Our investment experts can help you with an individualized financial strategy to help grow and maintain wealth or to simply begin on your path to financial security.
Comprehensive Wealth Management
Retirement Income Strategies
Retirement income plans 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 an Ernst & Young study1, a married couple aged 65 has a 50 percent chance that at least one spouse will live to be 94 years old. 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 dying.2
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 as well as guaranteed* income throughout your retirement.
You may be able to use time to your advantage when investing for wealth accumulation.
The longer you invest, the more potential your money has to compound interest. If your portfolio has not fully recovered from losses in recent years, you may wish to consider a more aggressive allocation to make up for lost ground and get back on track to accumulating wealth.
However, with fluctuations in the stock market, it is important to remember that more conservative retirement strategies typically have only a portion of the assets invested in the stock market. Allocations can be set aside for more conservative investments and/or secured, guaranteed* income contracts such as annuities.
Annuities are long-term vehicles designed to generate supplemental income during retirement. They have minimum guarantees backed by the strength and claims-paying ability of the issuing insurance company. After all, the last thing you want to do is lose more ground during the next market correction.
Estate planning is simply determining (while you’re still alive) where your assets should go after you die. Without a properly structured estate plan, your wishes may not be fulfilled, and there may be unintended consequences for your loved ones.
While the concept is simple, the vehicles, planning and implementation process can be rather complex. Because of the estate tax laws and emerging vehicles to help you protect and transfer your assets effectively, it’s important to work with experienced estate planning professionals who stay current in this field and advise clients on a day-to-day basis.
Because the market does not provide security, you may want your financial strategies to include some guaranteed* income products. For example, annuities, which are insurance products with guarantees*, can provide a source of supplemental income throughout your retirement.
Twenty-first century asset protection may require more than just strategic asset allocation. Including products like annuities in your retirement income strategy may 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 help you meet your retirement income goals throughout your lifespan.
In the past, retirees could typically count on three sources of retirement income that divided roughly into thirds. These three sources of income have traditionally been 1) government-funded Social Security, 2) employer-sponsored components and 3) 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 has 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 contract value, as well as any death benefit to beneficiaries if applicable, and excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to fifteen years of the contract. Because qualified deferred annuities (purchased using pre-tax dollars) 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.
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 should 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 as long as premiums continue to be paid.
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.
Investing in or purchasing a tax-deferred vehicle means your money can compound interest for years, deferring income taxes and providing the potential to earn interest at a faster rate. Few financial vehicles avoid taxes altogether. Insurance products only allow you to defer paying them until retirement – when you may be in a lower tax bracket.
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 seniors, home health care can cost as much as $50,000 or more per year3, and nursing home care can run as high as $85,0004 per year or more. Does your retirement income plan account for this kind of possibility? Would you be prepared for twice that number as a married couple?
Considering that you could have to reduce your financial means before Medicaid will pay for long-term care and neither your employer group health insurance, nor major medical insurance—including Medicare—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.
IRA and 401K Assets
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 additional federal 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. We can help you determine if a rollover is the right move for you.
Working with Professional Athletes
The team at Drew Financial Private Capital offers specialized services for the unique needs of professional athletes. Big paydays during your peak years as an athlete can help ensure your financial future is secure after your playing days are over. We can be your financial backup team while you’re on the field so you have income during the offseason.
We will also work with you and other specialists within your network or ours on strategies that include proper tax planning, documentation and communication so any potential tax liabilities can be mitigated. This focus on tax planning also extends to your investment strategy and how your portfolio is managed. And we also offer a range of insurance services to protect you and your family during your playing days and beyond.
1 http://www.rdmarketinggroup.com/Files/AG%20Secure%20Lifetime%20GUL%20and%20LIS%20Client%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
3-4 Genworth 2017 Cost of Care Survey, conducted by CareScout®, June 2017. https://www.genworth.com/aging-and-you/finances/cost-of-care.html
*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.
Your investment advisor is not permitted to offer, and no statement contained herein shall constitute, tax, legal or accounting advice. You should consult a tax or legal professional on any such matters.
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 59½, may be subject to a 10 percent federal additional tax.
Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Global Financial Private Capital or GF Investment Services.
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