retirement

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What is a Fixed Annuity ?

by Donn J. Sinclair, MBA – February 1, 2018

Insurance Professional Donn SinclairFixed annuities are essentially fixed rate accounts issued by insurance companies. These accounts pay a guaranteed rate of interest for one or more specified term periods.

Fixed annuities can be deferred or immediate. The deferred variety accumulate regular rates of interest and the immediate kind make fixed payments – determined by your age and size of your annuity – often during retirement.

The convenience and predictability of a set payout makes a fixed annuity a popular option for retirees who want a known income stream to supplement their other retirement income.

What are It’s Advantages ?

Fixed annuities pay guaranteed rates of interest, which makes them appealing to investors wary of the stock market’s ups and downs. What also makes them appealing are their low investment minimums – usually $1,000 to $10,000 – and the fact that the interest they pay defers taxation until withdrawn from the fixed annuity. Also note that fixed deferred annuities are not necessarily a lifetime commitment. Some are available that can be redeemed in as little as one year !

What are its Disadvantages ?

Their rates can also be fixed for a limited period, and then drop say, after the first year. If you don’t like the new rates and want to withdraw your money early, heavy surrender charges could kick in and cut into your returns.

Plus, if you decide to opt for fixed lifetime payments, those payments most likely will not rise to keep pace with inflation. As a result, the value of the money you receive will decline over time as inflation erodes the purchasing power of each dollar. So for example, if you retire young and plan to keep collecting annuity payments for a longer period of time, the purchasing power of your money could be a big concern.

How do I Know if a Fixed Annuity is Right for Me ?

If you’re worried about coming up short, a fixed annuity can help you sleep at night. Because of their stability, fixed annuities might be well suited to those who want to make sure their money will be enough to carry them through retirement, and at least cover the bare minimum of fixed expenses. Please phone Donn today so we can review current rates and see if a fixed rate annuity may be right for you.

 

Updated by Donn J. Sinclair, MBA

in Charlotte NC and Rock Hill SC

January 25, 2018   (803)329-0609

DJS: More information is available at IRS.gov.

See Publication 590-A and Publication 590-B.

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Social Security Retirement Estimator

by Kristin P. Sinclair – A Accu Tax – April 4, 2018

The Social Security Retirement Estimator provides you estimates based upon your Social Security earnings record. Please note that these are estimates and not a guarantee of benefits to be paid. The Social Security Administration will provide you with your actual benefit amount when you apply for benefits.

That amount may differ from the estimates for several reasons:

• Your future earnings may increase or decrease from today’s estimate.
• Benefits most likely will be adjusted for cost-of-living increases.
• Today’s estimated benefits are based on current law, and do not account for any future changes in the law. There are concerns about benefits to be paid after 2034. • Military service, railroad employment, or pensions earned through work on which you did not pay Social Security tax may affect your future benefits.

When Can Use the Retirement Estimator

retirement how to retire

When you have enough Social Security credits to qualify for benefits, and when you are not currently receiving benefits on your own Social Security record. You must also not be waiting for a decision about your Social Security benefits application for benefits or Medicare benefits. Also you should not use the Social Security Estimator if you are age 62 or older and receiving benefits on another Social Security record; or if you are eligible for a pension based on employment not covered by Social Security.

Please note that when you are receiving only Medicare benefits, then you can still get an estimate. For more information please read: Retirement Information For Medicare Beneficiaries at SSA.gov.

The Social Security Retirement Estimator Link is: https://secure.ssa.gov/acu/ACU_KBA/main.jsp?URL=/apps8z/ARPI/main.jsp?locale=en&LVL=4

Updated in Rock Hill SC and Charlotte NC
by Kristin P. Sinclair December 10, 2017
(803)329-0615

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