5 Retirement Strategies

Here are five strategies my clients have utilized that you may want to consider for your worry-free retirement. These concepts are intended to help make your money last longer, provide protection from unforeseen financial setbacks, and provide a degree of financial certainty in the event of health related calamities. Sometimes, just one of these strategies can help accomplish more than just one of your financial goals. Here they are:

  1. Consider postponing lifetime income until your age or your health is an asset.

Income can be purchased in the same way you purchase a hamburger from McDonald’s. When I go to my favorite McDs, I order a McDouble and give the order-taker a buck and some change in return for the sandwich.

Likewise, you can take cash to an insurance company and exchange it for lifetime income.  But, just as hamburgers are not priced the same from one restaurant to another, neither is income.  So you want to shop companies—or let me do it for you.  That’s what I do; I find you the best solution from a quality carrier.

You can do this with your pension, 401(k), IRA or from your savings and investments. Click Here for more information.

  1. If you haven’t already taken Social Security, consider postponing taking it as long as possible.

Given the limited space here, I cannot possibly satisfy what should be your quest to get it right for you and your spouse.  Nearly half of all people retiring early take Social Security at age 62.  But, should they?

There are three key elements that determine your Social Security amount:

First, it is your earnings history that determines the monthly benefit to which you are entitled.  Second is the age at which you initially file for benefits.  And third is the potential delayed retirement credits to which you are entitled should you elect to wait beyond your full retirement age to begin collecting benefits—age 70 being the latest age you can take it.  The potential to earn delayed retirement credits—which can add up to as much as 8% per year in addition to the cost of living adjustments each year—may add up to a substantial increase in your monthly benefit amount.

If you are single, you may want to take short-term withdrawals from your assets so that you can delay your Social Security benefit.  Remember, your Social Security benefit increases each year with inflation.  You want income that will go up each year to be as much as you can get.

If you are married, a file and suspend election along with a spousal election for a short-term period may provide you thousands more than you otherwise would be entitled.  We perform these calculations for you.

One of the services I provide with a consultation is an analysis of your Social Security benefit and illustrate to you the best month and year you should take your benefit to maximize your return. Click Here to request a consultation.

  1. Match your financial goal with the financial instrument that best accomplishes your goal.

One of the mistakes I see made as one nears or is in retirement is not matching one’s goal—including sometimes not even having a defined goal—to the proper tool to achieve the goal.  Most of us would not choose a hedge trimmer to cut our lawn.  We could, but it would take forever and probably not be the end result we wanted.

Similarly, you shouldn’t use short-term instruments like Cds, for long-term goals.  That’s the mistake I see often.  There is nothing wrong with having money in the bank; in fact, it is desirable.  But bank instruments are meant to provide you liquidity—access to your money—not growth.  The money you have in the bank should be money you are willing to sacrifice earnings to have liquidity.  But, you don’t have to sacrifice earnings for safety.

So nearly 20 years ago, the insurance industry came up with a hybrid instrument that has principal protection and guaranteed interest while still benefiting its clients with reasonable rates of return.  They are called fixed index annuities.

With these instruments, you can choose between a fixed interest rate, currently around 3% (1st quarter of 2014), or have your interest earnings credited based on distinct Index Account Options and the annual performance of these indices.  The Interest Credits will not mirror the actual performance of the index itself, but rather the index closes (daily, monthly, annually, etc.) are used as a basis for determining what the Interest Credits will be.  With these instruments, you can benefit when the index goes up without any risk of loss when it goes down.

Who should own these instruments?  If you don’t want market risk, you don’t want to pay tax on money as it accumulates (you pay tax only when you withdraw earnings), or you want to benefit from market trends without the risk of loss, these instruments might be for you.

Choosing the right accumulation vehicles through retirement can be difficult, but having some of your money free of market risk, yet with long-term growth opportunity can be a good choice.  For an illustration, click here (link ‘click here’ to Contact page).

  1. A Split-Annuity Strategy can provide tax-free income and tax-deferred savings. If you are in your 50s or 60s, or if you are very healthy and in your 70s, a split-annuity concept can be a great way to add to your income while building additional wealth for the near future.

This is a concept that my clients who want tax-free income without the risk associated with bonds will choose.  You divide the cash you want to make available for this concept—let’s ay $500,000—between an immediate payout annuity for tax-free monthly income, and a tax-deferred annuity to earn interest for the same number of years your income annuity is set up to pay you income.  The goal is to grow your tax-deferred annuity back to the total amount of cash you started.

Depending upon interest rates, this may mean we use $200,000 to pay you an income for 10 years while growing the remainder $300,000 back to the original $500,000.

How much income would this pay you for those 10 years?  That would depend upon the interest rate environment and the insurance company we used.  Click Here for an illustration.

  1. This Alternative to a Long-Term Care Insurance Policy can accomplish multiple goals.

Traditional long-term care insurance policies are expensive and difficult to qualify if you have waited too long to purchase.  “Too long” is relative to the assets you have to purchase a policy and how good your health is.

Some of my clients have liked the option of “hitting two targets with one arrow.”  A handful of life insurance companies have created what is often referred to as “living benefit riders” for their life insurance policies.  In essence, these riders allow the policyholder to accelerate the death benefit to use for reason like nursing homes, assisted living, home health care and even catastrophic illnesses requiring surgery.

Think about this.  Instead of using your assets for these life-changing episodes, you can purchase a life insurance policy and use an “advance payout” of the death benefit to pay for these events.

There is flexibility in the way you can pay for these policies.  One is simply to pay the policy in full with a single premium.  These arrangements often come with a full premium refund at anytime if you decide you no longer want the coverage.  In essence, this means you had all the benefits of the life insurance coverage, the long-term care coverage, and the catastrophic illness coverage for the sacrifice of the interest on your principle.

Click here to request an illustration for you.

These five strategies are safe and conservative solutions to retirement challenges.  They are designed to get the most from your money, provide income without risk and give you maximum flexibility and control of your assets.  For an analysis of your financial circumstance and to see how you can have the income you need while leaving a legacy your family deserves, click here (link ‘click here’ to Contact page).

There is an excellent website that has only the facts about fixed annuities.  Visit:


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