Which Way To Turn

By |2020-04-15T01:06:46+00:00March 25th, 2020|Annuities|

Quarantined, isolated and confused

Today, March 23, 2020, I am sitting in my home, self-isolated, keeping a social distance away from the rest of the world, and I have a slight tickle in my throat. I am watching TV with one eye on the stock market as the Dow drops lower and lower, and with the other eye and ear watching and listening to the 24-hour-a-day coverage about the Coronavirus pandemic.

I am asking myself, where is this world coming heading? Where are we going to turn for answers? I don’t know if the stock market is going to go up or down tomorrow. I don’t know how many more people are going to die from the Coronavirus before a cure is found.

 

There is one thing I do know. Before the Coronavirus threat if I had a tickle in my throat, I would take a cough drop and continue with my work. But today, I don’t know which way to turn. I’ll let the experts answer the questions about the stock market and the Coronavirus. As an insurance and retirement professional, I’ll dedicate my attention to what I do best, helping solve my client’s retirement concerns.

The question, “Which way should I turn?” came up recently with a client who is about to retire. He and his wife are concerned that their retirement accounts are shrinking from market losses. I explained to them that fixed indexed annuities are safe; their principal is protected and secure from market risk, and the strength of the insurance company backs their investment.

Additionally, because the insurance company does not invest their money in the stock market, they will no longer experience market losses. They told me that they have done their research and heard index annuities are offered both with and without an income rider.

They asked me to help them decide which option best meets their needs and goals. This is how I explained the advantages of both. Features of an index annuity without income rider: Index annuities without income riders offers you several options as to when to access your funds.

It is primarily intended for clients seeking a long-term retirement savings vehicle.
•Funds may be withdrawn from your annuity account any time
•You’ll have penalty-free access to 10% of the total account value in years 2-10
•If your funds are from a pre-tax account and you are over 72 years old, you may begin RMD withdraws at age 72 and discontinue your 10% withdraws
•Funds may also be withdrawn from the interest earned in your annuity, or from annuitization
•Access to funds may be penalty-free in the event of a terminal illness or need for long-term nursing care(LTC)

•A death benefit may be paid to a beneficiary
•There are many interest rate options to choose from, such as fixed interest rates or hypothetical indexes that depend on the performance of the index selected.

There are some important factors you must consider before choosing an index annuity without lifetime income. It is not guaranteed.

How long income will last depends on the amount withdrawn from the annuity and the performance of the index selected. The owner of the annuity manages how and from what source income payments are withdrawn. If a health emergency requiring (LTC) or a death occurs to one spouse, and part or all the funds are withdrawn from the annuity to pay for these expenses, the other spouse may not have enough income to live on.

If you need true (LTC) protection and do not want to deplete your account value, you will need a separate (LTC) plan. Features of index annuities with an income rider, you receive all of the features of an annuity without an income rider including:

•Funds may be withdrawn from your annuity account any time
•You’ll have penalty-free access to 10% of the total account value in years 2-10
•If your funds are from a pre-tax account and you are over 72 years old, you may begin RMD withdraws at age 72 and discontinue your 10% withdraws
•Funds may also be withdrawn from the interest earned in your annuity, or from annuitization •Access to funds may be penalty-free in the event of a terminal illness or need for long-term nursing care (LTC)
•A death benefit may be paid to a beneficiary
•There are many interest rate options to choose from such as fixed interest rates or hypothetical indexes that depend on the performance of the index selected In addition to these features if you choose an index annuity with an income rider you also receive these benefits:
•Many index annuities with income riders provide up to two times the income value to pay for (LTC). After the care is no longer required and if the account value is not fully depleted, the lifetime income resumes.
•Some annuities with lifetime income riders offer the beneficiary two options for receiving the death benefit. They may choose to receive the full account value in one payment, or they may choose to draw the full income account value (which is higher) over 5-years.
•There are many interest options in which you can select. Some are hypothetical and depend on the performance of the index chosen, and some offer guaranteed interest rates, as high as 4%. If you desire a product that provides the highest accumulation you can earn, an Index annuity without an income rider can be a right annuity solution.

If you desire a product for income accumulation and a guaranteed lifetime income, (LTC) enhancement, and optional ways to pass your legacy to your beneficiaries, an index annuity with an income rider is a good solution.

If you don’t know which way to turn with your retirement decisions, I recommend you turn to your trusted advisor for help.

About the Author:

Joe Marullo
Joe Marullo Insurance & Retirement Services provides services and products which help mature individuals and families keep their savings up with inflation, protect their estate from losses to income taxes, and turn their estate into a guaranteed lifetime income. Website: joemarullo.retirevillage.com

Office: (281) 668-9160 | Joe Marullo Insurance & Retirement Services