Knowing How Long We’ll Live Makes Retirement Income Planning Much Easier In Kc
Oh, the uncertainty of it all! While knowing when we are going to die would definitely help the retirement income planner in all of us, but it would likely take the “fun” out of retirement. Since we don’t know when we are going to check out our goal is to make sure our retirement savings and our retirement income funds from social security and possibly a pension are able to not only last a lifetime, but keep up with inflation for everyday living costs and having a safety net for unexpected expenses.
Since we are dealing with so many unknowns in our golden years it can be overwhelming when trying to decide the best way to ensure you won’t outlive your money. Think about it we have to decide what to do with our 401k rollover, what retirement income is taxable, where to put your retirement savings, CD’s, annuities, fixed annuities, variable annuities, fixed indexed annuities, equity indexed annuities, mutual funds, stocks, bonds, is my retirement pension safe, what guaranteed income investments, or guaranteed income products, life insurance, income taxes, estate taxes, and your home.
Wow that’s a lot of very complex decisions just to try to make your money last a lifetime. Financially complex decisions that can take make you feel like you are losing control of your life.
Today’s article will focus on one area that could give you back some control. Many retirees that fear the risks in several of the tools mentioned above, end up putting a big portion of their retirement savings into Bank Certificates of Deposit or CD’s. It’s something that’s been done for generations.
Why CD’s? Is it because they are insured by the government? Is it because you know what interest rate the bank will pay you? Isn’t it because it’s safe and there’s a high level of certainty? What many don’t realize is that with that “safety” comes a bigger risk. Since CD’s are safe they offer lower rates of return and the income from them is taxable even if you aren’t using that income. Did you know that the interest from CD’s can cause your social security benefits to be taxed even if you are just letting the interest rollover into another CD?
So CD’s have a very tough time keeping up with inflation and can also cause you to pay more taxes. They actually make it more likely that you won’t be able to keep up with inflation over time and you could be giving up more money to taxes, money that you should be trying to keep.
What if there was a way to put a portion of your assets into a CD-like vehicle? What do we like the most about CD’s? The safety of it being government insured. So if there was another vehicle that was government insured would you feel better possibly utilizing it?
The next challenge for retirement income planning that CD’s pose is their low rates of return due to their “safety” of being government insured. What if this CD-like vehicle had a minimum growth rate of 3.25%, but historically had more than doubled the rate of inflation? Actually, historically when inflation was higher so was the growth rate on this vehicle. Would that make it more attractive?
The next challenge for CD’s is that the interest earned is taxable even if you aren’t taking it as income and it can make up to 85% of your social security benefits taxable. So if this CD-like vehicle could actually grow tax-favored at worst and tax-free at best and has no impact on your social security income, thus no additional taxes whether you are taking the income or not, is that better than a CD?
Now if this CD-like vehicle could also provide lifetime income, guarantees you will never have a house payment and that you can stay in your house as long as you are physically able to would that make it more attractive as a retirement income planning tool?
Whether you live in Missouri or Kansas it seems to sound too good to be true doesn’t it? I thought that too, but this type of Government Insured vehicle does exist and if you would like to find out a little more information about it go to www.incomeforlifekc.com and watch our short videos on the subject. Or you can come to one of our weekly Free Information Only Seminars held every Thursday beginning at 1:30 space is limited so reservations are required. Reserve your seats by emailing kurt@incomeforlifekc.com.
