Who do you know that makes $10 million a year? They don’t live in my neighborhood. Neither does Bruce Willis but every time he signs to star in a movie, his $20 million salary always makes the news. Do you think those contracts should be made public? Should any sector of our business sector be able to keep contracts secret? Do you really care? I can say that I don’t care, but I know someone who does, the Securities and Exchange Commission (SEC) and the financial industry regulator FINRA care.
My friend John has a special item in his life, John has a safe. This isn’t any ordinary safe; it is a special safe that John keeps his important money in. John’s safe protects his money so it is never at risk and no one can withdraw John’s money from his safe, except him. He is the only one with the combination to his safe. John’s safe has a special feature, it increases John’s money by paying guaranteed interest each month.
If you are like most people who participate in an employer-sponsored retirement plan, you will be pleasantly surprised to learn that you may be permitted to access part or all of your assets within the plan while still employed. It is one of the most unique and powerful investment strategies available, yet it’s seldom used or explained in offering greater diversification and opportunities. Some opportunities may even provide guaranteed benefits for lifetime income.
While dollar cost averaging does not by itself shield investors from market downturns, continuous and scheduled purchases over an extended period of time tend to cancel out the ups and downs of the market, and leave the investor with a net gain and a minimized risk. A variable annuity is more suited for taking advantage of dollar cost averaging because it allows for a specific portion of your annuity investment to be transferred tax free on a monthly into equity portfolios.
Purchasing an annuity can be a great way to guarantee your retirement income for as long as you live. It can also protect your assets from inflation, stock market fluctuations, a serious medical crisis or other unforeseen circumstances. An annuity can help bolster your retirement financial plan by guaranteeing your retirement income. Think of an annuity like a pension you might purchase. You pay a lump sum or payments over time. In return you receive monthly income for a specified period of time or for the rest of your life – no matter how long you live.
In its simplest definition, an annuity is an amount payable annually. For our purposes, however, an annuity describes a contract offered by an insurance company that allows you to accumulate funds for retirement on a tax-deferred basis. Upon retirement, you’ll receive income from the annuity that can be guaranteed by the insurer to last either a fixed number of years, or as long as you live. An annuity is neither life insurance nor a health insurance policy, and it’s not a savings account or a bank Certificate of Deposit.
Fees and expenses should be disclosed and completely transparent along with the methods used in making long term calculations. Not only is it the right thing to do but it makes the playing field level. The actual pro and con fight is between the insurance industry and the securities industry. The insurance side wants retirees to know the benefits of providing income over long term periods of time. The securities side feels that approach it too narrow and provides a disadvantage to them.
If Congress does not change the current law, the federal estate tax exemption in 2014 will be just $1 million. You do not have to die in 2013 to use this exemption; you can use it to make gifts now, while you are living. You do not have to completely give away your assets; you can make the transfers in ways that will let you keep control and even keep the income your assets are generating. Gifting can make solid sense. Under current federal law you can give up to $14,000 to as many people as you wish each year.