Month: May 2016

Stagnant Interest Rates Have Their Own Risk

Stable Interest Rates Does Not Equal Financial Stability Although a same rate of interest can be friend or foe, depending on your situation, the sustained low interest rates of recent years are spelling increasing concern for retirees. Just as a well-tailored black suit can be perceived as stylish to some, but mournful to others, a sustained low interest rate of say, 2% or less, can be an opportunity for some consumers or a dark cloud for others, with the latter especially troublesome for retirees. An example is the high interest rates of the 1970s. With double-digit rates the norm,...

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The 4% Withdrawal Rule Died w/ Market Volatility & Living Longer

Low-Volatility Assets Combined with Annuities May Help. The traditional 4% withdrawal rate was based on 1990s data. Recent updates now put the figure closer to 3%, requiring changes to asset allocation and withdrawal strategies. The decades-old notion that retirement assets can typically last 30 years with a mix of 60% stocks and 40% bonds is in doubt, and retirees who have followed this lead may face unexpected asset shortfalls that can last for years. A current distribution rate closer to 3% has roots in low and sustained rates of return, market volatility, longer lives and revised distribution schedules. Importantly,...

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The Strategic and Tactical Use of Cash-Value Life Insurance in Retirement

Life Insurance is Tax-Free and Non-Qualified Monies Most retirees think of their retirement income in terms of their qualified plans, such as defined-benefit plans that work like pensions or defined-contribution plans that work like 401(k)s. But you need non-qualified monies for strategic and tactical planning in retirement to maximize your income and minimize your taxes so you can keep more of your money. Cash-value life insurance is a non-qualified asset and can generate non-reportable income—it can be a retirement plan in itself. But more and more, it’s being used in strategic- and tactical- planning scenarios to generate more net...

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Life Insurance Can Generate Tax-Free Income Via Policy Loans

Cash-Value Life Insurance Offers Multiple Crediting Methods Cash-value life insurance has been a supplemental retirement resource and complement to qualified plans for decades. It was used to augment retirement income, so it was looked upon as a secondary-support product. But now, in some planning circles, cash-value life insurance has taken the post-position in the competitive race as a tax-advantaged resource for retirement. First some important caveats: Tax-free policy loans from cash-value life insurance are significant advantages as products, but only if the contract is designed to comply with the TAMRA regulations that allow tax-free policy loans. In addition, the...

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