Variable annuities were originally designed to offer retirees a steady and reliable cash flow during retirement. For Americans who fear running out of money in retirement, variable annuities might seem like a great investment. But beware: they’re rarely the ideal solution for replacing your paycheck during retirement.
As a business owner, executive, or other high income earner, your annual salary might shut you out of being able to contribute directly to a ROTH IRA. High earners with adjusted gross incomes higher than $132,000 (single) or $194,000 (jointly) aren’t eligible for this savings vehicle. However, that doesn’t mean that you can’t take advantage of similar tax-free benefits in other ways. There are still ways for you to be able to save money that you’ve already paid taxes on and withdraw that money, and investment gains, tax free in retirement.For example, you could contribute after tax money into a ROTH 401K, assuming your 401K plan has a ROTH feature.
Investing your money can be complicated…and scary. To ensure you’re maximizing your returns and staying on track for your retirement goals, it can be highly beneficial to work with a financial advisor. In fact, we recommend it for all but the most financially literate Americans. Unfortunately, though, too many Americans are being poorly served by their financial advisors. And you might be, too.
There’s no quick answer to the question “when can I retire?” Your unique circumstances, such as your health, your lifestyle goals, your life expectancy, your debt levels, your amount of savings, and so many other factors need to be considered. You’ll need to assemble many different pieces and fit them together in order to help bring your retirement picture into focus. You’ll need to crunch the numbers. And you might even need the help of a retirement planner to get a realistic portrayal of your retirement.
Everyone looks forward to retirement. You can finally stop working every day and start enjoying life to its fullest. But to be able to enjoy your golden years—the golfing, the trips, the new hobbies you’ll pick up—as well as pay for bills, you’re going to have to replace your paycheck in retirement.
Retirement has changed over the last few decades. Years ago, Americans expected to work their entire lives for a single employer and receive a traditional pension for their loyalty and hard work. During these times, retirement planning was really just about figuring what you wanted to do with your free time. After all, your income was already figured out for you.
In the 1940s, high income earners who made more than $200,000 a year faced marginal federal income tax rates of over 90%. And, until as recently as 1980, the highest marginal tax rate was 70%.There’s no telling whether or not federal income tax rates will be higher in the future, but, with the country’s national debt currently sitting at $9 trillion, it wouldn’t be at all surprising if the government raised taxes significantly.
Most people save money for retirement in tax sheltered accounts in order to lower their current taxable income. But these taxes are only deferred. You must pay taxes once you retire and begin to withdraw from those accounts.
Americans are living longer than ever. You need to ensure that your savings can go the distance so you don’t run out of money once you retire.
Longevity insurance is a simple product: it is a deferred annuity that promises specified monthly income at a later date in exchange for a premium paid today. This promise can also include inflation protection and death benefits.