There may be no resource more valuable in retirement than income that’s guaranteed for life. Guaranteed income provides you with a base level of certainty and predictability. It’s not impacted by market fluctuations, and there’s no risk that you’ll outlive your funds. When you have guaranteed income, you can make financial and spending decisions with confidence.
Unfortunately, guaranteed* income is becoming more and more rare for many retirees. There was a time when workers could expect to have their entire retirement funded by Social Security and employer pensions. Today’s Social Security benefits are unlikely to fund a full retirement, however, and few employers still offer a pension.
There is good news, though. You can create your own stream of guaranteed lifetime income using something called a single premium immediate annuity (SPIA). These tools are insurance products that convert a portion of your assets into a guaranteed lifetime income stream. They’re not right for everyone, but they can be useful in the right situation. A financial professional can help you determine whether a SPIA is right for you.
If you’re approaching retirement and behind on your savings, you may have a powerful tool to help you get back on track. It’s called a catch-up contribution. As the name suggests, it’s an extra amount you can contribute to your 401(k) and IRA each year once you turn age 50. The IRS allows these extra contributions so you can accumulate more retirement assets in the last 10 to 15 years of your career.
Catch-up contributions are so powerful because they’re used in qualified, tax-deferred accounts. You don’t pay any taxes on your growth as long as the funds are inside the account. That could help your assets accumulate at a faster rate than they would inside a similar, taxable account.
Catch-up contributions can also help you save on taxes today. Like standard 401(k) contributions, your catch-up contributions are deducted from your check on a pretax basis. That means they reduce your taxable income, thus lowering your tax exposure.
Thinking about making catch-up contributions to your qualified plans? That could be a wise strategy. Below are a few tips to help you get started:
According to a recent Gallup study, most Americans are worried about their ability to afford a comfortable retirement. Gallup’s annual survey of Americans’ financial concerns found that 54 percent of respondents are worried about retirement. That’s enough to make retirement the top financial concern for the 17th year in a row.1
Those worries may be warranted. Many Americans haven’t saved enough for retirement and haven’t planned adequately for potential risks. Even if you’ve accumulated enough assets for retirement, you could still face serious financial challenges after you leave the working world.
Below are three risks that could sneak under the radar and threaten your retirement. You can minimize these risks by developing and implementing a comprehensive retirement plan. A financial professional can help you take action against these risks to protect your golden years.
Did you leave something behind when you left your last job? Perhaps your vested 401(k) balance? According to a study from the U.S. Government Accountability Office (GAO), you’re not alone. The study found that more than 25 million Americans left their 401(k) balance in a former employer’s plan during the 10-year period from 2004 through 2013.1
Technically, there’s nothing wrong with leaving your balance behind. However, it can create some retirement planning complications. For example, if the employer is sold or goes out of business, you could have trouble accessing your funds or managing the money. If you pass away, your beneficiaries could have trouble tracking down your old balance.
If you have a balance in an old 401(k) plan, now may be the right time to take action. Below are a few options. Consider your unique needs and goals. You also may want to consult with a financial professional to help you decide on the right strategy.
According to a recent study from InsuranceQuotes, 40 percent of Americans don’t have life insurance. Among those who didn’t have insurance, half said they feel like it’s not necessary.1 Even among those who have insurance, many don’t know if they have the correct amount.
Risk management is at the core of any financial plan. There may not be a bigger risk than the early death of a parent, loved one or financial provider. If you have young children or you support loved ones, your death could cause serious financial challenges for those who are most important to you. Life insurance helps you minimize that risk.
Want to retire early? You have company. According to a recent study from MSN, two-thirds of millennials want to retire before age 65.1 That’s well ahead of Social Security’s full retirement age of 67. Retirement is always a challenging goal, no matter your age. Many Americans lack the needed savings to fully retire in their late 60s, let alone early.
Early retirees face a number of difficult challenges. They live longer in retirement, which means they have to fund more years with their savings. They may retire before they qualify for Social Security or Medicare, which means they’re even more reliant on personal assets.
However, it is possible to retire early if you plan ahead, stay disciplined and implement a sound strategy. Below are three simple steps to help you start your planning. You may also want to work with a financial professional to help you analyze your needs and goals and develop a more detailed plan.