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April 22nd, 2018 by

future stability

In a recent survey of 3,000 Americans ranging in age from 20 to 70, almost two-thirds of the respondents said they feared running out of money during a long retirement more than they feared death.1 Fear may not be a helpful response, but this concern is not surprising considering changes in the American retirement landscape.

People are living longer during a time when traditional pensions are disappearing and medical expenses continue to climb. Social Security may provide a dependable, supplemental income throughout retirement, but benefit levels are not high enough to fund a long retirement for most people. In January 2018, the average monthly benefit was just $1,404, and the maximum benefit at full retirement age was $2,788.2

Even people with a substantial nest egg face a challenge in making their dollars last throughout a long retirement. Withdrawing too much too quickly can put you at risk of running out of money while being overly cautious and withdrawing too little might lead to a less satisfying retirement lifestyle than you might otherwise enjoy.

Planning for a long retirement

One way to help solidify your long retirement income is by purchasing a longevity annuity. It is a deferred fixed annuity that delays lifelong income payments until a future date. Often it is when the contract owner reaches age 80 or 85. Because the annuity income is deferred, the payouts are typically higher in relation to the premiums than they would be if the annuity income had been paid immediately. Purchasing the annuity at a younger age with a longer deferral period would generally give you a better premium-to-income ratio.

A longevity annuity may give you more confidence that you will have income for a long life. It also makes it easier to manage the near-term income from your dollars and financial instruments. For example, if you retire at age 65 and feel comfortable that the combined income from your annuity and Social Security will meet your income needs after you reach age 85, you could focus on funding your earlier retirement years from other monies and vehicles for a 20-year period, rather than guessing how long your nest egg dollars might have to last.

Source:
1) Money, October 19, 2017
2) Social Security Administration, 2017

Find out how to never outlive your resources.

Let me show you how to get the most from your planning! I want you to enjoy a long retirement without fear of running out of money. Contact me for a FREE retirement strategy consultation at my office in Upper Marlboro, MD. Contact me 1-833-313-7233.

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April 10th, 2018 by

Many early retirees reported reasons for retiring early that were beyond their control, such as health problems or disability, company downsizing or closure, changes in the skills required for their jobs, or having to care for a spouse or family member. However, some said they retired early by choice because they could afford to or because they wanted to do something different.1

If you’re nearing the end of your working years, you probably have a retirement timetable in mind. It may be as specific as a particular date or as general as a range of years. Regardless of your timetable, circumstances could change, and retirement might come sooner than you think.

Considering some key issues now might ease your transition and give you more choices in how you retire.

IMAGE

1. Calculate The Necessary Income for Your Retirement Lifestyle.

Would you be able to maintain your desired standard of living if you had to retire early? It might be helpful to calculate your projected income based on two different retirement dates: the date you prefer and an earlier date.

Keep in mind that your Social Security benefits would be reduced if you claim them before reaching your “full retirement age” (currently 66 to 67, depending on year of birth). And the sooner you retire, the less time your investments have to pursue potential growth, so accelerating your savings now could make a big difference. Even if you retire on schedule, having a larger savings balance may give you more flexibility in your retirement lifestyle.

2. Reduce Your Debt

Lowering or eliminating outstanding credit-card balances as soon as possible could be a great step toward getting on track for retirement. Paying off auto loans would free up more income when you’re retired.

Owning your home free and clear would also be a big help in creating an ideal retirement lifestyle. However, about 37% of homeowners age 65 and older are still paying off a mortgage.2 If you foresee your mortgage being an issue in your retirement years, you may want to examine options to pay it off early, reduce payments, or otherwise modify the terms.

3. Consider Your Health

Fifty-five percent of retirees who left the workforce earlier than planned cited health problems or disability as a reason for early retirement; 17% cited caring for a spouse or other family member.3

  • Is your retirement timetable realistic based on your current health status and the health of your spouse?
  • Would you be prepared if your health changes?
  • Have you factored the cost of health care into your retirement strategy?

A married couple who retired at age 65 in 2016, with median expenses for prescription drugs, would need an estimated $265,000 to have a 90% chance of paying their health-care costs throughout retirement.4 Costs for your dream retirement lifestyle may be higher.

Sources:
1, 3-4) Employee Benefit Research Institute, 2016–2017
2) U.S. Census Bureau, 2017 (2015 data)

Plan your dream retirement!

Preparing now could help ease you into a more comfortable retirement lifestyle. Let me show you how to get the most from it. Contact me for a FREE retirement strategy consultation at my office in Upper Marlboro, MD. Contact me  1-833-313-7233.

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August 18th, 2015 by

Longevity odds

Knowing when to claim distributions from your retirement nest eggs will help you outlive the longevity odds. Because each person’s situation is different, there is no “one size fits all” when making these decisions. But, a retirement expert can help you weigh the options and guide you to the best decision for your retirement goals. Here’s how:

Boost Lifetime Benefits

Social Security benefits can be claimed by eligible workers at any age between 62 and 70. Retired workers can claim a reduced (70% to 75%) benefit at age 62, but eligibility for the full retirement benefit ranges from age 66 to 67 (depending on birth year). For each year Social Security is delayed after full retirement age, the annual benefit grows automatically by about 8%, up to age 70.1

Thus, someone who is currently eligible for an $1,800 monthly benefit at age 62 could receive $2,400 at full retirement (currently age 66) or as much as $3,168 by delaying benefits to age 70. In this example, the individual who files at age 70 instead of age 62 would receive more than $16,000 of additional income every year for the rest of his or her life. This is only an example: actual results will vary.

Plan for Longevity

In theory, benefit calculations are actuarially neutral, which means that recipients who live an “average” life span should receive the same lifetime Social Security income regardless of when they begin collecting benefits. However, you may want to consider the possibility that you and/or your spouse could live well beyond that “breakeven” point.

Delaying benefits is more likely to pay off for women and married couples. If the higher-earning spouse waits to file for the highest possible Social Security benefit, his or her spouse could eventually receive a higher survivor benefit after the death of the high earner.

Consider Future Taxes

If retirees delay filing for Social Security and receive income from IRA withdrawals and taxable financial instruments in their early retirement years, they might pay more taxes initially but less over the long term. Even though retirees who live mainly on Social Security income in the early retirement years might pay little or no income taxes on their benefits, after they reach age 70½ and must start taking RMDs, the income tax liability on IRA income and Social Security benefits combined could be more onerous.

Distributions from traditional IRAs are taxed as ordinary income. Withdrawals taken prior to age 59½ may be subject to a 10% federal income tax penalty, with certain exceptions.

Preserve Your Nest Egg Dollars

The funds that you will need during the early years of your retirement should generally be put into financial vehicles conservatively. Otherwise, your nest egg could be depleted if you are forced to sell during a down market.

The age at which you sign up for Social Security is an important personal decision. It should generally be based on many factors including your marital status, health, work situation, financial resources, tax burden, and retirement goals.

Source: 1) Social Security Administration, 2014

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM

There is expert guidance available to your for your retirement planning goals.

Meet me for a FREE retirement strategy consultation at my office at 833-313-7233 | MD, VA & DC. 

 

 

January 12th, 2015 by

Tony Robbins: Money Master the Game Book“People make several mistakes when saving and planning for retirement and one of the biggest ones is not getting started because they think they need a large sum of money to begin”, says Tony Robbins, 54, an inspirational speaker and best-selling author. His new book, Money: Master the Game: 7 Simple Steps to Financial Freedom, shares his interviews with more than 50 top financial experts including Charles Schwab, Carl Icahn, Warren Buffett, Steve Forbes, hedge fund manager Ray Dalio and Vanguard founder John Bogle.

People make mistakes when saving & planning for retirement

From those interviews, Tony has come up with 7 steps to financial freedom that everyone should be using:

1. Make the decision to not become a consumer. You have to commit a certain percentage of your income to savings for your financial freedom. Whatever that number is — 10%, 15% — stick to it in good times and bad. Have it taken automatically from your paycheck and put directly into a retirement or savings account.
2. Become an insider on financial instruments. Know the rules of the game. Understand financial instruments and how they work. Look into the fees you are paying & how that affects your financial future.
3. Make the game winnable. Figure out how much money you need for financial security and financial independence. Calculate this and come up with a plan. Look for places you can save more.
4. Evaluate your allocations. “You have to learn where to put your money to keep it safe and where to put your money to grow it with some risk,” he says. Put your money in different types of financial vehicles. Diversify your allocations.
5. Create a lifetime income plan. Make sure you won’t run out of income for as long as you live. Income is really what matters.
6. Act like the .001%. “That means learn from the very best on earth (Schwab, Icahn, Bogle, Dalio, Forbes and others he interviewed for the book), and what you learn from them apply and you’ll achieve financial security faster than you will any other way.”
7. Just do it, enjoy it and share it. Make a commitment to be wealthy now, not in the future. “Start where you are, and you’ll begin to find out that there’s more than enough.”

Robbins is donating all of the profits of this book in addition to a personal donation to feed 50 million meals to people in need this year through Feeding America, a hunger-relief charity.

Sources: USA Today – December 10, 2014

Learning as much as you can about how to become financially free will give you the knowledge and tools to stick with a plan. I want to help you become financially free and outline a plan for an income you cannot outlive in your retirement years. Let’s get started today! Contact my office at 1-833-313-7233 | MD, VA & DC. Freeman Owen, Jr - Host of SAFE MONEY TALK on CBS The Big Talker 1580AM
July 30th, 2014 by

Making a million retirement dollars last

The road to a comfortable retirement is full of risks and they don’t end when you stop working. In addition to longevity risk (the risk that you could outlive your retirement dollars), here are four additional risks that remind us the importance of early retirement planning:

Inflation:

The inflation rate has been relatively low over the last five years, averaging about 2.25% per year. But even that level can eat into the purchasing power of your retirement dollars. And long-term inflation trends have been higher, averaging 2.85% annually over the last 30 years.1

Unexpected Events:

A recent survey of Americans aged 50 to 70 found that the average respondent had experienced four “derailers” that temporarily knocked them off track in saving for retirement, with an average loss of $117,0002. This may sound daunting, but setbacks for your long term goals can be mitigated by maintaining an emergency savings fund.

Social Security:

According to the 2013 Annual Report of the Board of Trustees, Social Security benefits should be fully funded at current levels until 2033, when the trust funds may be exhausted. After that, payroll taxes would be able to fund only about 77% of scheduled benefits.Depending on your age, you might need to scale back your expectations for Social Security as a major source of retirement income.

Sequencing:

The most complex challenge could be sequencing risk, which refers to the timing of unfavorable portfolio growth, especially in the early retirement years. This could result from adverse financial conditions and/or an inappropriate withdrawal strategy.

Each of these risks presents its own challenges and potential solutions. But, you may benefit from professional help in analyzing and addressing these risks as they apply to your own situation. Don’t try to plan for retirement on your own.

Sources:
1) Thomson Reuters, 2013, Consumer Price Index for the period 12/31/1983 to 9/30/2013
2) BenefitsPro.com, June 26, 2013
3) Social Security Administration, 2013

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM For better money management and to plan more effectively for your retirement, contact me for a free consultation.
Toll Free: 1-833-313-7233 | MD, VA & DC. 
April 21st, 2014 by

Living Longer- retirement planning
Many pre-retirees either underestimate or over estimate how long they will live. For example, over estimation means you think you’ll live to 100 years old, and therefore you make plans to reach that age, but you only make it to age 95. But, 56%-62% of surveyed participants under estimated how long they will live. This type of survey indicates that people do not foresee living as long as they actually will. With advances in health care technology, it is no wonder that longevity is actually on the increase. That’s celebratory news for you to enjoy a longer life filled with happy moments. But, it’s a scary reality if you’re not sure you are going to be able to afford to keep living.

According to data compiled by the Social Security Administration:

  • A man reaching age 65 today can expect to live, on average, until age 84.2
  • A woman turning age 65 today can expect to live, on average, until age 86.2

And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.2

It’s About Accurate Retirement Planning

Nobody wants to fear their retirement years and feel insecure about whether they will outlive their resources. So, be better prepared. Let me help you prepare for retirement by keeping your money safe.
Toll Free: 1.833.313.7233 | Just Ask Freeman for a free, no-obligation consultation. | MD, VA & Washington DC

Sources:
1. Society of Actuaries, 2012
2. Social Security Administration Life Expectancy Calculator

March 7th, 2014 by

Women Still Lead The Charge in Retirement Nest Egg Planning

From the TV show “Skills to Pay the Bills”, Freeman talks about how women are still leading the charge in retirement planning. Their 401(k) accounts and 403(b) accounts are consistently larger than most men who are responsible for bills in a home and have a tendency to buy “big toys”. As more women have opted to pursue male dominated industries, like medical and law fields, women have created an even greater ability to plump their 401(k) and 403(b) accounts.

View This TV Segment With Tia Young

Protect Your Nest Egg Further

Ladies, your dedication to your retirement planning is impressive! But, please let me help you protect your nest egg further so you never outlive your resources.
Let me show you how it can be done. Just Ask Freeman | 1-833-313-7233

February 6th, 2014 by

Longevity Risk

photo credit: 401(K) 2013 via photopin cc

The uncertainty of an individual’s lifespan cannot be eliminated.  However, planning to have sufficient monies requires setting realistic expectations of how long retirement will last.   According to the Social Security Commission, the average life expectancy for those still alive at age 65 is 84 for males and 86 for females.  Planning, however, needs to take into consideration living longer than average, or half of retirees could run out of money before they die. So another consideration is the possibility of living longer than average. The data shows that one in four people alive at age 65 will live past age 90 and one in ten will live past 95.

Life Expectancy By Calculator?

To help identify the average life expectancy for a stated age and gender, the Social Security Administration provides a life expectancy calculator.  Estimating life expectancy may begin with a table or calculator, but the next step must take into consideration personal and family health history.  One online calculator, the living to 100 Calculator, takes these personal factors into consideration when creating a life expectancy estimate.  By entering information about your current health, lifestyle habits, and family’s health history, the calculator is able to create a more accurate personal life expectancy estimate.

Planning Against Longevity Risk

It sounds like a fancy strategy, but planning against longevity risk is simply planning to never outlive your resources in retirement. And, there are ways to ensure that never happens. Here are some options:

  • Deferring Social Security benefits
  • Electing life annuity payments from an employer sponsored retirement plan
  • Purchasing a life annuity can create a stream of income
  • Purchasing a deferred income annuity (a life annuity that begins at a later date)
  • Deferred annuities can be purchased with riders
  • Lifetime income is also available through life insurance contracts with a death benefit

Source: FORBES http://www.forbes.com/sites/jamiehopkins/2014/02/03/planning-for-an-uncertain-life-expectancy-in-retirement/

A FREE Call: Just Ask Freeman

Your retirement strategy is important. Now is the time to contact me so we can discuss the best options available to you.

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February 5th, 2013 by

retirement planning for age

The number of Americans aged 90 and older almost tripled between 1980 and 2010 and is expected to quadruple by 2050.1

Without a source of guaranteed income, it might be difficult to estimate how much to withdraw each month from your retirement nest egg. Withdraw too much and you risk running out of money in your lifetime. Withdraw too little and you may live on a more limited budget than necessary, missing out on some of the experiences you have looked forward to enjoying in retirement.

Annuity payouts can be retirement income solution. In fact, annuity payouts can be structured to continue throughout the lifetime of a second individual, thereby providing income for a surviving spouse (as long as the contract remains in force). Knowing today’s census data, this may be especially important for women, who often are younger than their spouses and typically live longer than men.3–4 According to US Census Bureau, more than 84% of women who live to age 90 and older are widows.5

Premiums for a fixed annuity can be paid in a lump sum or a series of payments. If the insured dies before annuity payouts begin, the insurer will generally keep the premiums that were paid. You should be aware that money put into a fixed annuity does not have the opportunity to pursue potentially higher growth rates in the financial markets. And inflation could reduce the future purchasing power of the annuity payouts.

A fixed annuity is an insurance-based contract. Any guarantees are contingent on the claims-paying ability of the issuing insurance company. Generally, annuities have contract limitations, fees, and expenses. Most annuities have surrender charges that are assessed during the early years of the contract if the annuity is surrendered. Withdrawals of annuity earnings are taxed as ordinary income. Early withdrawals prior to age 59½ may be subject to a 10% federal income tax penalty.

Sources
(1, 3, 5) U.S. Census Bureau, 2011
2) usnews.com, May 25, 2011
4) National Vital Statistics Reports, Vol. 59, No. 9, September 28, 2011

Call The Host of Radio Show- CBS Sports Radio 1580AM, Freeman Owen JrI specialize in retirement planning strategies. Let me help you determine the best way to plan for retirement and keep your money safe so you can enjoy the retirement lifestyle you always dreamed about. My consultation is free so call 833-313-7233.

July 26th, 2012 by

Avoid Running Out Of Assets in RetirementThe “typical” man retiring at age 65 can expect to live an additional 17 years.

The “typical” woman retiring at age 65 can expect to live an additional 20 years.

Those are great statistics if you are looking forward to an active and fulfilling retirement. In fact, an increasing number of people are reaching age 90 and older due to improvements in health care.  If you are someone who wants to have a retirement filled with laughter, fun, adventure and enjoyment, you cannot be stressed and anxious about money. You must be certain that your money is safe and that you have enough so that you can never outlive your resources.  So, here are several strategies that you can employ to help avoid running out of nest egg dollars:

  • Eliminate Debt: Before you retire, eliminate all major debt. Otherwise, in order to make debt payments, you may be forced to liquidate your money at inopportune times, such as during a falling market.
  • Purchase Guaranteed Income: If your monthly sources of retirement income, such as Social Security and a monthly pension benefit, are not sufficient to pay your anticipated monthly expenses when retired, consider using a portion of your retirement nest egg to purchase an income annuity that guarantees to pay you a lifetime income.
  • Limit Withdrawals: It’s generally a good idea to limit the amount you withdraw from your retirement nest egg in the early years of your retirement…if you take out too much too soon, you might run out of money in the later years of retirement. It’s also important to understand the potential advantages and disadvantages of withdrawing money from tax-advantaged accounts versus taxable accounts, as well as the required minimum distribution rules that apply to tax-advantaged accounts.
  • Continue Working: In order to preserve your retirement money until later in retirement, you may want to continue working on a part-time or consulting basis.

Call Freeman Owen Jr For Retirement Saving AdviceRetirement planning is essential to your success.  Contact me at 833-313-7233 for a free consultation so we can determine your specific needs and plan for your retirement days to be the best years of your life!