Retirement
Imagine the Possibilities
Evaluating Your Retirement Needs
Your Employer’s Retirement Plan — a Great Place to Start!
Fixed Annuities
Financial Calculators
Imagine the Possibilities
When you envision your retirement years, what do you dream of? Spending time with your family and friends,
pursuing your hobbies, learning new things, volunteering for your favorite charity – imagine the
possibilities.
Today more and more people are maintaining their current lifestyle well into retirement. Modern retirement
is active, engaging, and independent. As a society, we are generally taking better care of ourselves, and as
a result, we’re living longer. These factors affect the way we must plan for our retirement. Social Security
may not provide what you’ll need to live comfortably in retirement, and odds are against winning the lottery.
How can you make sure you will have enough money to retire? When should you begin saving?
Evaluating Your Retirement Needs
How Long Will You Be Retired?
Most of us have an idea of when we’d like to retire, but it is also important to estimate how many years you
will spend in retirement. This is especially important today since many people are living longer. One of the
greatest fears of retirees is outliving their retirement savings and running out of money. As a result, one
of the goals of your retirement plan should be to ensure your money lasts as long as you do.
How Much Do You Need?
Experts estimate that you will need at least 80% of your pre-retirement income to live comfortably in
retirement. When you retire, you probably won’t have the expenses you do now, such as a mortgage or a child’s
college tuition, but costs such as medical care may claim a sizeable share of your retirement income. With
this in mind, some financial planning experts estimate you may need as much as 100% of your pre-retirement
income just to make ends meet.
How Will You Fund Your Retirement?
Planning and investing during your working years will help ensure that you will be able to live comfortably
in retirement. Once you retire, the paycheck you rely on today will be replaced by Social Security, personal
savings and your retirement plan assets. The first step in meeting your retirement needs is estimating how
much you need to invest to reach your long-term goals.
The Sooner the Better
While it is never too late to start saving for retirement, the sooner you begin, the longer you have to
achieve your goals with less effort and resources. Over time, even the smallest steps can become a giant leap
toward reaching your goals, thanks to the power of compounding.
Consider this — four people begin saving for their retirement at different stages of their lives.
Here’s how the retirement nest egg of each would compare at age 65 based on an 8% hypothetical annual
effective rate of return.
Investing $100 per month at different stages of life:
|
Age |
Amount Invested |
Total Value at age 65* |
|
Start at age 55 |
$12,000 |
$18,128 |
|
Start at age 45 |
$24,000 |
$57,266 |
|
Start at age 35 |
$36,000 |
$141,761 |
|
Start at age 25 |
$48,000 |
$324,180 |
*There is no guarantee that these figures will be
attainable in the future. This hypothetical illustration is not meant to represent the return of any specific
investment.
Your Employer's Retirement Plan -- a Great Place to Start!
If your primary financial goal is to build retirement savings, we suggest you first take a look at the
retirement benefits that might already be available to you through your workplace.
If your company offers a retirement plan, you might be eligible to contribute a percentage of your
paycheck, up to a specified maximum. Often you are given the choice of contributing before-tax dollars, which
means the amount of your salary subject to income taxes is lowered and you may pay less in taxes.
Furthermore, as an incentive to save for retirement, your employer may match a percentage of the dollars you
contribute, sometimes equaling one dollar for every dollar you put in. Lastly, most plans offer more than one
investment choice with the goal of appealing to both conservative and aggressive investors as well as
providing the opportunity for diversification.
The benefits of contributing to your employer-sponsored retirement plan are undeniable, but if you do not
have this option available, or you are looking to build additional retirement income, we can help you find a
strategy to help accomplish your goals.
Fixed Annuities
An annuity is a contract between an individual and an insurance company. If you purchase an annuity,
you’re buying an income stream in the form of annuity payments for a specified period of time. Annuities can
be immediate or deferred, depending on when you want to begin receiving payments. Annuities are also either
fixed or variable. Fixed annuities offer a guaranteed rate of return.
We sell fixed annuities with a variety of distribution options to meet your income and retirement needs.
Fixed annuities offer a guaranteed rate of return, as determined by the insurance company, for a set period
of time. The initial interest rate is usually guaranteed for a specific period and then may be readjusted
after the guaranteed period is over.
Fixed Annuities offer:
- Tax-deferral
- Guaranteed rate of return
- Guaranteed return of premiums
- Pay-out options
When to Buy a Deferred Annuity
Deferred annuities allow your money to accumulate over time and grow tax-deferred during the years before you
start receiving payments. However, withdrawals prior to age 59 ½ may be subject to ordinary taxes and a 10%
IRS penalty. Deferred annuities are designed for your long-term savings goals, such as retirement. Deferred
annuities may have withdrawal charges that apply if you decide to take your money out in the first few years
of the contract. Usually, however, there are provisions that allow you to access a small percentage of your
funds without incurring contract penalties in case of an unexpected need. When you start receiving income
from your deferred annuity, there are several payment options available to you, including income you cannot
outlive.
You may want to consider a deferred annuity if you:
- Wish to save for retirement and enjoy tax-deferred growth
- Already contribute the maximum to your 401(k), 403(b), individual retirement account (IRA) or other
retirement plans, and you want to save more for retirement
Deferred annuities can be part of an employer-sponsored retirement plan or an IRA account, but can also be
used as an additional means of saving for retirement or funding other long-term savings goals. Consult your
financial professional for the annuity that best suits your savings and income needs.
When to Buy an Immediate Annuity
Immediate annuities provide a guaranteed stream of income payments for the rest of your life or for a
specific period you select at the time of purchase. You purchase an immediate annuity by making a one-time
contribution, and then begin to receive payments from your annuity within the first year.
You may want to consider an immediate annuity if you:
- Have a sizable sum of money you wish to turn into dependable income
- Need an immediate return from your investment
- Want to receive a steady monthly check for the rest of your life
Keep in mind that immediate annuity payments often maintain the same dollar amount throughout the entire
pay-out period.
If you've recently had a personal injury claim, you may consider the option of receiving a structured
settlement, which is another type of immediate annuity.
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