Date post: | 12-Jan-2017 |
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Economy & Finance |
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AVERAGE LIFE EXPECTANCY HAS GROWN BY THREE MONTHS EVERY YEAR FROM 1840 TO 2007 AND SHOWS NO SIGNS OF SLOWING DOWN.
➤Family history is also not necessarily indicative of how long someone may live.
➤Lifestyle choices such as diet and exercise can have a dramatic impact on the length of life.
LONGER LIFESPANS MEAN WE HAVE MORE TIME TO
ENJOY THE THINGS AND PEOPLE WE
LOVE MOST.But they also pose a unique
challenge.
“This presentation includes pros and cons of some of the most popular, “tried and true” retirement investment strategies and highlight their effectiveness in today’s life changing times.
Anthony Pellegrino, Founder & Principal, Goldstone Financial Group
Annuities are a great way to save for retirement because they can potentially generate interest over a fixed time on a principal amount that is guaranteed.
BECAUSE YOU ARE NOT REQUIRED TO ANNUITIZE
—TO RECEIVE PAYMENTS AT A REGULAR
INTERVAL FROM THE ANNUITY—CERTAIN KINDS OF ANNUITIES
ALSO OFFER THE FLEXIBILITY TO LEAVE
MONEY FOR YOUR HEIRS:
STRAIGHT LIFE
➤This is the simplest, least expensive annuity. It pays benefits until the death of the annuitant—the person receiving the funds—without an option to appoint a beneficiary.
LIFE WITH A GUARANTEED TERM
➤This somewhat more expensive option allows the annuitant to designate a beneficiary.
➤ If the annuitant dies within the guaranteed term, the beneficiary will receive the remainder of the annuity in one lump sum.
SUBSTANDARD HEALTH
➤This type of annuity is advantageous for someone with a serious health condition.
➤Although the annuity will cost more the less the annuitant is expected to live, the payouts are larger than in an annuity in which the annuitant is expected to live a long time.
JOINT LIFE WITH LAST SURVIVOR
➤This annuity allows the annuitant to select a beneficiary who will receive payments regardless of whether the annuitant dies within a certain term.
➤However, because of the added insurance component of this product, this is the most expensive fixed annuity.
HYBRID (A.K.A. FIXED INDEXED)
➤Fixed indexed annuities are known as hybrids because they invest your principal in the market, allowing for higher rates of return, but still guarantee the principal amount.
➤Therefore, even if the annuity does not generate any additional interest because the market tumbles, your initial investment remains safe.
PEOPLE WHO CONTRIBUTE TO A
TRADITIONAL IRA ARE ABLE TO DEDUCT THE CONTRIBUTION FROM
THEIR ANNUAL FEDERAL AND STATE
INCOME TAXES.
CONVERSELY, CONTRIBUTIONS TO ROTH IRAS ARE NOT
TAX DEDUCTIBLE BUT FUTURE
WITHDRAWALS WON’T BE TAXED.
INCOME REQUIREMENTS:
➤Roth IRAs have strict and specific income requirements.
FUTURE TAX:
➤Additionally, depending on the difference between the current and potential future tax rate, one type of IRA may be more advantageous than the other.
➤Finally, traditional IRAs require you to take mandatory taxable distributions beginning at age 70½ whereas Roth IRAs do not require you to take any money.
TAXABLE DISTRIBUTIONS:
A 401(k) is an employer-sponsored retirement fund that invests your
money in order to generate more. This savings strategy may yield excellent benefits but may also be the riskiest
option.
➤The amount of your annual contribution to your 401(k) is tax deductible. Additionally, many employers will match your contribution up to a certain amount—usually 3% of your annual income—essentially giving you “free” money.
➤After you retire, withdrawals are taxed as income and may be taxed at a higher rate than your present tax rate.
➤You may also not be able to withdraw your employer’s contributions until after the vesting period concludes.
➤Additionally, should you find yourself in need of money before the age of 59½, you will be subject to a 10% withdrawal fee.
➤Whenever money is invested in such fashion, there is a risk that stocks can crash and that your 401(k) will lose significant value.
➤Fortunately, you have full control over how your money is invested, so this risk can be minimized with some education about the market and less risky investment strategies.
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