwidds.com