Most of us have spent some time daydreaming about how we’ll spend our golden years. Whether that looks like hitting the road for cross-country trips in your RV or simply spending quality time with your loved ones, you’ll need plenty of money to retire in style and live comfortably. Luckily, you have dilligently put money away into your retirement nest egg – but will that be enough? If you’re worried about outliving your savings, our insurance experts have some simple ways you can boost your nest egg and retire in style!
Let’s Talk About Annuities
We know, we know – you’ve heard that annuities are too complex and risky to be worth the trouble, right? Wrong! While variable annuities can be risky, fixed index annuties (FIAs) are surprisingly simple and low-risk. At this point, you probably have some questions about FIAs and how exactly they tie into your retirement. Here are some answers:
What is an FIA?
Simply put, an FIA is a low-risk income stream to supplement your retirement funds. Unlike other riskier investments (like variable annuities), the money in your FIA account is insulated from market downturns. So, even though your gains may be lower with an FIA, you won’t be at risk of losing money to a volatile market.
How Does it Work?
With an FIA, the bulk of the risk falls on your insurance company. If investment performance is more than what your insurer needs, the difference is added to their company surplus. If performance is low, they bear the loss, not you. Fixed index annuities also guarantee a minimum interest rate, generally between 1% and 3%.
How FIAs Can Help You Retire in Style
Now that we’ve given you the run-down on FIAs, it’s time to unpack some ways you can utilize them as a part of your retirement planning! We’ve highlighted 4 tips below:
1. Retire with a Lifetime Income
Although it’s a stressful topic to brooch, we are here to rip the proverbial bandaid off – the fear of outliving your savings is real! With the average life expectancy only increasing, this worry is absolutely valid. That’s where an FIA can help. Many FIAs offer optional income riders, providing withdrawal benefits similar to immediate annuities. In essence, this provides a monthly check, guaranteed to remain constant over the course of your lifetime.
2. Retire Early - Without Penalties
If you’re under the age of 59½ and ready for early retirement, a FIA may help! In many cases, you can roll lump-sum distributions from your 401(k) or severance package into a FIA without recognizing taxable income! This can be done by setting up a program known as “Substantially Equal Periodic Payments” (SEPP). With a SEPP, you can make penalty-free withdrawals from a tax-deferred account you otherwise couldn’t touch until retirement!
Plan with the Right Team
While an annuity is an insurance product, your retirement planning is a bigger conversation. With Lifetime Wealth Management, P.C. as our sister company, we have the insight that most insurers don’t to help you plan!
3. Build Probate-Free Inheritance
If you have experienced the process of sorting out inheritance, you already know how time-consuming and costly a probate can be. If you don’t know, a legal probate is designed to ensure the proper distribution to heirs. With an FIA, you can spare your beneficiaries this costly delay in estate distribution, as they will be paid directly and promptly, as soon as the insurance company has been notified about your passing.
4. Annuitize Your Policy
As we mentioned before, you can annuitize your FIA policy to utilize tax advantages, while turning your annuity into a steady income stream. This process would entail exchanging the accumulated value of your FIA into an “immediate annuity.” If this is an option you want to consider, it’s a good idea to shop the market, as there could be other insurers that can offer more generous settlement rates!
Retire in Style with Our Help
Whatever retiring in style looks like to you, our insurance experts at Lifetime can help! From exploring your annuity options to shopping the market for the best bang for your buck, our experts can help you build a plan that will make your golden years worry-free! Give us a call today at (972) 771-2622 or visit our website.
Retire in Style with Lifetime
The insurance pros at Lifetime can help you find the perfect solution for your golden years!