Tag Archives: Retirement Savings

Finding Your Second Career After Retirement

Finding Your Second Career After Retirement

Longer and better health, the fear of outliving retirement savings, and a strong desire to remain active and involved have all contributed to today’s retirees viewing retirement very differently than the generations before them. Many retired boomers are using their retirement years to explore new careers that were previously not economically feasible for them.

Even though a second career during retirement will most likely be more about personal fulfillment than money for you, this career should have the same planning and care as your first career. Here are four tips to help you approach your second career with a level head:

1. Reassess Your Job Skills

Whether you already have a career in mind or are unsure exactly what type of job you’d like to have, it’s important to begin by listing out all the skills you’ve accumulated over the years from your primary career. This will help you determine what skills can be transferred to the type of job you have in mind or in which types of jobs your skill-set would be most valuable. Online job boards, employment services, and the classified section of your local newspaper are all great sources to research job opportunities. They also usually provide tips on resume revamping and the interview phase of seeking employment. Since you’re changing careers, your resume will most likely need to be reworked to highlight which skills are transferable/applicable. If you want one-on-one help with the process, then you might consider hiring a job coach that specializes in second careers or midlife career changes.

2. Research Growing Industries

There will always be fields like healthcare that have steady and strong growth rates. However, new industries and specialties looking for workers emerge everyday. Therefore, you shouldn’t overlook researching what industries are being developed in your area. There are many sites, such as Seniors4Hire.org, Workforce50.com, and AARP, that offer you information on what organizations are welcoming to the older workforce. The Occupational Outlook Handbook by the Dept. of Labor also offers detailed information about almost any field of work.

3. Make Industry Connections

Two excellent ways to make connections in the industry you plan to work is by attending industry-related conferences and joining applicable professional organizations. At meetings, you’ll have the opportunity to converse with workers currently in the industry and find out what businesses are hiring, the demand for jobs, businesses that are hospitable to older workers, and so forth. Do keep in mind that your lack of experience in a given field may mean that you’ll need to start out as an unpaid intern or volunteer. It’s also important to consider elements like lower Social Security benefits and the possibility of earning only a fraction of a profession’s average salary during any training period.

4. Evaluate Furthering Your Education

Despite any educational and professional achievements already under your belt, your second career may require furthering your course work, obtaining certifications, or pursuing an altogether different degree. Some employers will hire you, even if you don’t meet their hiring criteria, given that you agree to further your education. Some may even offer a tuition reimbursement for agreeing to work for them a specified amount of time, but you need to make sure that you’re prepared for such a commitment. In the event it’s necessary to further your education without any type of tuition assistance, then you’ll need to carefully assess your finances to see if this is a realistic expense for you.

Time to Split: Squelch Retirement Worries with a Split-Annuity

Time to Split: Squelch Retirement Worries with a Split-Annuity

Recent research shows that U.S. workers are growing increasingly apprehensive about their ability to fund a comfortable retirement. Only 18% of surveyed workers said they are very confident about having enough money for a comfy retirement, according to the Employee Benefit Research Institute’s 2008 Retirement Confidence Survey.

That means that more than 80% of workers are not certain that they have enough retirement savings. Of course, in the face of skyrocketing health-care costs and burgeoning inflation, it’s really no wonder why workers are so concerned. If you’re worried that you may not have enough income to last a lifetime, you may want to consider a split-annuity strategy. This tactic may allow you to start receiving a steady stream of income now that could continue well into your retirement years.

How to make the split

It’s fairly simple to pull off a split-annuity strategy. All you have to do is divide a lump-sum contribution between an immediate fixed annuity and a deferred fixed annuity. An annuity is a contract between you and an insurance company. You pay the insurance company either a lump sum or a series of payments in exchange for the promise that the company will offer you a stream of income in the future. This allows your money to grow over a specified period of time in a relatively low-risk environment.

The split-annuity strategy is an effective approach for those who need income now and well into the future. That’s because the immediate annuity starts paying you income right away for a specific period of time while the deferred annuity continues to accumulate interest-which will provide you more income in the future.

A case study

Let’s say a man named Bob splits a $500,000 lump sum between an immediate annuity and a deferred annuity-that’s $250,000 in each account. Bob chooses an immediate annuity contract that guarantees a 4% annual rate of return, allowing him to receive an annual payout of $35,000 for the next eight years.

In the meantime, Bob’s $250,000 in the deferred annuity is also earning a 4% annual return on a tax-deferred basis. After eight years, Bob’s immediate annuity has been drained, so he turns to the deferred annuity-which has grown to more than $342,000. Bob can now start collecting income from the deferred annuity.

Important annuity facts

Before you tap into this split-annuity strategy, it’s important to understand all the ins and outs of annuities. Here are a few things you’ll want to keep in mind:

  • Beneficiaries: If you have a deferred annuity and die during the accumulation phase (the time before the payouts begin), your designated beneficiary will collect the principal in addition to any interest that has accumulated. This is why it’s extremely important to designate a beneficiary in your annuity contract.
  • Surrender charges: Although there are some surrender charges associated with withdrawing money from deferred annuities, these charges typically decrease over time. After a certain amount of time, surrender charges will no longer apply.
  • Taxes: Annuity earnings are taxed as ordinary income. Also, if you make any withdrawals before the age of 59ВЅ, you may be subject to a 10% federal income tax penalty.

If you are concerned about having enough income to fund a comfortable retirement, ask your financial advisor about a split-annuity strategy. This effective line of attack may allow you to start collecting income right now and ensure you’ll have enough income well into the future.

* Annuity withdrawals are generally taxed as ordinary income and may be subject to surrender charges, in addition to a 10% federal income tax penalty if made prior to age 59 1/2. The guarantees and payments of income are contingent on the claims paying ability of the issuing insurance carrier.

Understanding the Difference Between Annuity, Bond and CD Ladders

Understanding the Difference Between Annuity, Bond and CD Ladders

One great way of creating a gradually disbursing retirement benefit while still keeping the long-term savings portion of your money conservatively invested is to create a bond, annuity or CD ladder. These ladders are separate investment instruments with varying maturity dates that allow you to take advantage of long-term savings rates while still making sure that some of your money is readily liquid when you need it. This strategy is called “laddering” because each maturity date is its own rung on the ladder of your retirement years.

While each ladder is a great strategy in its own right, it’s important to understand the differences between each of them before you decide which is (or are) right for your retirement plan.

Annuity Ladders

An annuity ladder is created when you spread out your annuity purchases over several years. Instead of investing all your retirement savings at once into a single annuity contract, you only invest some of the proceeds. The rest remains invested in equities, bonds, CDs and other appropriate investments. Then, over time, say every 5 years, you buy another annuity. Doing so helps insulate your savings from being locked in to low-interest annuities. This gives you the benefit of guaranteed income without interest rate risk.

Bond Ladders

Bonds are debt instruments that act as loans to companies and municipalities. While the issuer is using your principal for their projects they pay out interest to you. Once the bond matures, you are paid back the principal that you invested. When you create a bond ladder, you purchase several bonds with varying maturity dates. The later maturity dates afford the investor greater interest payments, but the earlier maturing bonds give the investor liquidity when they need it. Many bonds also have put options so that if you should pass away before the bonds in your ladder mature, your family can execute the put and be paid the principal by the bond issuer.

CD Ladders

CD rates vary depending on how long you are willing to have your principal tied up in the CD. A 20-year CD will have a significantly higher rate than a 6-month CD, but tying all your retirement money up for 20 years in order to get that rate is not a smart strategy since you are likely to need something to live on during the 20-year period. With a CD ladder, you can invest a portion of your savings into CDs with varying maturities. They will mature and pay you your principal and interest throughout the years as you enjoy your retirement.

Liquidated earnings are subject to ordinary income tax, may be subject to surrender charges and, if taken prior to age 59 1вЃ„2, may be subject to a 10% federal income tax penalty.

Guarantees and payment of lifetime income are contingent on the claims paying ability of the issuing insurance company.

Fill Up Your Buckets for a Stream of Retirement Income

Fill Up Your Buckets for a Stream of Retirement Income

If you’ve heard it once, you’ve heard it a million times: when it comes to retirement planning, diversification is key. Everyone knows how important it is to build up a healthy nest egg—but if you put all your eggs in one basket, you are putting your financial well-being at risk.

Look at it this way: if you throw all of your funds in one investment or market sector, what happens if that sector takes a nosedive? Your retirement savings will go down the tubes right along with it. However, if you spread your investment funds across a variety of different assets, you will greatly decrease your risk.

So, how can you possibly protect yourself from financial devastation and still save up plenty of funds for a comfortable, happy retirement? Simple. It’s time to fill up your buckets!

The art of bucket planning

As Americans are living increasingly longer lives, one of the greatest risks today’s retirees face is the possibility of outliving their income. That’s why financial experts recommend that retirees adopt what’s called “bucket planning.”

Bucket planning is the act of spreading money across various pools income to ensure you have a lifetime stream of income. This strategy is growing increasingly popular in the retirement planning field. As a matter of fact, approximately 52 percent of financial advisors recommend the bucket planning method to their clients, according to Gallant Distribution Consulting.

Collect your buckets

There are a few different bucket planning methods. Some financial advisors recommend three buckets while others say you should fill up four. However, the most basic bucket planning strategy includes the following three pails:

Bucket #1: This bucket holds into low-risk investments, such as short-term Treasury bonds. This pool provides a stream income for the first five to seven years of your retirement.

Bucket #2: This pail should be filled with indexed annuities, which offer guaranteed income with an upside potential if the markets do well. This bucket will provide income for years 8 through 15 of your retirement.

Bucket #3: This is the bucket for long-term investments that will provide a guaranteed stream of income in your later years.

Another version of bucket planning includes investing in three or four different fixed or fixed indexed annuities, each which has a unique set of terms and benefits.

In either strategy, each bucket represents a different stage in your retirement. The primary objective of your first two or three buckets is to create an annual income stream during your first 15 years of retirement. When those 15 years are up, the last bucket still holds plenty of guaranteed annual income that will last throughout your lifetime. Because you have a bucket of income set up for each retirement phase, your cash flow will never run dry.

An endless stream of income

Bucket planning has skyrocketed in popularity because it can create an endless stream of income that you won’t outlive. If you set up your buckets properly, you won’t lose money, you’ll always be accumulating money and you’ll always have a guaranteed stream of income. That means you’ll live a comfortable and financially stable retirement without having to worry about outliving your assets.

In other words, if you fill up your buckets, you won’t run out of money before you—well—kick the bucket.

Liquidated earnings are subject to ordinary income tax, may be subject to surrender charges and, if taken prior to age 59 1⁄2, may be subject to a 10% federal income tax penalty.

Guarantees and payment of lifetime income are contingent on the claims paying ability of the issuing insurance company.

Fixed Annuities

Fixed annuities can offer fixed interest rate accumulation and guaranteed income and help maximize the wealth you pass on to your heirs. With an annuity’s fixed rate of return, you can protect your principal and predict your earnings, which are not taxed until you withdraw your money. Fixed annuities are considered to be a more conservative investment option than variable annuities. Funds in fixed annuities grow steadily, and are not subject to downfalls in the stock market. Fixed annuities offer a guaranteed payment, with the payout amount based on the assumed future returns of the investments and the annuitant’s life expectancy. The payment can be fixed for life, or can allow for future increases.

Fixed annuities are regulated by state insurance departments. Fixed annuities are not securities and are not regulated by the SEC. Equity-indexed annuities combine features of traditional insurance products (guaranteed minimum return) and traditional securities (return linked to equity markets). Fixed annuities are designed to provide retirement savings and , at your option, a guaranteed income stream. Most fixed annuities offer a choice of methods to receive income, one of which usually guarantees an income stream for life.

Fixed annuities pay a “fixed” rate of return. The monthly payout is a set amount and is guaranteed. Fixed annuities can potentially pay more than I Bonds, because insurance companies can invest in higher-yielding assets. Insurers’ portfolios that support fixed annuities are primarily invested in publicly-traded and privately-placed corporate bonds and commercial mortgages, which have a higher yield than Treasury securities of comparable maturity. Fixed annuities are designed for long-term investing to help meet retirement and other long-range goals. Fixed annuities are not suitable for short-term goals because substantial tax penalties and early surrender charges may apply if you withdraw your money early.

Fixed annuities are characterized by a minimum interest rate guaranteed by the issuing insurance company. Typically, a minimum annuity benefit is also guaranteed. Fixed Annuities: Fixed annuities are backed by highly rated insurance companies which guarantee your principal amount deposited. Subject to the claims paying ability of the issuing insurance company.) Because you earn compounded interest on the money that would have gone to pay taxes, savings grow faster than they would in a taxable investment at the same rate. Fixed annuities are a way for you to save for your retirement. Basically, it’s a contract between you and an insurance company.

Call Brian to see if a fixed annuity is right for your unique situation call 509-218-7329