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Once you start with the benefits for heirs you lose a lot of the cash flow advantage .
A more powerful alternative is to take a single annuity and use life insurance for a spouse or heirs. Not only can you get more money for less in most cases but the money is tax free unlike the annuity that passes.
The combo of an annuity ,your own investing and life insurance has many advantages.
It won't let me +rep you again for this but I would. The cable/internet/phone bundle is about the only bundle I have purchased in a long time. With just about anything else, it seems like they bundle to confuse you or just to keep you from shopping around for each individual component and possibly find a better deal or product you like better. It's like when you go car shopping and are going to trade in; there are 3 deals - buying a car, selling a car and borrowing money - but all they want to talk about is what monthly payment they can offer you. They make you feel good about what they give you for your trade in by not knocking down the price of the new car as much as they could or putting you with the lender who pays them the most. A bit of a tangent but it is the same sort of thing when you get an annuity that has features besides just paying you a set amount. You want life insurance that leaves money for heirs? Buy that. You want to invest? Invest. You want to give someone a lump sum and receive guaranteed payouts? Buy an annuity. A simple one.
So . . . . if you are a good 10 years (or more) from retirement, do you buy the immediate annuity now or closer to retirement date?
And if you go the annuity route, is that considered taxable income in retirement for income tax purposes?
Depends what money fed that annuity. If it was Roth IRA money then no, it's not taxable income if you meet the 5 year rule for the Roth money.
If it's 401K or IRA money then it's taxable income.
until recently it made no sense at all to ever buy an annuity inside a retirement plan. to buy a tax defered vehicle in a tax free or tax deferred account was just a poor plan.
but new changes in tax law has qualifying policy's exempt from rmd's which can now be a powerful planning tool.
Do u have a web site with a more clear explanation of that
It is not something our financial advisor/CPA has mentioned.
My husband has funded a significant (for us) deferred benefit plan through his sole-employee S-corp. RMDs will put us in higher tax bracket than we like --especially because of SS even if deferred until 70.
Do u have a web site with a more clear explanation of that
It is not something our financial advisor/CPA has mentioned.
My husband has funded a significant (for us) deferred benefit plan through his sole-employee S-corp. RMDs will put us in higher tax bracket than we like --especially because of SS even if deferred until 70.
You can look up Roth conversions and Roth ladders if you want to move that tax deferred money over to tax free Roth money. You still have to pay taxes on it though as you move it over.
This argument has been debated ad nauseam. There are obviously two sides to this. One side will say annuities are good and cherry pick statistics to back up their claim. The opposing side will say annuities are bad and they too will cherry pick statistics to back up their claim. And so the argument continues.
The one constant, however, seems to be, if you do purchase an annuity, never tie up all of your funds in one. Try to keep some money for emergencies.
Personally, I think the biggest advantage to an annuity is the peace of mind one has. Studies show that those who purchased an annuity are happier in their retirement than those who decided to rely on the stock market. It only takes a major market downturn similar to what we saw in 2008 to make one realize how tenuous the market can be. While it's true the market always comes back after some time. However, retirees may not have time on their side.
Exactly; your buying a insurance product .Not even really a pension as the term is most used. Pensions by employer like other benefits given are really forms of compensation same as salary. Once I qualified then my total compensation benefits that included employer contribution pension and health insurance that shifted from retiree non-Medicare to how Medicare supplement came into effect. Same as in that compensation were two life insurance plans; one while working and another once retired. All compensation with some deferred and having to meet requirements.
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