Subscribe via RSS

Annuity Shelter Strategies – Get a Crystal Clear Understanding of Its Basic Concept



Annuities, and the related annuity shelter strategies, are the call of modern life and lifestyle. They come with mixed bag of pros and cons depending upon the preferences, needs and requirements of the people. It offers some wonderful investment and saving options in certain situations. It would be wrong to generalize the comprehensiveness of various annuity plans as they are diverse and miscellaneous in their relevance.

Just as the every human situation is diverse, so is their demand for an investment plan for themselves. Since it may not be everyone’s cup of tea to understand all nuances of annuities, we have brought in here few well-researched and well-represented annuity shelter strategies. Hopefully they would provide insight for many who do not know much about annuities -

There are basically four kinds of annuities – the fixed, the variable, the deferred and the immediate. The fixed annuity pays a designated interest rate for the specific time period. This type of annuities are invested for the prime reason of long term saving. In case of an immediate annuity plan, the insurance company starts paying the returns to be investor just as the plan is entered. A variable annuity has a varying profile where the investor is required to investment in various portfolios such as stocks, mutual funds etc. Those who want safety of their investments must never get into variable annuity plan since their portfolios fluctuate along with ups and downs of economic scenario of the financial market. One of the sound annuity shelter strategies is never to be rash in investment and always resort to the advice of a financial advisor. Keep the long term benefits in mind at the time of purchasing the suitable annuity plan. The idea is to keep the finances available after retirement or old age for financial security. Treat annuities as saving-vehicles and not as mutual funds. There are variety of annuity plans in the offing that offer various benefits for different age groups such as short-term bonuses, retirement benefits, educational benefits for children or grandchildren of annuitant, benefits for charity, benefits for higher education, and numerous retirement plans. One of the annuity shelter strategies is not to consider the interest yield the prime factor in mind. Some times a financial product has many lucrative offers along with the not-so-promising yield. Fixed annuities have the lowest risk level while the variable annuities have the maximum. Always prefer to take back your annuity payments and benefits stretched over period of time rather than in a lump sum manner. The lump sum receiving of annuity benefits may invite tax issues. One of the important annuity shelter strategies is to designate the heir, inheritor and beneficiary of the primary investor clearly at the time of signing the annuity agreement. Any lapse in designating the nominee may result in great confusion and discomfort at later stages in life.
With complete understanding of above mentioned annuity strategies, and many more, the investing and savings would become all the more interesting.

Retirement Plans – Why Bother If 2012 is the End?



Can Obama save the world? That question is actually the title of the first chapter of Robert Kiyosaki’s book “Conspiracy Of The Rich”. As we scan the world today, many are in fact looking to Obama to save them as Kiyosaki mentions in that opening chapter. From corporate bail outs here in the US to starving people in Africa, more than ever folks have their hands out toward government.

The government here in the US is at the top of the donor list. The shinning example to the world! Yet, here we are in America, digging deeper and deeper into debt. What makes anyone think that this government can save them? If you wanted to know how to get out of debt, would you go get advice from someone who is currently going through bankruptcy?

Many folks look at social security as their retirement security. Again, if you look at what’s going on, does that seem like a solid plan? Many people also overestimate how much they will receive from social security, and wait too long to start the enrollment process.

With all the bad news of gloom and doom in the world, I wanted to share a message of hope here in this article which may help with your retirement planning. Still to give you that hope, we must first cover some gloom to illuminate the positive.

This fear of the world coming to an end has been heightened by the recent release of the film “2012″, based upon the Mayan calender date.

When it comes to scientific reasons for the planet’s destruction, scientist tend to argue both ways. Yet, when we look at the physical aspects of our world easily visible to the naked eye, it becomes clear there are Major problems, and man does not seem to be coming up with many satisfying answers.

For decades much of the world criticized our capitalistic society. Karl Marx wrote that it would one day eat itself up, and you would see the middle class disappear. That we would end up with a society of haves and have-nots. Sad to say, much of what he wrote about is happening now.

Yet, after years of criticism (and perhaps, rightly so) most of the world has followed the US model. A central bank that prints money, and a stock market for high finance. These have become two common features in societies worldwide regardless of what form of government rules.

And why not? What county wouldn’t want rich companies with the capital to grow and create jobs? In each nation that imitated our model, US corporations gladly entered to lead the way!

Now there seems to be this sentiment of “Too Bad, You Great Country” from around the world as many see America as a nation on the verge of collapse. Yet, they are following our capitalistic blueprint in some form or another! Most have just not been on that path as long as the US and the UK have. So, what will the result be for their markets and financial systems down the road?

Actually, the US banking system is just an offshoot of the European system. The monarch families of Europe years ago moved to take control of US banking, and more importantly, the money supply.

The European system is an offshoot of other failed systems of the past. Fiat money, backed by nothing has never stood the test of time, and history clearly shows that.

Some would argue that the US system is fine, and that after the bail out of the banks we are back on solid ground. Yet, how can something that is so fundamentally broken be permanently fixed with a patch? That is exactly what the infusion of phony money was – a patch or temporary answer to an age old problem.

Aside from the banking system, the corporate system itself is seriously flawed. If you doubt that, you MUST see the documentary film “The Corporation” by Mark Achbar and Jennifer Abbott.

In the film a corporation is compared to a psychopath. It would be hard to argue against the comparison. A psychopath is someone who cares little about the law, or individuals, and feels no remorse for their actions. They have no shame or guilt, and feel fully justified for the things they do. Does that not describe a corporation perfectly!

Corporations now have more power and money than most governments. Here in the US they have even been given all the rights and more of human citizens, yet have been released of nearly any consequence for their actions.

Corporations will do anything and everything to grow the bottom line. That’s what it is all about right! That is what we as investors want to see – Growth, GRowth, and more GROWTH! They have become like huge monsters that must be fed, and innocent bystanders are hurt in the process. They control nearly all of the mass media, and decide for themselves what is news and what is not (all based upon the profit involved).

The corporation reminds me of the Ferengi of Star Trek. The Ferengi would do anything for profit, and had little if any morality in the process.

Then we have the religious aspect of our global society. They have not been able to get along, and many wars have been fought because of religious differences. The UN has even discussed this problem on more than one occasion. From the Protestant and Catholic wars in Ireland, to the Muslim and Hindu battles in India, nearly every area of earth has been touched by this ugly menace.

So, when you look at all the problems man has, is it any wonder many are thinking the end of the world must be close at hand?

There is one other area that seems to escape attention when it comes to the demise of civilization, and that is the family unit. History clearly shows that when the family falls apart, so does the nation to which it belongs. Rightly so, because stable families are building blocks for stable societies.

Family values here in the US have been on the decline for many years. It used to be that many other countries were still holding to old fashion standards, but now most seem to be following the US lead in this area as well. Our senior citizens are treated as little more than a burden. This thinking is heightened by the way corporations view elderly workers.

At one time older folks were viewed as wise and valuable. Someone with answers to life’s problems. Now, we can’t seem to wait to get them out of our hair.

There is also much confusion as to what comprises a family. Our nation whose motto is “One Nation Under God” has quickly forgotten the values outlined in God’s word. Now if you suddenly are uninterested in this article, it may well be that you have become disgusted with anything bible related, and that is certainly understandable. Much evil has been done in the name of religion. BUT, does the fact that man has used the bible for his own advantage make what the book says invalid? When they use the bible as an excuse for bad, then they are distorting it’s message.

Now, even if you try to mention bible principles you are viewed as if there is something wrong with YOU! Forget bringing up Romans 1: 24-29, or Genesis the 19th chapter, you will be ran out of town. You might be deported for even mentioning these accounts. For a nation that claims to be “Under God” we sure seem to be quickly trying to put him into the retirement home!

So, what is the positive point? It is a simple scriptural point that many have forgotten. During his sermon on the mount, Jesus said at Mat 5:5 “Blessed are the meek, for they shall inherit the earth”. What were these meek ones to inherit? A nuclear ball of waste? NO. Jesus was quoting from the 37th Psalm which shows a great future for our planet! All evil will be gone, and if we are picked as a member of that new society, we won’t have to be worried with all the problems we now face.

So, how can that info help us now? Well aside from the fact that the good book reveals what type of citizen God is looking for in that world inherited by the “meek” (which we may decide to qualify for or ignore – it’s our choice), it can clear our minds and comfort us now too.

In God’s eyes, we are expected to care for our families now physically and financial now (1 Timothy 5:8).

Having this knowledge can keep us from spending our lives worrying that the sky may fall. We don’t have to add to the problem, (it should guide us to what type of investments we will accept in our portfolio) but we don’t have to be terrified of what might happen either.

When the current society does come to an end, it won’t be a sci-fi reason, or some Mayan calender plot that will make it happen. We can sure see the creator cleaning the earth up for a new carefree society, and the creator is about the only one who has the power to make that happen (But, he does promise that the earth will always be here Psalms 37: 9,11,29, 104:5; Proverbs 2: 20-22). At that point it won’t matter where our money is anyway.

The good book also tells us that no man knows when the end will come (Mark 13:32). So, in the mean time we had better plan for retirement. If we don’t need it, Great! But until that day comes, it is what our maker would want us to do.

The financial system we have in place now is too corrupt to be fixed in my opinion. The big boys who print the money are never going to give up that power, so we will just have to play the fiat game and be ready come what may.

If we look for Obama or any other hard-working man to solve all the problems for us, we will be disappointed. In the mean time “there is nothing better for man under the sun than to eat, and to drink, and to be merry, for his hard labor” (Ec. 8:15 -which basically means to work hard and be happy in your work) And YES, we need to prepare for our future, and plan for our retirement!

Retirement Plans in Jeopardy? Need to Supplement Your Retirement Income?



Retirement Risks

If you’re one of the “Baby Boomers,” you’re probably giving serious thought to retiring, if you haven’t already retired – and if you have already retired, you may be wondering if you’re going to be able to afford to stay retired.

Today’s economic crisis complicates the situation considerably by increasing the following retirement related risks:

1. Average Life Expectancy Has Increased

People are living longer than their parents’ generation. For example, in 1970 a 60 year old white male had a life expectancy of an additional 16.2 years; however, by 2008 his life expectancy had grown to 20 years.

So how is the Boomer going to afford retirement during those bonus 3.8 years? There are only a few likely answers to that question:

Increase current savings Work longer Move in with children or other family members Get by with a lower standard of living
2. Health Care Costs Keep Rising

Predicting and planning for ways to cover one’s health care costs are some of the most difficult, largely because requirements are so individualistic with requirements varying substantially from one person to another. Long-term care needs are even more difficult to predict and arrange adequate funding.

Health care costs have grown at a rate greater than 5% (inflation adjusted) for the past 15 years – and that is higher than the growth in family income. Medicare costs are expected to rise at a comparable rate.

3. Government Actions May Impact Retirement Benefits & Benefit Programs

It is well known that the costs associated with the major social programs (e.g., Social Security, Medicare, and Medicaid) are growing faster than other parts of the economy, and some experts question their long-term viability because of the combined effects of increased longevity, size of the Boomer population, and rising health care costs in general.

Further, immediate questions regarding ongoing health insurance in retirement, and at what benefit levels, are rampant in today’s economy – and these questions are given even more fuel by the reorganizations occurring, especially among the auto industry.

There is currently a lot of discussion about a national health care program – but such conversations have been ongoing for decades, with few benefits to show for those efforts. Although President Obama will be leading such efforts this year, most people expect a lot of opposition from Congress (although maybe it will be a bit easier now that the Senate will soon be welcoming its 60th Democratic Senator).

Most people expect that seniors over age 55 will be protected from cuts in these social programs, but maintaining full coverage for them is a two-edged sword – doing so increases the likelihood of a new value-added tax, which would likely add to the tax burden for retirees.

4. Sometimes One’s Retirement Date is Dictated, and not a Free Choice

According to a 2004 Health and Retirement Survey (HRS), 37% are forced to retire. This can occur due to poor health or economic downturns, etc.

5. 401Ks Became 201Ks

Did your 401k and other retirement savings take a major hit with the stock market meltdown last year? Mine did. Many people saw their 401k and other stock market accounts take a 50% hit, which has led many comedians to rename them “201k”. For many people, their 401k was the bulk of their retirement savings, so this stock market meltdown has really damaged their retirement plans.

Humpty Dumpty Had It Wrong

But, the news is not all bad. You can fix a broken egg – a broken retirement “Nest Egg,” that is. You can work longer, semi-retire and take a part-time job, work from home, start your own business, etc. A study by Butrica, Smith and Steuerle (2006) indicated that working just one (1) extra year can increase annual retirement income by 9%, while working a total of five (5) extra years results in an extra 56% annual retirement income.

Credit’s Impact on Our Daily Lives #7 – Retirement Plans



It may seem like a crazy thought to even talk about retirement plans during this economy. If you are in your twenties or even thirties, retirement is so far off that thinking about it is just a waste of time. But experts have actually proven that the earlier you start planning you are not only set up better for the future, but you are more financially stable in the present. What usually happens when you start planning is you set and stick to a budget more precisely that allows you to save money each month.

The more you save for your retirement, the less you spend on bills and other expenses which means you are able to save for things now and for in the future. This is all a great help and can make life so much easier, and you can also improve your finances in the future and the present, is by using credit repair to strengthen your score. Credit repair will fix your score so that you can save a lot of money on bills, especially borrowed money. When we borrow money like for home and car loans, credit cards and other things, our payments are based on how much we owe back and our scores. The better our scores are the less we have to pay back. That can be the difference of over $100,000 when you are buying a home.

Chances are your home will be a major part of your retirement plans and because of that you need to do what you can to save money. The more you can save the better situation you will be in down the road. If you can save even $100 a month on every thing you finance that can add up to thousands of dollars a year. Even by putting that money into a simple savings account it can grow to tens of thousands of dollars or even over one hundred thousands dollars by the time you are ready to retire.

A Summer of Discontent For the Nation’s Finances



Judging from the way stocks have been moving up and down, and faced with a cautious if not confused market in the months ahead, there are plenty of reasons for concern. Most broad-based investment portfolios had a good first quarter run and gave back these gains by the end of the second quarter — the first down quarter in 15 months. After seven months, the market is up fractionally. So who’s taking the biggest hit?

This turbulence is particularly unsettling for New Seniors for several reasons. Those 65+ depend on their retirement plans to complement and supplement Social Security benefits. Negative growth means the principal is shrinking, because whatever flat sum is needed each month for living expenses is greater than the return on investment. So many of us are worried about running out of money before we run out of life. Not a comforting feeling for those who worked all our lives to have a retirement nest egg.

Many of us have a beef because government workers, whose retirement plans are protected from the same volatility, don’t share the uncertainties private sector retirees must endure. Public employees once made less money in exchange for job security and better benefit packages, including retirement plans. The tide has turned; now this sector makes more in raw salaries than comparable jobs in private business. With states and municipalities in financial trouble, taxpayers must pay the bill for underperforming public employee pension plans. Why? Because it’s in their contracts.

When the economy was good, these deals were negotiated by the unions representing various groups of government workers. At best, everyone thought the market would continue to grow and this clause would not be a problem. The worst case was that elected and appointed officials responsible for putting this plans together, mortgaged our tomorrows so they could look good at the time. Even if you live in a city or state where these outlandish concessions were not made, the federal government will be called upon to bail out those struggling, which means greater deficits, higher taxes or both.

Concurrently, manufacturing is sputtering and retail as well as home sales are off. The good news is people have started to save more, but this does not help an economy that is dependent on consumption to grow and prosper. Jobs won’t be created, other than for government employment, until individuals have confidence enough to start buying. Then businesses will start hiring. And taxes will start coming into the various governments. Taxes don’t need to be raised when people are working and businesses are growing; because this, in turn, generates more tax dollars.

Many politicians don’t want to hear this, because they tend to measure their job performance by how many bills are passed and the size of the budgets attached to the legislation. That’s why it’s important to elect people this November who understand that the spending spree must end and sound fiscal as well as social responsibility must prevail. Otherwise, New Seniors and those following us in the years to come will be faced with many summers of discontent.