What Is The Function Of a Retirement Income Specialist?
Retirement specialists must be able to explain the complicated nature of investment, compensation and retirement packages to employees in a clear, concise fashion. They also file and process retirement plans in accordance with federal and company regulations.
7 reasons to hire a Retirement Income Specialist.
- Creating income.
When you don’t have that regular paycheck anymore, you lose your safety net. Instead, you must create income from the money you invested and make it last as long as possible. You’ll get a monthly boost from Social Security and/or maybe from a pension. But mostly it’s up to you and your adviser to figure out when and how much you’ll need from your retirement accounts. If you plan poorly, you could use up your money way too fast.
- Outpacing Inflation.
Inflation has been pretty low for some time now, but experts are predicting a rise in the near future. Even if it lands at the Fed’s goal rate of 2% (and that’s lower than most are forecasting), you’ll see a decline in your purchasing power and, consequently, your standard of living. Most people think they won’t need as much when they’re retired, but even the basics will cost more. With this in mind, you’ll need to keep your nest egg invested but safeguarded against the unexpected.
- Guarding against the unexpected.
The market is hitting record highs right now, but that can’t last forever. Whether it’s the inevitable market correction, some world political event or a natural disaster that sends things into a spiral, you have to be prepared. To be a success in the second half, you must understand your capacity and tolerance for risk. You won’t have as much time to come back if the market tanks when you’re in the retirement red zone, the 10 years before and after retirement.
- Factoring in longevity.
Thanks to healthier lifestyles and medical breakthroughs, life expectancy for Americans has increased significantly. According to the Social Security Administration, a 65-year-old man today can expect to live, on average, until age 84.3, a 65-year-old woman can expect to live to age 86.6, and one out of every four 65-year-olds will live past 90. Naturally, you want to stay in the game for as long as possible, but that also means your investment portfolio may have to last for 30 years or more. If you don’t have a plan for guaranteed income, you could end up having to downsize the lifestyle you dreamed of or possibly depend on others for help.
- Being tax efficient.
Many retirees focus on avoiding taxes in the short term only to be hit hard later on. During the withdrawal phase, the decision about when and where to remove assets should be combined with a plan to avoid landing in a higher tax bracket than you expected and keeping as much of your Social Security out of the taxable equation if possible.
- Managing health care costs.
According to the U.S. Department of Health and Human Services, 70% percent of those who live past the age of 65 will need long-term care. You’ll need to put a plan in place to cover those costs – as well as your day-to-day health care – so these costs don’t eat up your retirement income.
- Estate and legacy planning.
Most retirees hope to leave some sort of financial gift to their loved ones and/or a favorite charity (wealth transfer), but the planning often gets pushed to the back burner. You must include this as part of your overall financial strategy to make sure everyone gets what you want them to have and in a way that isn’t burdened by taxes.
GUARANTEED INCOME IN DIFFERENT FLAVORS
Annuities can be a valuable part of your retirement income plan, addressing three big risks in retirement. When it comes to deciding exactly what kind of annuity and guarantee is right for you, you’ll want help from a financial professional who can figure out the strategy that best fits your goals.
There are different types of annuities that provide guaranteed income and you may get guidance on using one or more of these as part of your plan. It’s helpful to understand that some annuities provide higher guarantees that remain steady throughout your life while others offer guarantees with the possibility of increases over time. Generally speaking, a greater potential for increase comes with a lower guarantee.
There are also other valuable features of the annuity that may make a particular contract work for you, such as additional benefits for long-term care or life insurance that does not require underwriting. You’ll need to discuss these details with your financial professional.
Annuities can be a powerful tool to help you retire with the assurance that your income will last a lifetime. When you’re putting together a comprehensive financial plan, they give you the freedom to increase the growth potential of the rest of your savings and meet the risks of retirement with confidence.
Frequently Asked Questions
Can you rollover 401k or IRA into annuity?
Rolling Your IRA or 401(k) into an Annuity. Tax-protected retirement savings accounts, such as IRAs or 401(k) plans, can be directly rolled over into an annuity tax-free as long as you follow the IRS’s requirements. Annuities funded with an IRA or 401(k) rollover are considered qualified plans.
What is the advantage of rolling over a 401k to an IRA?
Key Takeaways. Some of the top reasons to roll over your 401(k) into an IRA are more investment choices, better communication, lower fees, and the potential to open a Roth account. Other benefits include cash incentives from brokers to open an IRA, fewer rules, and estate planning advantages.
What is the advantage of rolling over a 401k to an IRA?
Key Takeaways. Some of the top reasons to roll over your 401(k) into an IRA are more investment choices, better communication, lower fees, and the potential to open a Roth account. Other benefits include cash incentives from brokers to open an IRA, fewer rules, and estate planning advantages.
Employer-sponsored 401(k) plans allow you to withdraw and manage funds on your own after reaching retirement age. Although this may seem attractive, unexpected expenses or poor financial planning can put you at risk for depleting your retirement nest egg too soon. You can help prevent this by purchasing income insurance in the form of a tax-deferred annuity. Internal Revenue Service rules allow you to buy such an annuity by rolling over your 401(k).
Explaining Common Forms of Annuity
Life Annuity
Periodic payments are made for the Annuitant’s lifetime. Upon the Annuitant’s death, all payments cease.
Life Annuity with Cash Refund or Installment Refund
Periodic payments are made for the Annuitant’s lifetime and there is a guaranteed minimum total payment amount. Upon the Annuitant’s death, the total amount of all benefit payments made over their lifetime is subtracted from the guaranteed minimum total payment amount. Any remaining guaranteed benefit is paid in either a lump sum or in installment payments to the beneficiary(ies).
Annuity With Period Certain
Periodic payments are made until the later of Annuitant’s death and the end of an elected guaranteed payment period (for example, 10 years). If the Annuitant passes away prior to the end of the elected guaranteed payment period, the remaining guaranteed payments are paid to the beneficiary(ies).
Temporary Life Annuity
Periodic payments are made until the earlier of the Annuitant’s death and the end of the elected temporary period (for example, 10 years).
Period Certain Annuity
Periodic payments are made to the Annuitant until the end of an elected certain period (for example, 10 years). If the Annuitant passes away before the end of the certain period the remaining periodic payments are made to the beneficiary(ies).
Joint & Survivor Annuity
The Annuitant names a Contingent Annuitant at the time of retirement. Periodic payments are made for the Annuitant’s lifetime and then for the lifetime of the Contingent Annuitant. The amount the Contingent Annuitant will receive in each periodic payment is based on an election made by the Annuitant at the time of retirement (for example, 50%, 75% or 100% of the Annuitant’s periodic benefit amount).
Joint & Survivor Annuity With Cash Installment Refund
The Annuitant names a Contingent Annuitant at the time of retirement. Periodic payments are made for the Annuitant’s lifetime and then for the lifetime of the Contingent Annuitant. The amount the Contingent Annuitant will receive in each periodic payment is based on an election made by the Annuitant at the time of retirement (for example, 50%, 75% or 100% of the Annuitant’s periodic benefit amount). There is also a guaranteed minimum total payment amount. Upon the death of both the Annuitant and the Contingent Annuitant, the total amount of all benefit payments made over their combined lifetimes is subtracted from the guaranteed minimum total payment amount. Any remaining guaranteed benefit is paid in either a lump sum or in installment payments to the beneficiary(ies).
Joint & Survivor Annuity With Period Certain
The Annuitant elects a guaranteed payment period and names a Contingent Annuitant at the time of retirement. Periodic payments are made for the Annuitant’s lifetime and then for the lifetime of the Contingent Annuitant. The amount the Contingent Annuitant will receive in each periodic payment is based on an election made by the Annuitant at the time of retirement (for example, 50%, 75% or 100% of the Annuitant’s periodic benefit amount). If both the Annuitant and Contingent Annuitant pass away prior to the end of the elected guaranteed payment period, the remaining guaranteed payments are paid to the beneficiary(ies).