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Perfecting Your Recipe for Retirement Although your retirement date may still be many years off, it is never too early to start planning for the day when you can say "good-bye" to the working world. Yet, to be financially secure, you need to create a plan that will maintain or enhance the quality of your life in the future.
For most people, Social Security and an employer-sponsored pension plan will probably not provide enough retirement income for maintaining pre-retirement standards of living. Consequently, most people will have to look to personal savings to fill the gap between what they will need and what those sources will provide.
Choosing investments that could help you meet your retirement needs can be challenging. Three options which might form a personal savings retirement plan are: mutual funds, annuities, and life insurance. The proper mix of investments for each individual may differ and depends on: 1) the number of years left until retirement; 2) amounts already saved; 3) individual risk/reward profile; and, 4) the value of benefits anticipated from alternative sources such as a pension.
Diversify with Mutual Funds Mutual funds offer the opportunity to create a diversified, professionally managed portfolio.
Funds vary from very conservative, such as money market funds, which offer maximum liquidity and safety of principal, to bond funds (both taxable and tax-exempt) which offer income with low risk to principal, to the more volatile stock funds which offer the potential for growth.
However, investment return and principal value of mutual funds will fluctuate due to market conditions. Therefore, when shares are redeemed, they may be worth more or less than their original cost.
Copyright © 2015 Liberty Publishing, Inc. All rights reserved Distributed by Financial Media Exchange
Consider Annuities Annuities bought outside regular retirement plans enjoy favorable tax treatment without the contribution limits of regular retirement plans such as IRAs and 401(k)s. Although annuity contributions are not tax-deductible when made, the earnings on an annuity grow tax-deferred until money is withdrawn, which means more money is accumulated than in a comparable taxable investment. However, there may be a penalty for withdrawals before age 59 1/2. Flexible payout options allow the annuity owner to choose a method which matches income needs. For example, by selecting a life option, you could receive an income guaranteed by the issuer for your life, or for the joint lives of both you and your spouse. A life annuity cannot be outlived, which is important since many individuals are concerned about outliving their savings.
Traditional annuities offer a fixed investment return similar to a certificate of deposit (CD), which may be guaranteed in increments of one, three, or five years. Variable annuities offer the opportunity to participate in different investment markets (e.g., stocks and bonds) which carry different levels of risk and reward. Returns are not guaranteed.
The Value of Life Insurance Life insurance provides several benefits in planning for retirement, including income replacement and security to family members in case of the insured's death and cash values (with whole life policies) that grow tax-deferred. You can borrow against cash values through policy loans, which are generally free from current income tax. Your policy premiums help provide protection for your family in the event that an untimely death prevents you from completing your retirement savings program.
Enjoying the Fruits of Your Labor Beyond an employer-sponsored pension plan, mutual funds and annuities represent popular investment choices for your personal retirement savings plan. These investments offer a wide range of options from fixed returns with a relatively low risk factor, to variable returns that can provide higher returns but which also involve a higher level of risk. By starting early to learn about these and other investment products, you can help to assure that money will be available when you are ready for retirement.
RPGC2UU-X
Copyright © 2015 Liberty Publishing, Inc. All rights reserved Distributed by Financial Media Exchange
For most people, Social Security and an employer-sponsored pension plan will probably not provide enough retirement income for maintaining pre-retirement standards of living. Consequently, most people will have to look to personal savings to fill the gap between what they will need and what those sources will provide.
Choosing investments that could help you meet your retirement needs can be challenging. Three options which might form a personal savings retirement plan are: mutual funds, annuities, and life insurance. The proper mix of investments for each individual may differ and depends on: 1) the number of years left until retirement; 2) amounts already saved; 3) individual risk/reward profile; and, 4) the value of benefits anticipated from alternative sources such as a pension.
Diversify with Mutual Funds Mutual funds offer the opportunity to create a diversified, professionally managed portfolio.
Funds vary from very conservative, such as money market funds, which offer maximum liquidity and safety of principal, to bond funds (both taxable and tax-exempt) which offer income with low risk to principal, to the more volatile stock funds which offer the potential for growth.
However, investment return and principal value of mutual funds will fluctuate due to market conditions. Therefore, when shares are redeemed, they may be worth more or less than their original cost.
Copyright © 2015 Liberty Publishing, Inc. All rights reserved Distributed by Financial Media Exchange
Consider Annuities Annuities bought outside regular retirement plans enjoy favorable tax treatment without the contribution limits of regular retirement plans such as IRAs and 401(k)s. Although annuity contributions are not tax-deductible when made, the earnings on an annuity grow tax-deferred until money is withdrawn, which means more money is accumulated than in a comparable taxable investment. However, there may be a penalty for withdrawals before age 59 1/2. Flexible payout options allow the annuity owner to choose a method which matches income needs. For example, by selecting a life option, you could receive an income guaranteed by the issuer for your life, or for the joint lives of both you and your spouse. A life annuity cannot be outlived, which is important since many individuals are concerned about outliving their savings.
Traditional annuities offer a fixed investment return similar to a certificate of deposit (CD), which may be guaranteed in increments of one, three, or five years. Variable annuities offer the opportunity to participate in different investment markets (e.g., stocks and bonds) which carry different levels of risk and reward. Returns are not guaranteed.
The Value of Life Insurance Life insurance provides several benefits in planning for retirement, including income replacement and security to family members in case of the insured's death and cash values (with whole life policies) that grow tax-deferred. You can borrow against cash values through policy loans, which are generally free from current income tax. Your policy premiums help provide protection for your family in the event that an untimely death prevents you from completing your retirement savings program.
Enjoying the Fruits of Your Labor Beyond an employer-sponsored pension plan, mutual funds and annuities represent popular investment choices for your personal retirement savings plan. These investments offer a wide range of options from fixed returns with a relatively low risk factor, to variable returns that can provide higher returns but which also involve a higher level of risk. By starting early to learn about these and other investment products, you can help to assure that money will be available when you are ready for retirement.
RPGC2UU-X
Copyright © 2015 Liberty Publishing, Inc. All rights reserved Distributed by Financial Media Exchange
