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The government passed a year-end spending bill in December, and it included one piece of legislation that could have a big impact on retirees. It’s called the SECURE Act. The bill’s name is an acronym for Setting Every Community Up for Retirement Enhancement.
The legislation is aimed at helping Americans save more for retirement. While many of the changes will certainly be helpful, they may also require you to revisit your retirement strategy. The SECURE Act affects many different areas, from your 401(k) plan to your IRA to even how you take withdrawals in the later stages of retirement. Below are some of the biggest changes in the SECURE Act: Elimination of” Stretch” IRA The biggest change in the SECURE Act may not impact you but rather your IRA beneficiaries. The SECURE Act eliminates the ability to “stretch” an IRA, which was a strategy commonly used by non-spousal beneficiaries to reduce their tax burden and continue to grow the account. Under a stretch IRA concept, your non-spousal beneficiary, like a grown child for example, could simply withdraw your RMDs on annual basis from the IRA after you pass away. Because they are taking the minimum amount from the IRA, they reduce their annual tax obligation. They also leave assets in the IRA to continue growing on a tax-deferred basis. The stretch IRA is no longer an option, however. Under the SECURE Act, all non-spousal beneficiaries must take the full IRA balance within 10 years. The only exceptions are minor children and handicapped individuals. If you plan on leaving your IRA to someone other than a spouse, you may want to review their options. RMD Age Most qualified accounts like IRAs and 401(k) plans have something called required minimum distributions, or RMDs. These are withdrawals that you are required to take each year once you hit a certain age. Traditionally, RMDs have started at age 70½. However, the SECURE Act pushes the RMD start age back to 72. That means you’ll have eighteen additional months of tax-deferred growth in your 401(k) or IRA before you have to start taking taxable withdrawals.1 Traditional IRA Contributions RMDs aren’t the only reason why 70½ has historically been an important age. That’s also the age at which point you could no longer make contributions to a traditional IRA. Until now. The SECURE Act eliminates the age limit on traditional IRA contributions. That means you can continue making contributions well past 70½. That could be especially helpful if you plan on working in retirement and want to continue to bolster your savings.1 401(k) Plans for Part-Time Employees and Small Businesses The SECURE Act has also made 401(k) plans more accessible for part-time employees and employees at small businesses. In the past, 401(k) plans were usually reserved for full-time employees. However, under the SECURE Act, companies are required to offer 401(k) eligibility to any employee who works 1,000 hours in one year or 500 hours in three consecutive years.1 It’s also been difficult for many small businesses to offer 401(k) plans. These plans often have high startup and administrative costs that can be burdensome for small businesses with a tight budget. The SECURE Act aims to resolve that problem. The new law offers up to $5,000 in tax credits to offset 401(k) plan startup costs for small businesses. It also allows small businesses to pool together to offer 401(k) plans to their employees. 401(k) Plan Income Strategies The SECURE Act also focuses on how 401(k) plans can generate income for participants. Plans must now deliver “lifetime income disclosure statements” each year. This document will show you exactly how much income your plan could generate for life if you used the balance to purchase an annuity. The law has also made it easier for 401(k) plan participants to access annuities with guaranteed lifetime income features. The SECURE Act eliminated some regulatory issues that had prevented annuities from being common strategy options in 401(k) plans. With those issues resolved, participants can now use their 401(k) funds to create guaranteed lifetime income through the use of an annuity. What Should I Do? These are some of the biggest changes to retirement plans in decades and it would be wise to re-evaluate your retirement plan. By meeting with a financial professional, we can help you evaluate your current plan and how you may want to adjust based on these recent changes. There are certain things you may want to look at differently, including some sophisticated tax planning opportunities, that only a professional can truly help you understand. Ready to review your retirement strategy to see how it is impacted by the SECURE Act? Let’s talk about it. Contact us at Cornerstone Financial Associates today so we can help you analyze your current plan and develop a winning strategy. Don’t wait, the sooner we can help you evaluate your needs, the sooner you can feel confident about the plan you have in place. Let’s connect soon and start the conversation! 1https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 19636 - 2020/1/13
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It’s the giving season. Are you planning to make a donation to your favorite charity this holiday season? If so, you have company. More than 60% of Americans make some type of charitable donation in the last two weeks of the year. The post popular charities are churches, organizations that serve the poor, and children’s charities.1
Regardless of what charity you choose to support, the end of the year is a perfect time to make a donation. You help your favorite charity build their financial reserves for the upcoming year and you may even be able to realize a tax deduction. A cash donation may seem like the obvious way to support your charity, but it’s not your only option. You can also use life insurance to make a donation. If you have a life insurance policy you no longer need or if you are in the market for life insurance, below are a few ways you can use your policy to help the charity of your choice: Name the charity as a beneficiary. One of the easiest ways to use life insurance to support a charity is to name the charity as a beneficiary on the policy. You can name them the sole beneficiary or partial beneficiary. You simply fill out a beneficiary change form with your carrier. When you pass away, the charity files their beneficiary claim and receives their share of the death benefit. This type of donation can be advantageous because it’s convenient and because it doesn’t require a cash donation today. The charity doesn’t receive the money until some point in the future when you pass away. Just be sure to let the charity know that you have named them as a beneficiary. If you don’t, they may not know that they need to file a beneficiary claim upon your passing. Transfer the policy to the charity. You can also transfer ownership of the policy to the charity. In this instance, the charity becomes the new policy owner and usually, the new beneficiary as well. They receive the death benefit when you pass away, but they also assume full control of the policy. For example, the charity controls the cash value. They can withdraw cash from the policy or even take dividends or interest as distributions. They can change the beneficiaries on the policy. They can even surrender the policy and take the cash value as a distribution if they want. If you don’t want to relinquish all control of the policy to the charity, this probably isn’t a good option. However, if you truly don’t have any use for the policy, you may want to consider it. You may even be able to deduct the value of your paid premiums and all future premiums. Use a charitable rider. Some life insurance companies offer a charitable rider. This is an optional feature in which the insurance company automatically pays a small portion of the death benefit to the charity of your choice upon your death. In many cases, these riders have no cost. This could be a good option if you want to leave a modest amount to a charity. The charity isn’t named as a beneficiary, so your other beneficiaries may not even know that the charity was included in your death benefit. You also don’t have to worry about the charity forgetting to file a claim. The insurer automatically makes the donation. Donate your interest or dividends. If you have a permanent life insurance policy, you may receive annual payments from the insurer. On whole life policies, these payments come in the form of dividends. On universal life policies, the payments are interest. You can donate your annual interest or dividends to the charity of your choice. They can then use those funds as they see fit. You may even be able to deduct the donation from your taxes. Ready to review your life insurance strategy? Let’s talk about it. Contact us today at Cornerstone Financial. We can help you review your protection and find the right plan for your needs. Let’s connect soon and start the conversation. 1https://www.worldvision.org/about-us/media-center/survey-majority-americans-donate-charity-end-december Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19505 - 2019/11/21 It’s hard to believe we’re already nearing the end of 2019. This year has flown by and 2020 is almost upon us. If you’re like many people, you use the end of the year to evaluate the past and make resolutions for the future. Your financial strategy might be included in those resolutions.
This year has been a rollercoaster for many investors. While the markets have moved higher and hit new record levels, that growth hasn’t come without a few bumps. Through November 20, the S&P 500 has increased by 24% year-to-date. However, the index also experienced several sharp downturns, especially through the summer.1 If you’re approaching retirement, you may not have the same comfort level for risk that you once did. This may be the time to review your retirement strategy and implement changes that can reduce your risk exposure. Below are a couple of steps to consider as you make your 2020 financial resolutions: Protect yourself from risk. Are you less comfortable with risk and volatility than you were in your younger years? That’s natural. Many people become more risk-averse as they approach retirement. After all, you don’t have as much time as you once did to recover from a market loss. There are a few steps you can take to reduce your exposure to risk. One is to review your allocation and risk tolerance and make sure they’re aligned. Your risk tolerance is your specific comfort level with market volatility. It’s based on your unique needs, goals, and time horizon. As you get older, your risk tolerance may change, so it’s important that your strategy changes along with it. You could shift your strategy to more conservative assets that have less exposure to risk and volatility. You could also utilize financial vehicles that offer growth potential without the chance of downside loss. A financial professional can help you identify strategies that can reduce your risk exposure. Guarantee* your income. Income planning is one of the most important elements of any retirement strategy. Generally, the goal is to generate enough income to cover your expenses so you don’t drain your retirement savings. If you have to withdraw too much money from your savings in the early years of your retirement, you may not have assets left in the later years. Fortunately, you’ll likely receive at least one source of income that’s guaranteed* for life from Social Security. You also may be fortunate enough to receive a defined benefit pension. You can also take steps to convert a portion of your retirement savings into a guaranteed* income stream. There are a number of different financial vehicles available that can be used to create a source of income that is guaranteed* for life, no matter how the market performs or how long you live. You could reduce your risk and protect your financial future by guaranteeing* a portion of your income in retirement. If you’re nearing retirement and haven’t explored options for guaranteed* income, you may want to take that step in 2020. Ready to get back on track for retirement in 2020? Let’s talk about it. Contact us today at Cornerstone Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation. 1https://www.marketwatch.com/investing/index/spx *Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19504 - 2019/11/21 What are you most thankful for this Thanksgiving? Time spent with family and friends? Good health? Perhaps a positive career development? This is the season to reflect on the past year and appreciate all of life’s good fortune.
You probably have a number of blessings for which to be thankful. One that may not be so obvious is your financial strategy to protect your loved ones from risk. Specifically, you might be thankful for your life insurance policy, which protects your loved ones from one of life’s most catastrophic risks. Granted, you probably won’t mention “life insurance” at the Thanksgiving table when your it’s your turn to say why you’re thankful. However, this may be the time to review and reflect on your family’s needs and your protection strategy. Below are four reasons to be thankful for life insurance coverage: Family Protection Life insurance can serve many purposes, but the primary purpose is usually protection. When you purchase life insurance, you name one or several individuals as beneficiaries. Upon your death, your beneficiaries file a claim with your insurer. The insurer then pays them their portion of the death benefit, either as a lump-sum or in regular installments. Your beneficiaries can use their benefit in any way they see fit. If you’re a breadwinner and provider for your family, they may use the funds to pay off debt, cover living expenses, or simply stabilize their financial situation. Your kids or grandchildren could use the funds to pay for college. Your surviving spouse could use his or her benefit to pay for retirement. Life insurance can help your family reach their financial goals even after your death. Probate-Free and Tax-Free Legacy Life insurance death benefits are unique in that they are tax-free and probate-free. Your beneficiaries don’t pay income taxes on life insurance benefits. The benefit also avoids probate. When you pass away, your estate may have to go through probate, which is the legal process for resolving outstanding estate issues. During this time, your estate executor files a final tax return, pays off debts, and distributes assets to heirs. It can be time-consuming and costly. However, life insurance proceeds avoid probate. That means your beneficiaries can receive their share of the death benefit, even if your estate is still in probate. Tax-Deferred Growth Permanent life insurance policies have something called a cash value account. When you make a premium payment, a portion pays for the cost of insurance and the remainder goes into the cash value account. Your cash value can grow over time. The method of growth depends on your type of policies. Some pay interest or dividends. In other policies, your cash value is invested directly in the financial markets. In all permanent policies, though, your cash value grows on a tax-deferred basis. That means you pay no taxes on your growth as long as the funds stay in the life insurance policy. Tax-Efficient Income What can you do with your tax-deferred growth in your life insurance policy? One option is to use it as a source of tax-efficient income. When you take a withdrawal from your life insurance policy, the premiums come out first and growth comes out last. As long as you only withdraw your own premium payments, withdrawals are tax-free. You can also take loans from your policy. Loans are also tax-free. You can borrow from your policy’s cash value and then repay the loan through premium payments over time. If you don’t repay the loan before your death, the balance is taken from the death benefit. Your cash value could serve as a helpful supplemental income source, especially in retirement. Ready to evaluate your life insurance strategy? Let’s talk about it. Contact us today at Cornerstone Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19433 - 2019/10/28 More Americans than ever are including annuities in their retirement planning. According to the Limra Secure Retirement Institute, there were more than $132 billion in fixed annuity purchases in 2018. That’s a 25 percent increase over the previous year and an all-time record.1
Fixed annuities are retirement income vehicles that allow you to earn tax-deferred accumulation, often with some kind of downside protection. For example, you might earn a fixed interest rate over a set period of time. Or you could have the potential to earn interest based on the performance of an external market index, like the S&P 500. Why have these vehicles surged in popularity? It often depends on a person’s specific retirement income goals and needs. However, there are a few common factors that could make a fixed annuity appealing for someone who is approaching retirement. Volatility So far in 2019, the S&P 500, which is a broad-based index representing American stocks, is up more than 20%. However, that hasn’t come without some sizable ups-and-downs, including a market downturn over the summer.2 If you’re nearing retirement, you may not be as comfortable with those “ups-and-downs” as you were in the past. It’s natural for people to grow less comfortable with risk as they get older. After all, if you’re retiring soon, you don’t have as much time to recover from a loss as you did when you were younger. Most fixed annuities offer some level of downside protection, such as a principal guarantee*. While you may not earn as much as you would in the market, you also aren’t exposed to downside loss. You simply earn interest based on the terms of your contract. If the market goes down, your premium doesn’t. A fixed annuity can often be a stable portion in an overall allocation. Guaranteed* Income Many fixed annuities also offer guaranteed* lifetime income features that can give you certainty and predictability in retirement. For instance, in many of these benefits you’re allowed to withdraw up to a certain percentage of your value each year. As long as your withdrawal stays within the limit, your income is guaranteed* for life, no matter how long you live or how the annuity performs in the future. Many retirees can only rely on Social Security or possibly a defined benefit pension for guaranteed*, predictable income. An annuity with a lifetime income benefit can provide an additional source of guaranteed* income in retirement. Tax-Deferral Growth in fixed annuities is tax deferred. You potentially earn interest each year, but you don’t pay taxes on that growth as long as the money stays in the annuity. That deferral could help your assets compound at a faster rate than they would in a comparable taxable vehicle. You eventually pay taxes on the growth when you take withdrawals or when you pass away. Ready to evaluate your retirement strategy? Let’s talk about it. Contact us today at Cornerstone Financial. We can help you develop and implement a plan. Let’s connect soon and start the conversation. 1https://www.investmentnews.com/article/20190220/FREE/190229989/fixed-annuity-sales-smash-previous-record 2https://money.cnn.com/data/markets/sandp/ Licensed Insurance Professional. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. 19436 - 2019/10/28 It’s the scariest time of year. Halloween is here again. It’s time to stock up on candy, carve your pumpkin, and find the perfect costume. This may be the season for ghouls and goblins, but there could also be terror lurking in your retirement strategy.
More than 50% of Americans say their number-one financial concern is not having enough money for retirement.1 It’s a valid concern. Retirement is a substantial financial need. It can be challenging to accumulate enough money to fund a long, stable retirement. Fortunately, there are strategies that can take some of the terror out of retirement uncertainty. Below are three common retirement concerns. They can all be addressed with one optional shared strategy—a fixed indexed annuity (FIA). If you share these retirement concerns, you may want to consider how an FIA can fill the gaps in your income planning. Market Volatility Nothing can derail a retirement income strategy like a market downturn. You’ve worked your entire career to save and accumulate assets. A decline just before retirement could reduce your nest egg and limit your ability to generate income. A fixed indexed annuity can help you reduce your risk exposure. In an FIA, you have the potential to earn interest based on the performance of an external market index. If the index performs well, you earn more interest, up to a limit. If it performs poorly, you may earn little or no interest. However, most FIAs have a principal guarantee*. That means that even if the index declines in value, your annuity value will not go down. You can’t lose any premium due to market risk. An FIA could help you achieve growth while reducing your risk exposure. Unpredictable Income Where will your income come from in retirement? It’s an important question. Unfortunately, too many retirees can’t answer it. Social Security will provide some level of income. Perhaps you’re lucky enough to have a defined benefit pension. The rest of your income may come from your savings and investments. However, that income isn’t guaranteed* and may not be predictable. After all, if you suffer a loss in the markets, your income could go down as well. You can use an FIA to help manage this risk. Many FIAs have optional guaranteed* withdrawal benefits. You’re allowed to withdraw a certain amount each year. The withdrawal is guaranteed*, which means you can take the same amount regularly, regardless of how your annuity performs. That kind of predictability can help you make informed financial decisions throughout your retirement. Running Out of Money It’s possible you could spend 30 years or more in retirement. That’s a long period of time to make your assets last. If you don’t watch your spending in the early years, it’s conceivable you could run out of money by the end of retirement. Fortunately, an FIA with a guaranteed* withdrawal benefit lasts your entire life, no matter how long you live. As long as you stay within the income limits, your income will last your entire life. Again, that could provide much-needed certainty to help you meet potential financial challenges in the later stages of retirement. Ready to take the terror out of your retirement strategy? Let’s talk about it. Contact us at Cornerstone Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation. 1https://news.gallup.com/opinion/polling-matters/260570/despite-economic-success-financial-anxiety-remains.aspx *Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19291 - 2019/9/23 According to a recent survey from Policygenius, only 32% of Americans own life insurance.1 Life insurance provides financial protection, especially for those with children or other dependents. Life insurance provides a tax-free lump sum benefit that can be used to cover a wide range of expenses and financial challenges.
Life insurance is a valuable tool for many Americans, but it can be important for small business owners. In many small businesses, the owner wears multiple hats. You may be the CEO, but also a salesperson, a manager, a bookkeeper, and much more. If the owner passes away, the business could suffer a major loss, both financially and operationally. Fortunately, you can use life insurance to minimize your risk and protect your business and your family. If you don’t have life insurance or don’t have enough, now may be the time to explore your options. Below are a few ways you could use insurance to protect your family in the event of your death: Provide the business with liquidity and cash flow. It’s never fun to think about death, but it’s also too important to ignore if you own a business. Imagine what might happen if you were to unexpectedly pass away. Would your business continue to run seamlessly? Or would it face major disruption? Who would run the business? Life insurance can give your family and your business much-needed cash to keep the business running while they address those questions. They can use the cash to pay bills, make payroll, and maintain operations until they develop a strategy for how to move forward. Compensate your family and protect your partners. Do you have a business partner? Or even multiple partners? An unexpected death can create chaos in a business partnership. On one hand, your partners may be able to assume your responsibilities and keep the business afloat. On the other hand, your partners may also want to take over your share of the business. You’ll likely want your family to be compensated if that happens. Life insurance can provide funding to facilitate that transaction. You and your partners can all buy life insurance policies on each other. If you pass away, your partners receive the death benefit. However, you use a contract called a “buy-sell agreement” to dictate what happens with the benefit. For instance, your agreement may state that your partners use the proceeds to buy your share of the business from your family. Your loved ones receive compensation and your partners are able to keep the business running. Avoid liquidation or other undesired outcomes. Assume you pass away and you don’t have partners or a family member who can step in and run the business. What happens? Your survivors may have no choice but to fold up shop and sell the business. In fact, if you have outstanding debt, your creditors could foreclose and liquidate your business’s assets. Life insurance helps your heirs avoid that situation. They can use the proceeds to pay off debts and meet financial obligations until they can find a buyer or other suitable outcome. That can prevent liquidation and help them get fair value for all your hard work. Ready to protect your business and your family? Let’s talk about it. Contact us today at Cornerstone Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation. 1https://www.policygenius.com/blog/many-americans-are-underinsured/ Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19300 - 2019/9/24 Planning your retirement strategy? Wondering where your income will come from in retirement? It’s likely that Social Security will be part of the mix. More than 90% of Americans age 65 and older receive Social Security benefits. In fact, for 48% of married elderly couples and 69% of unmarried seniors, Social Security represents more than half their income.¹
The average retiree receives $1,461 per month from Social Security.¹ While that’s a significant amount, it’s likely not enough to support a full retirement. If you’re like many retirees, you’ll need income from sources besides Social Security. How much of a role will Social Security play in your retirement? And how much additional income will you need? To answer those questions, it’s helpful to know how your Social Security benefit is calculated. How much can you expect from Social Security? The Social Security Administration can provide an estimate of your benefit amount. It’s driven by your career earnings and your age at the time you file. Generally, everything else being equal, higher career earnings lead to a higher benefit amount. However, your age at the time you file for benefits also plays a major role. You are eligible to receive your full benefit when you reach your full retirement age (FRA). Most people have an FRA between their 66th and 67th birthdays. You can file as early as age 62. However, your benefit could be reduced by as much as 30% if you file before your FRA.² You can also delay your filing past your FRA and increase your benefit amount. Social Security credits your benefit by 8% per year for every year you delay your filing past your FRA. This credit is offered up to age 70.³ Again, Social Security can offer an estimate of your future benefits. Also, a financial professional can help you determine how Social Security fits into your retirement strategy. You may not be able to control your career earnings, but you can maximize your benefit by carefully planning the timing of your filing. How else can you generate retirement income? Even if you delay your Social Security and maximize your benefit amount, it’s likely that you will need some other form of income. Perhaps you have a defined benefit pension through your employer. Or maybe you can take withdrawals from your 401(k) or IRA. You also may want to consider an annuity with a guaranteed* income benefit. These are tax-deferred vehicles in which you can potentially earn interest. However, many annuities also offer optional guarantees* that provide a guaranteed* income stream for life. No matter how long you live or how your annuity performs, you still receive income. That kind of guaranteed* cash flow could supplement your Social Security benefits and provide financial stability in retirement. Ready to plan your income strategy in retirement? Let’s talk about it. Contact us at Cornerstone Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation. 1 | https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf 2 | https://www.ssa.gov/planners/retire/retirechart.html 3 | https://www.ssa.gov/planners/retire/delayret.html *Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19151 - 2019/8/19 |
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