The Middle Ground May Be Fixed Index Annuities

Can we find any middle ground for the many savers who want decent returns with a guaranteed return? You may be able to find that middle ground. It could be a fixed index equity annuity. These products are considered safe, and they could help you reduce your risks while growing your returns. Consider some pros and cons of fixed index annuities.

These products do come from insurance companies, and that is because they do use some of the same actuary tables that life insurance does. However, they do combine some aspects of insurance with features of an investment product. An agent or financial professional, who is licensed to sell annuities in your state, is a good place to get more information.

Also note that I am talking about fixed annuities, and not variable annuities. These are very different things, and variable annuities can be more risky. You have to learn the difference. Beyond that, contracts can vary by company and state. You must always understand the actual terms of any individual contract that you are considering.

These products base their returns on a market index. A common example is the Standard and Poor’s 500. When the index rises, returns should increase. What is different about a market indexed annuity than the market itself. If the index goes negative, a guaranteed return, will keep you from losing all of your hard earned money. That is why many financial pros advise their clients to consider these products.

There are a couple of drawbacks you should consider. In general, these are long term savings vehicles. If you take out your money early, you will probably get charged a penalty. Be very certain that you can keep your money in place for the length of the surrender period. Otherwise, you may be penalized. People only really profit when they plan to keep their money in place past the surrender period.

During boom years, market caps will keep you from making a very high profit. During any up year, a participation rate will keep you from totally maximizing your profit too. Of course, you must always balance that potential limit against the lack or risks. You are protected from losing money.

If you need a safer investment, with decent returns, you may want to talk with a financial professional about fixed index annuities.

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Financial planning is not just for people with money. People who are in difficult financial situations can benefit from getting answers to these questions. A financial wellness kit gives you simple tools to figure out where you stand money wise.

Here are some of the questions included in the kit:

1. Is your net worth growing?

2. How are your ratios?

3. Are you spending more than you earn?

4. What has changed in your life in the last year?

Other questions help you think about what you are spending on and how it relates to what you really want out of life. Most people don’t think about their spending. They spend on reflex. Or they spend to subconsciously keep up with their family, their friends, and their neighbors. They spend to make themselves feel better. They spend to show off. They spend on things they want instead of the things they need.

Answering the questions helps you identify and focus on our goals.
Your goal may be to retire early or your goal may be to get out of debt so you can sleep at night.

Even just reading through the questions can give you a new perspective on how you think about money.

See our post atWomanwork.net Financial Wellness Kit

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According to Bankrate’s survey, this year, only 45% of non-interest checking accounts offered were free, down substantially from the 65% offered last year and 76% two years ago.

For non-interest accounts, the average monthly fee jumped a staggering 75.5% this year to $4.37 over last year.

On accounts that pay interest, the average monthly fee rose 8.5% to $14.15. The requirement to avoid paying such fees is to hold a substantially higher balance of $5,587, up 44% from the previous year.

ATM fees will also eat away at your checking account balance. If you use an ATM machine that is out of your bank network, you can be charged as much as $4.00. ATM fees have been increasing for the last seven years.

In total you can run up as much as $50 a month if you do not maintain minimum balances or meet other requirements for certain high-end checking and savings accounts.

Cheapskate bloggers having been talking up credit unions. It seems they are not the only ones. Credit unions added more than 1 million new customers last year.

The National Credit Union Administration said the nonprofit financial institutions registered 1.3 million new consumers in 2011, more than double the previous year’s growth.

Cheapskate bloggers are all recommending one particular credit union located in Texas. Anyone can join regardless of where they live or work. Find out the name of this credit union that has free checking and pays bonus money for using your debit card, paying bills online and banking online. See our post at rCheapskateliving.org called Cheapskate Bank

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As you might expect the first step is computing how much money are you going to need and for how long.

Retirement experts say you can plan on living until 90 and how much you need depends on your lifestyle choices. Extensive travel means you will need more than if you plan to stay local most of the time.

Retirement advisers say the key to a successful retirement is having an accurate picture of your projected living expenses. Knowing what it will cost you to live helps you know how much you need to save. There are formulas you can apply to figure out how to preserve capital when you begin drawing it down for income. See our post Extreme Early Retirement for the formula.

Also planning for financial setbacks is important so you don’t panic and compromise your assets. During an extended economic downturn you need to know what your plan of action would be to protect your assets.

Extreme retirees plan ahead but are flexible if changes need to be made. For instance, you may need to reduce your income in years where the financial markets are low or possibly consider part time work. See our post Frugal Retirement Living

If you are reading this post you have already taken the first step. You are getting information which will help you plan your early retirement. Billy and Akaisha Kaderli, the “grandparents” of the extreme early retirement movement for baby boomers, say, their advice for those seeking to follow the same path is: Work hard, spend little, save a lot and invest wisely.

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Here is a brief overview of what tax incentives are currently available as far as federal income tax. Several states are also trying to offer some incentives to taxpayers to supplement the cost of long term care.

Long-term care premiums are deductible as a medical expense (subject to the 7.5 percent-of-AGI floor), although there are limits to the deduction based on the taxpayer’s age.

If you work for yourself you are eligible to deduct 100% of long term care insurance premiums.

If you are employed by someone and your employer pays for a portion or all of your tax-qualified long term care insurance you do not have report this benefit as an addition to your adjusted gross income.

You can also use an HSA to pay for long term care premiums. (see our post Are Long Term Care Premiums HSA Contribution)

The new annuity 1035 exchange effective in 2010 allows you to do a partial 1035 from your NQ annuity to pay for a qualified LTC contract. If you want find out more about this possibility you probably need to talk to an insurance agent or financial planner that you trust.

For more details on each of these options see our post IRS Long Term Care Deduction

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If you are researching retirement life insurance, you have probably come across something called single premium whole life (SPWLI). You do not make periodic payments for you policy, but you do fund your policy with one big lump sum of cash. This is different than the way you may be used to paying for coverage. Consider the pros and cons of single premium whole life.

Make One Big Payment. Get Covered!

Since this is a different way of doing things, you may need single premium life insurance explained in a way that everybody can understand.
Many people consider these single premium policies for retrirement. Single premium whole life insurance can give you lifetime insurance.SInce whole life policies may also build a cash value, once the actual insurance has been funded, you may also enjoy growth in your cash account.
So you can see the advantages. You can get a lifetime of life insurance. Your cash account should start growing quickly. These types of policies provide life insurance. They also can be a type of investment vehicle for you.

How Big Is The Single Premium?

The exact sum of money will depend upon several things. The amount of coverage you want, your age, and the insurer will affect the premiums. You will need to get insurance quotes to compare actual prices. But you will need a few thousand dollars, at the least, in order to start your policy.

You Have To Give Up Control!

You should also only consider a SPL policy is you can stay with it for the long term! You have to give up the use of your money for a few years. Single premium life only works if you have a substantial amount of money you will not need in the near future.
In the beginning, you may actually see your cash account drop from your initial investment minus the coverage costs because the insurer needs to regain its other costs. If you do need to take out your money, you may even get hit with penalties. Again, this should only be considered as a long term transaction.
Some policies may have clauses that will remove early withdrawal pentalties or surrender charges in the case of a serious illness. This allows you to use your policy as a sort of emergency fund in case you need money for medical bills or nursing care costs.
Since these are cash value policies, you may also be able to sell your insurance in a life settlement transaction. This could allow you to get more money than you have in the cash account.

Is SPLI Right For You?

A single premium life insurance policy could be a good alternative. If you have a sum of cash to fund the policy, can wait to collect on it, and would like a lifetime of coverage, it may be good for you. If you think you need to keep your money in the short term, you may want to consider another type of life insurance.

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Estimate Your Income With A Single Pay Annuity Calculator

If you have a large sum of money, just sitting there and not working for you, why not consider a single pay retirement annuity that can help you get more income?

Single Pay Annuity Calculator

If you run this single pay annuity calculator, you can see how you can generate income from the money you have to invest. You can input the amount of funds you have, your planned rate of return, and how long you want to get income for. This will give you some useful estimates about how these plans can work.

How Is Your Retirement Plan?

Has another year has come and gone? Did you make any New Year’s resolutions this year? I have no problem with making these resolutions for the new year, but most of us tend to forget them by Valentine’s Day. One resolution we should all keep is to have some sort of retirement goals and plans in place.   It is only common sense to say that the earlier you implement your own plan, the better off you will be. Even if you cannot stick the plan all of the time, the plan will help you make progress!

People who get their money to work hard for them have a much easier time having a comfortable lifestyle when they end their working years!If you do have money, from your savings, or from some type of other distribution, you may want to use it to generate income. That is where single pay annuities can be helpful. They are considered safe, and yet they may help you get better returns than some other safe alternatives.

This is not a good option for all people. Some may be better off keeping more control of their money or using it to pay off debts. It is just one option to explore.

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What are older workers concerned about? You may have already guessed it!  One of the top concerns that most baby boomers have is if they will have enough money for a comfortable retirement. Most of the people that have been asked about this topic worry that they will not have enough retirement income or assets to live on. If you plan to retire soon, or if you do not plan to retire for decades, you may want to figure out how you can cope with retirement too!

Fixed annuity products are getting a lot of attention these days. They can be a good tool to help you grow your income during retirement. Insurance companies develop and sell annuity products. These products are meant to help you increase your income. There are several types of annuities, and the type that you choose depends upon your needs. For some people, the advantages of annuities are very attractive!

Do you want to retire soon? If so, do you have a lump sum of cash that you can use to start your annuity? You may have this cash because you have saved it, gotten a lump sum from your employer, or even been involved in a lawsuit. If so, you could use this cash to start your single premium immediate annuity. These are funded with one large payment at the start.

You can start your immediate annuity one month, and then you can start collecting checks the next month. This is one way that retirees use the money they have saved in order to provide them with a larger retirement income.

If you do not plan to retire for several years, you do not need to have a large sum of money right now. You can start your account with a smaller sum, and you can even keep adding to that sum over the course of many years. The account will grow. This means that you should have a larger account by the time you do want to take retirement. Of course, you can start taking money out when you do retire. These are called deferred annuities because you do not make withdrawals right away.

I just meant this article to be a very simple explanation of a couple of types of retirement annuities. In order to get more information, you could chat with a financial professional. He or she should be happy to illustrate particular products that may be good fits for you. You should be able to consult with the professional for free, or for a very low fee. They tend to make their money when a client actually signs up and deposits money!

Annuities are not the right solutuion for every retirement planner. However, they can provide many folks with a good way to increase their retirement income!

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Are you looking into different individual retirement accounts (IRA)? Of course, when we only had traditional IRAs, it was pretty easy to illustrate the advantages of this type of account. You got tax deferred savings and growth. You just had to conform to quite a few rules, and you could get slapped with some stiff penalties if you had to take out your money early. In addition, you would be forced to start withdrawing money at age 70.

Why Consider A Roth IRA?

Today, many tax payers can also take advantage of a Roth IRA. You may want to read about the difference between Roth and Traditional IRAs

You do not get to deduct the money you put in the account, but the growth is still free from a yearly tax bill! As long as you wait until you are older than fifty-nine and a half, you are free to withdraw your money without paying taxes on it. Taxes have already been paid on the contributions. You do not have to take money out if you do not need it. For example, if you are 70, but not retired, you may not want to remove your money.

Will a Roth IRA be better for you?

It really depends upon your own situation. If you do not really need the tax deduction this year, and if you would rather just have tax free income later, it may be better. If you can make good use of a tax deduction right away, and believe your income and tax rate will be much lower later, you may want a traditional retirement account.

Either product can be a great way to build your IRA retirement savings!

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A good retirement directory can help you find a lot of resources on the net too!

Has your retirement account gone down? This is common because the stock market has been unstable lately. Another problem is that interest on bank accounts or bank certificates of deposits (CDs) has been very low. This is a big problem if you are trying to do some retirement planning in the near future! I wish there were simple solutions to these current problems.

You should also be very wary of panic selling when your account does take a dip. Remember the old common sense saying about the stock market? We all know that it is best to sell high and buy low. When you find yourself buying high and selling low, you have a problem!

The most common answer to diminishing savings is probably one you do not want to hear. You may have to accept the fact that you will have to work longer and save more money to make up the difference. The other solution is to try to cut current and future expenses as much as you can so you can save more money in less time. A lot of people will have to do both. They will have to work longer and try to cut expenses.

Health care is also a big concern for most older people. Prices are rising. People are worried that benefits may be getting cut. This can be true of the big government programs like Medicare, and it can be true of any retirement coverae you have from a job. You will have to take the time to explore your health care choices to make sure you can find the one that will be best for you. This means it has to provide good health service and be affordable.

You may want to compare Medicare supplements vs. Medicare Advantage plans too. Either alternative has benefits and drawbacks. It is time to figure out which one will be right for you. There is not one perfect answer for everybody, but there are a lot of choices. Finding the right retirement health plan may take some research. Lucky for us, there are a lot of good resources to help us do this reasearch. In fact, the US Medicare program website is a great place to start looking for answers.

There is no doubt that it is getting a lot harder to save for a comfortable retirement. We have little assurance that government programs like Medicare and Social Security will be the same as they were by the time we reach retirement programs. This can be very frustrating for people who have been paying into these programs for decades, hoping they would be reliable in the future. We have to remain flexible, keep our eyes open, and base our decisions on reality!

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