“My husband and I invested a good sized chunk of our savings in two annuities in 2009. Both of these annuities have a benefit that pays us an income for as long as either of us lives.
The annuity returns have been ok, but the growth of the income has been amazing. We now have a guaranteed retirement income of over $100,000. Just writing that puts a smile on my face.
I don’t think many people invest in these kinds of annuities. Maybe you can explain them to your audience. I know my son listens and I’m hoping he’ll listen to you since he rarely listens to me.
Thank you and thank you for your newsletters – I love reading them.”
Your words are very kind – and writing that puts a smile on my face.
I am very familiar with the annuity plans you and your husband own. And you are correct that they can provide exceptional retirement income guarantees. And I am happy to give everyone a little insight. It’s the part about your son that I’m not sure about.
For folks looking for the combination of strong guaranteed retirement income, investment flexibility, and the opportunity to provide funds for their beneficiaries – variable annuities with guaranteed income riders might fit the bill quite nicely. These annuity platforms are offered by a number of companies. The company you choose is very important. The guarantees (some that you hope will be in place for decades to come) are only as good as the company standing behind them.
These annuities allow you (hopefully with your financial advisor) to select from a wide array of investment options to craft a tax-deferred investment portfolio that best fits you. Then you can choose to add (by rider at an additional cost) guaranteed retirement income. In these uncertain times many people find it quite comforting to secure guaranteed income that will be there even if the investment markets take a dive.
Of course, this is just the briefest of descriptions. For those who are interested in exploring these options they should take their time and learn the pros and cons of the annuities they are considering. Of course, our More than Money advisors are always available to assist you in exploring, evaluating, and implementing a program that fits.
As for you son – these might be right for him. They might not be right for him. It depends on many factors that (almost certainly) are different for him than they are for you and your husband. I will be happy to talk to him and help him explore and identify the options that are right for him.
“I am 79 and widowed. Since I lost my husband six years ago I have been working with the financial advisor he picked for us when he was alive. I wasn’t sure I wanted to stay with him, but we work really well together and he understands me.
My question is really from my son. He was with me at my last meeting in my advisor’s office. My advisor reviewed my investments like he always does. He recommended a couple small changes, but nothing big.
My son asked him about the money I have in the bank – it’s a lot – over $100,000. My advisor said that he and I had talked about that and that was my cushion and should stay in the bank.
My son wants to know if that was the right answer and if not, where should my advisor have said to put that money?”
The reason this question is interesting to me is not because the answer is complicated. It’s not. This is interesting because of all the right things that are going on here.
You’ve got a financial advisor who understands you and works with you well. You have a son who cares enough to take the time to go with you to your advisor meeting. You have an advisor who is more interested the right answer for you than he is about making more money for himself. These are three very right things.
Your advisor seems to understand that the money you have in the bank isn’t there for the interest it may (or likely right not – may not) earn. It is there to provide you with peace of mind. It is there to absorb the shocks that come from time to time. It is there to give you comfort and confidence. He understands that these benefits – for you – outweigh the potential gains you might see elsewhere.
You’ve got a good financial advisor there. And a very good son, as well.
“My husband and I are retired and both age 77. We were both school teachers so we have our pensions and our social security. These cover our expenses and then some every month.
My question is about our IRAs. We both have rather large IRAs that we only take what we are forced to from every year. This year we don’t have to take anything and that’s good. We want these IRAs to go to our two daughters. We heard recently that the tax laws changed and they will have to pay large income taxes when they get their inheritance.
Is this true? Is there something my husband and I should be doing to prevent this?
The tax laws have changed and it will impact your daughters. How it will impact them is a very different question. Under the new law your daughters will be required to withdraw the funds you leave them in your IRAs by the end of the 10th year after they receive them. This may or may not present a problem to either of your daughters. It will depend on their specific, personal circumstances. There are some options you might consider:
Convert funds from your IRAs to Roth IRAs. You pay the income tax now and your daughters are off the hook later.
Secure a life insurance policy that will cover the income taxes your daughters might face. You might use your normal RMDs to cover the premiums on such a policy that could go to your daughters tax free.
You should consider a family meeting with a financial advisor. The proper course you choose is very dependent on a number of moving parts – some yours, some your daughters’, and some the tax laws.
Take your time, do your homework, and choose the option that best fits you.