Considering an Age-Based Withdrawal or Any Withdrawals While Working
There is a variety of tax qualified investments available not offered as an option in the Retirement program. As your move closer to your retirement establishing additional retirement plan options may offer income guarantee features that can create a known fixed stream of income can be helpful in planning your retirement household income where other investments available may not.
Why would I want to consider using all or part of my Retirement Plan to buy an annuity?
Annuities are insurance-based products; they have the ability, depending upon features and the type of annuity you buy, to offer you guarantees as to the safety of your investment. Annuities can also create a guaranteed stream of income using optional riders without losing ownership and control of your funds during the accumulation or distribution years. Many of these options will also allow your spouse to receive a joint income option that would continue the same dollar amount of income even after your death with any remaining funds could then be passed forward to your selected secondary beneficiaries.
What Type of Annuities Are Available To Me?
You can purchase a fixed interest rate annuity, Index annuity, variable annuity or an immediate annuity with your retirement funds or after tax dollars
Annuities are designed to meet a variety of financial needs that may require tax deferred growth , income needs to cover expenses now or take later in life, for estate planning, wealth transfers or even philanthropic reasons to see that money goes to their favorite charities after they are gone. Annuities are also useful if you have a sick or disabled loved one you want to see is taken care financially after you are gone.
Every ones needs may be different, creating a retirement plan and income strategy should be taken seriously and we suggest that you seek professional advice. Often people do not seek advice because they are worried that financial advisors may charge high fees for their time.
Understanding How Financial Advisors Are Paid is Important
Fees for financial planning are not always charged by advisors. Many will provide their services free to you and would then be paid a commission from any product you may purchase. They are still obligated under the Best Interests Rule to place your needs ahead of their own. This “The Best Interest Rule” was recently passed and will take affect this summer of 2020.
We suggest that you ask your advisor how they are paid, what commissions they may receive, what their planning fees are and if there are any ongoing fees they may charge you monthly for oversight or management.
When moving money to tax qualified investments outside of your retirement plan you can choose a financial advisor that works only for you, understands your individual goals, needs and may take on the capacity of a fiduciary overseeing your investments in your best interests. Often your employer’s retirement plan counselor is limited to offering any investing or investment advice leaving you with the job of doing it yourself and you may not be comfortable with that option.
Movement of Money Strategy
Retirement plans available to employees are typically long-term and dollar-cost averaging growth investing. Once you retire your strategy will need to change form growth to income. To make this change in one movement of money at one time is not always the best choice. Having an outside plan now, while you are still working, will allow you the opportunity to slowly transfer your growth strategy into an income strategy so by the time you do retire you can ease into a stream of income that may better meet your needs.
It’s Easy To Move Your Money From Your Plan
Provided you are age 591/2 or older you may be allowed an in service retirement funds transfer. This will allow you to transfer all or a portion of your retirement plan funds to an outside retirement plans self directed IRA allowing you to take advantage of selecting an annuity to other qualifying alternative investments for your funds today. Many plans offer the ability to phone in your request to transfer money to a new custodian for a tax qualified IRA account. Sometimes its simple paperwork and your financial advisor should be familiar with each of the processes and walk you through them.
You can learn more about the types of annuities that are available by visiting the annuity selection tab on our website.