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Retirement Income Strategies

Retirement income strategies are not just for the wealthy. As retirement nears, the traditional strategy has been to move growth-seeking products to more conservative, fixed-income products. According to a recent study, a married couple now aged 65 has a 50 percent chance of at least one spouse living to age 94¹. This means that you may need to plan for your retirement savings to potentially last 25 to 30 years.

One drawback to a longer life is the greater possibility of outliving your savings — creating all the more reason to develop a retirement income strategy designed to last a longer lifetime. Sixty-one percent of Americans surveyed said they were more afraid of outliving their assets than they were of dying².

A significant loss in the years just prior to and/or just after you retire could negatively impact the level of income you receive over the course of your life. In fact, if a loss occurs earlier in life, there is also the chance that you may have more time to recover (versus a loss occurring later in retirement). Why? Simply because a smaller pool of assets is left to sustain you throughout your retirement years, and your assets may not have as much time to recover.

We can help you design a guaranteed* retirement income strategy that incorporates insurance and annuity vehicles to create opportunities for long-term growth as well as guarantee* income throughout your retirement.

¹http://www.rdmarketinggroup.com/Files/AG%20Secure%20Lifetime%20GUL%20and%20LIS20Client%20Guide.pdf Prepared by Ernst & Young Insurance and Actuarial Advisory Services practice. The analysis uses the Annuity 2000 mortality table with Scale G2 mortality improvements.

² State of the Insured Retirement Industry: 2012 Recap and a 2013 Outlook, Insured Retirement Institute

^* Guarantees are backed by the financial strength and claims-paying ability of the issuing company and may be subject to restrictions, limitations or early withdrawal fees. Annuities are not FDIC insured.

Asset Protection

Because the market does not provide security, you may want your financial strategies to include some guaranteed* income products. Annuities can meet that need and provide a source of supplemental income throughout your retirement. (You can read more about annuities in the section below.)

Twenty-first century asset protection calls for more than just strategic asset allocation. Including products like annuities in your retirement income strategy can help protect* your money from declines due to market losses.

Diversifying your retirement assets among a variety of vehicles — both through insurance products and investments, depending on what is appropriate for your situation — may offer you the best chance of meeting your retirement income goals throughout your lifespan.

^* Guarantees and protections are backed by the financial strength and claims-paying ability of the issuing insurance company.

Tax Minimization Strategies

Rising taxes may be a concern for many individuals approaching retirement. It may be important to incorporate tax planning into your financial decisions.

Few financial vehicles avoid taxes altogether, but investing in or purchasing a tax-deferred vehicle means your money can compound interest for years free from income taxation, potentially allowing it to earn interest at a faster rate. Insurance products allow you to defer paying them until retirement, when you may be in a lower tax bracket.

Please note that withdrawals will reduce the contract value and the value of any protection benefits. Additional withdrawals taken within the contract withdrawal charge schedule will be subject to a withdrawal charge. All withdrawals are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10 percent additional federal tax.

Long-Term Care Strategies

As the oldest baby boomers begin to wind through their 60s, one of the biggest concerns may not be outliving income, but outliving good health.

For retirees, home health care can cost $50,000 or more per year1, and nursing home care can run as high as $80,0002 per year. Does your retirement income strategy account for this kind of possibility? Would you be prepared for twice that amount as a married couple?

Considering that you could have to reduce your financial means before Medicaid will pay for long-term care, and that neither your employer group nor major medical insurance will cover long-term care, you may want to consider planning ahead for these potential expenses.

We can help evaluate your situation and determine if purchasing a long-term care insurance policy may be the right move to help you feel confident in your financial future.

¹ Genworth 2012 Cost of Care Survey: Home Care Providers, Adult Day Health Care Facilities, Assisted Living Facilities and Nursing Homes https://www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/coc_12.pdf

² MetLife: The 2011 Market Survey of Long-Term Care Costs
https://www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-market-survey-nursing-home-assisted-living-adult-day-services-costs.pdf

IRA Asset Planning

IRA accounts have become one of the largest types of assets inherited by beneficiaries. If you don’t anticipate needing your IRA money in retirement, you may wish to consider a legacy planning strategy that potentially reduces taxes and potentially increases the payout your beneficiaries will receive upon your death.

You may want to use some of the value in your IRA to provide your beneficiary or beneficiaries a regular stream of income while leaving the balance of IRA assets invested for tax-deferred growth. The result may yield substantially more money paid out over the course of your beneficiary’s lifetime. We can help you evaluate your financial situation to determine if IRA legacy planning could help you meet your goal of structuring a long-lasting inheritance for your beneficiaries.

Annuities

In the past, retirees could typically count on three sources of retirement income. These have traditionally been government-funded Social Security, employer-sponsored components and individual savings. With this traditional scenario, both the government and employer-sponsored components of the strategy were considered predictable, reliable income sources that may also be adjusted for inflation, like Social Security benefits. Only one-third of the plan, individual savings, was the responsibility of the individual.

Today, however, due to employer-sponsored plans evolving from guaranteed pension payouts to more defined benefit contribution plans, which generally result in a payout in retirement based upon level of individual participation, the majority of the burden for retirement income seems to have shifted to the individual. For this reason, you may want to consider a guaranteed* fixed income component to your retirement strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed^*.

An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed* payout options. Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals can reduce the value of the death benefit, and excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to 15 years of the contract. Withdrawals will reduce the contract value and the value of any protection benefits, and because they are designed as a long-term retirement income vehicle, annuity withdrawals made before age 59½ are subject to a 10 percent penalty fee, and all withdrawals may be subject to income taxes.

^* Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by carrier. Annuities are not FDIC insured.

Wealth Management

Investing should be easy – just buy low and sell high, right? But most of us have trouble following that simple advice. There are principles and strategies that may enable you to put together an investment portfolio that reflects your risk tolerance, time horizon, and goals. Understanding these principles and strategies could help you avoid some of the pitfalls that snare some investors.

Life Insurance

Life insurance isn’t for those who have died — it’s for those who are left behind. When shopping for life insurance, consider needs such as replacing income so your family can maintain its standard of living, as well as paying for your funeral and estate costs. A general rule is that you may want to seek coverage between five and seven times your gross annual income. As far as the various types of policies go, they can generally be placed into one of two categories: Term and Permanent.

Term insurance generally provides coverage for a specified period of time and pays out a specified amount of coverage to your beneficiary only if you die within that time period. In a level premium term policy, you pay the same amount of premium from the first day of the policy until the term ends. A permanent insurance policy, on the other hand, will stay permanently in effect for the rest of your life so long as premiums continue to be paid.

IRA & 401(k) Rollovers

When you change jobs or retire, there are four things you can generally do with the assets in any employer-sponsored retirement plan:

• Leave the money where it is
• Take the cash (and pay income taxes and perhaps a 10 percent federal penalty tax if you are younger than age 59½)
• Transfer the money to another employer plan (if the new plan allows)
• Roll the money over into an IRA

Rolling over from one qualified plan to another qualified plan allows your money to continue growing tax-deferred until you receive distributions in retirement. If you decide to cash out of an IRA, we can help you find suitable vehicles to help you reach your retirement income goals.

Medicare

Medicare is vital for individuals 65 and older, but it can be confusing to navigate the different parts, like Medicare Part B or Medicare Advantage. Many people also mistakenly think Medicare covers everything, but it leaves out critical areas such as long-term care. We guide you through the nuances of Medicare, helping you choose the right combination of benefits and supplemental plans to ensure your health care is fully covered without unexpected costs.

Health Insurance – Group & Individual

With all the options available, choosing the right health insurance can be overwhelming. Many believe that selecting the cheapest plan will save them money, but it can result in coverage gaps that lead to higher out-of-pocket expenses in the long term. We help you navigate the complexities of health insurance, ensuring you have a comprehensive plan that covers whatever health care needs arise.

Group Benefits

Employees work best when they know they’re getting what they deserve in return. My Capital Wealth provides benefit experiences that work for real life, protecting people with coverage like life and disability insurance. We help employers like you offer employee benefit solutions that keep your employees prepared for whatever tomorrow holds.

Executive Bonus Retirement Plans

Small business owners across the country want to recruit, retain and reward top talent. One option that can help with that goal is an executive bonus plan. In its simplest definition, an executive bonus plan is a cash value life insurance policy that employers can provide to their key employees. Your employee gains additional compensation through an employer-paid life insurance policy and can feel appreciated for their hard work, while you’re able to retain and reward them. We can help add this flexible and resourceful tool to your company’s toolbox.