A Look Back at 2015: The 5 Most Important Retirement Planning Changes for 2016

[MULTIZ321]

A Look Back at 2015: The 5 Most Important Retirement Planning Changes for 2016 - by Jamie Hopkins/ Personal Finance/ Forbes/ forbes.com

"Retirement planning can be extremely challenging as individuals are tasked with planning for an uncertain time period. If that were not difficult enough, in many ways retirement planning is like trying to shoot a moving target in the wind.

Each and every year new legislation, court cases, and market conditions impact retirement planning, and 2015 certainly was no different.

In fact, public policy changes to Social Security really unnerved a lot of people who had become accustomed to the stability of certain Social Security benefits we have enjoyed for the last decade.

In addition, the retirement planning market saw an influx of new financial products, the sun setting on certain financial products, a changing investment market, and a variety of legal changes.

However, there were five changes that occurred in 2015 that everyone planning for retirement needs to know about: 1) Reduced Social Security claiming strategies; 2) enhanced reverse mortgage consumer protection rules; 3) considerable annuity product developments; 4) expansion of the myRA savings program; and 5) the creation of ABLE accounts.

While all of these topics can be fairly complex, this article will provide a brief overview of each of these changes for your consideration as you begin to plan for 2016..."

Richard

 

[bogey21]

I retired in 2001 and took the lifetime annuity rather than a lump sum and have been happy I did. One of the reason I took the lifetime annuity was the concern that I might out live my lump sum. If I were to do it today, I might consider taking the lump sum and using part of it to buy a deferred annuity kicking in at age 80 or 85 as protection.

George

 

[johnrsrq]

I retired in 2001 and took the lifetime annuity rather than a lump sum and have been happy I did. One of the reason I took the lifetime annuity was the concern that I might out live my lump sum. If I were to do it today, I might consider taking the lump sum and using part of it to buy a deferred annuity kicking in at age 80 or 85 as protection.

George

that all depends on your financial, health and family structure. Rating of a carrier is important as well as an understanding of their excess reserves- surplus capital.

I've sold annuities since 1985 and was very active in the beginning of the eia. The good eia with a decent rider at a competitive rider cost might match what you were mentioning.
The riders, income riders and death benefit riders along with their cost vary greatly among companies. Also the period as to when (age) the riders are issuable, when they stop preferred above average fixed rate compounding for lifetime withdrawals and the single/joint payout ratio (banded or not).

I can speak more freely of this at the moment as I am not currently FINRA registered.

I wish it were 2001 all over again because those in eia's from those days, at least from my companies, are sitting pretty. I don't have those offering today as all is related to option cost and interest rates.

 

[WinniWoman]

I know I have posted this several times, but I am having my husband take the lump some of his small pension when the time comes (hopefully he will still have one by then!).

Did you see how many people- including Fern- passed away this week before they even reached their mid 70's?!

 

[pedro47]

that all depends on your financial, health and family structure. Rating of a carrier is important as well as an understanding of their excess reserves- surplus capital.

I've sold annuities since 1985 and was very active in the beginning of the eia. The good eia with a decent rider at a competitive rider cost might match what you were mentioning.
The riders, income riders and death benefit riders along with their cost vary greatly among companies. Also the period as to when (age) the riders are issuable, when they stop preferred above average fixed rate compounding for lifetime withdrawals and the single/joint payout ratio (banded or not).

I can speak more freely of this at the moment as I am not currently FINRA registered.

I wish it were 2001 all over again because those in eia's from those days, at least from my companies, are sitting pretty. I don't have those offering today as all is related to option cost and interest rates.

To Johnrsrq;
Now that you can speak freely about annuities. Why does Susie Orman and other financial planners dislike annuities so much?

 

[WinniWoman]

Annuities are like gambling with your money. When an insurance company offers a product it is ALWAYS for their benefit- period. They are in business to make money- not lose it so you can win.

Sure- maybe there are a handful of people who might "make out" well, but for the majority- no dice.

Keep your money and invest wisely-use a Financial Planner if you have to- and make your own annuity. Simple.

At least when you die- if you have money left over- your spouse or your children will inherit it. Or- if you have a big expense you need money for- there it is in your own account available to withdraw.

Social Security is enough of an annuity. You can roll the dice and wait until 70 to take it if you want to gamble. You have already given the government a lifetime of your earnings and hope to collect. Same with Medicare.

Look at the monthly pension payouts for retirees being cut in a lot of industries.

Companies (and the government) count on your swift exit from earth.
Do you really think you will be the exception that will collect more than you put in? Sure- it's possible. Good luck.

Do you like the idea of giving control of your money to an entity who's main purpose for existence is to make money off of your money and keep your money when you die?

Then- an annuity is for you.

 

[Timeshare Von]

<<snipped>>

Did you see how many people- including Fern- passed away this week before they even reached their mid 70's?!

My parents both died very young (dad at 46 and mom at 57). Neither saw a dime of their pensions/retirements. In fact, when my mom remarried a few years after my dad passed, she forfeited his civil service pension as a survivor.

When she realized that, and still within the window to do so, she divorced hubby #2 (it wasn't going so well anyway) . . . and was able to recollect dad's retirement payments. It wasn't much but it helped her until her death about 10 years later.

 

[Talent312]

When I retire in about a year, I'll get both a lump-sum and a monthly check from my pension. The lump-sum is from a deferred retirement program in which one retires "on paper" but keeps on working.

I'm tempted to take the lump-sum and blow it on a some new toys and a party, but unfortunately, nearly all of it is taxable. So, I'll need stash it in a roll-over IRA and draw out just a bit at a time. <darn>
.

 

[johnrsrq]

To Johnrsrq;
Now that you can speak freely about annuities. Why does Susie Orman and other financial planners dislike annuities so much?

God bless Suzie Orman for blanket "one size fits all" statements. Also Fisher and every other attention getter. I guess all of those folks transferring risk to an insurance carrier to the tune of over $200 billion per year are misinformed. Is Microsoft at it's alltime high back 15 yrs ago or so? How about in AAPLE we trust.
Please don't misguide people as all annuities are bad. The discussion is deeper and involves looking at the different annuities- contracts and other investment alternatives or both. http://www.iii.org/fact-statistic/annuities

I will also note, I do not like many annuities, some carriers, some are not appropriate for some while they are for others. Opinions reflect investors and their planners belief they can perform at rates over time and assume their own risks. LTV, Bethlehem Steel, Enron, CSCO, IBM, HBAN, or funds with more fees, or RIA fees and others fees. or simple deferred's. Not all fit one size. Diversify, employ modern portfolio theory, use alternatives= sure they all can work- how much money are we talking about.

One has to identify (maybe with a planner-fee or no fee planner- commissions aren't all evil) their individual/family profile- risk tolerances, forward looking objectives, taxation, longevity- mortality, health- morbidity.

Hey, banks are safe (have to have reserves backing up guarantees to 250k etc)- put all you nest eggs there and wait till rates rise but that might exceed your life span. But some posters belong there.

I, however, see it prudent for me, not to have an extended conversation in this forum as it is serious business and, this is a timeshare forum. I get it is a general interest area but it has it's limits.

srq- out

 

[bogey21]

Annuities are like gambling with your money...Keep your money and invest wisely-use a Financial Planner if you have to- and make your own annuity....At least when you die- if you have money left over- your spouse or your children will inherit it....Companies (and the government) count on your swift exit from earth.

I disagree 100%. Annuities are not gambling any more than managing a portfolio of stocks is gambling. The key to annuities are its terms and picking a solvent provider for your annuity.....A lump sum doesn't work well for someone (like me) that doesn't want to leave an estate.....Companies (and the Government) aren't counting on one's swift exit. They play the averages.....With me they have already lost as I have been collecting for 15 years already. And finally if one has picked the right counterparty for his/her annuity, there is the mental benefit of not having to fret the gyrations of the stock and bond markets and/or the worry that one might run out of money.

George

 

[pedro47]

God bless Suzie Orman for blanket "one size fits all" statements. Also Fisher and every other attention getter. I guess all of those folks transferring risk to an insurance carrier to the tune of over $200 billion per year are misinformed. Is Microsoft at it's alltime high back 15 yrs ago or so? How about in AAPLE we trust.
Please don't misguide people as all annuities are bad. The discussion is deeper and involves looking at the different annuities- contracts and other investment alternatives or both. http://www.iii.org/fact-statistic/annuities

I will also note, I do not like many annuities, some carriers, some are not appropriate for some while they are for others. Opinions reflect investors and their planners belief they can perform at rates over time and assume their own risks. LTV, Bethlehem Steel, Enron, CSCO, IBM, HBAN, or funds with more fees, or RIA fees and others fees. or simple deferred's. Not all fit one size. Diversify, employ modern portfolio theory, use alternatives= sure they all can work- how much money are we talking about.

One has to identify (maybe with a planner-fee or no fee planner- commissions aren't all evil) their individual/family profile- risk tolerances, forward looking objectives, taxation, longevity- mortality, health- morbidity.

Hey, banks are safe (have to have reserves backing up guarantees to 250k etc)- put all you nest eggs there and wait till rates rise but that might exceed your life span. But some posters belong there.

I, however, see it prudent for me, not to have an extended conversation in this forum as it is serious business and, this is a timeshare forum. I get it is a general interest area but it has it's limits.

srq- out

Thanks for sharing your insights and I can understand your opinion on the subject matter.
Thanks for the web page information. I am surprise that the "Quiet Company" is not listed.

 

[VacationForever]

When one has a large enough retirement fund to work with, putting 15 to 20 percent in a future income fixed annuity makes it a diversified retirement portfolio. Not all annuities are bad. Variable annuities are the evil high fee ones. Also, you can pick fixed period annuities that pay to beneficiaries if you die before the designated payout period ends.

I see my retirement income to be made up of 1) social security - inflation adjusted 2) Required Minimum Distribution - rides with the market 3) fixed income annuity - non-inflation adjusted in itself but when you ladder it you can have bigger payments further out to cover loss of buying power due to inflation 4) chunk of non-IRA money for emergencies.

I ran it by my financial advisor and he said you cannot beat what I plan to do.

 

[johnrsrq]

Thanks for sharing your insights and I can understand your opinion on the subject matter.
Thanks for the web page information. I am surprise that the "Quiet Company" is not listed.

They're (Northwestern) a terrific "mutual" outfit, a solid competitor and are involved in retirement life and annuity products in a big way. Ohio National is an independent agent "mutual" counter- life product to life product. They don't fancy equity indexed annuities to my current understanding. (i could be wrong)

The market is so large because of the corporate market-401k, 403b. So, eliminating the group annuity carriers which employees are forced to choose from managements offerings (TIA/New York/Hancock/fidelity/Vanguard/AIGand the field brings a field a highly well capitalized carriers who offerings many times are superior. Hence, some people transfer to these other carriers because they fit better and more to them. And many with higher cap's, participation rates, lower costs, better guarantees etc., better death benefits, better living benefits, better liquidity.

Variable are indeed very high cost in fees and rider costs.

 

[jojo777]

Thank You for sharing this article.

 

[WinniWoman]

I once considered fixed immediate annuities, but the interest rates are too low.

 

[VacationForever]

I once considered fixed immediate annuities, but the interest rates are too low.

To overcome the low interest rates of immediate annuities, you want to look at fixed future income annuities - buy now to pay say 7 years out or 10 years out etc. Future income annuities is much less dependent on current market interest rates.

 

[DEScottzz]

When you buy life insurance, you win when you die. When you buy health insurance, you win when you get sick.

At least when you buy an immediate annuity, you win by living a long life. Seem like more fun to me than the other options I mentioned.

 

[WinniWoman]

When one has a large enough retirement fund to work with, putting 15 to 20 percent in a future income fixed annuity makes it a diversified retirement portfolio. Not all annuities are bad. Variable annuities are the evil high fee ones. Also, you can pick fixed period annuities that pay to beneficiaries if you die before the designated payout period ends.

I see my retirement income to be made up of 1) social security - inflation adjusted 2) Required Minimum Distribution - rides with the market 3) fixed income annuity - non-inflation adjusted in itself but when you ladder it you can have bigger payments further out to cover loss of buying power due to inflation 4) chunk of non-IRA money for emergencies.

I ran it by my financial advisor and he said you cannot beat what I plan to do.

I agree with this. If you have a huge amount of money then an annuity can be a good diversifier.

 

[VacationForever]

With the way the market has been tanking I regret not buying annuities last year. My plan has been to buy future annuities in March of this year after I rollover my employer 401K to my rollover IRA and to make my purchase from my rollover IRA account. I was not trying to time the market but because I am retiring in Feb and rolling over the account thereafter makes sense. Oh well.

 

[johnrsrq]

With the way the market has been tanking I regret not buying annuities last year. My plan has been to buy future annuities in March of this year after I rollover my employer 401K to my rollover IRA and to make my purchase from my rollover IRA account. I was not trying to time the market but because I am retiring in Feb and rolling over the account thereafter makes sense. Oh well.

ok I'll bite on the terminology. Income riders perform same thing so maybe the future income annuity is the same. Some are built in, some are optional- at a cost (which varies and is ok as long as it is understood and does what you want). The activation or turning on of the future income stream varies by age and joint/single lifetime guarantees with many carriers. Given that the future sum could be the same in comparison, it is wise to look at the payout of the next phase. If you don't mind sharing- which carriers have you looked at?

the market could ....do anything.

btw; I love that terminology and will incorporate it as it is self descriptive

 

[VacationForever]

ok I'll bite on the terminology. Income riders perform same thing so maybe the future income annuity is the same. Some are built in, some are optional- at a cost (which varies and is ok as long as it is understood and does what you want). The activation or turning on of the future income stream varies by age and joint/single lifetime guarantees with many carriers. Given that the future sum could be the same in comparison, it is wise to look at the payout of the next phase. If you don't mind sharing- which carriers have you looked at?

the market could ....do anything.

btw; I love that terminology and will incorporate it as it is self descriptive

Yes future fixed income annuities. My financial advisor (from a very large wealth management company) and I are supposed to sit down and look at the offerings. Which company do you recommend? From my own research Lincoln National Corp seems to offer the best rates for what I am looking for - fixed term payout. I am looking at buying a 10-year fixed return and then another 15-year fixed return after the 10-year fixed return runs out. Lincoln came up on top on the rate of return.

 

[johnrsrq]

Yes future fixed income annuities. My financial advisor (from a very large wealth management company) and I are supposed to sit down and look at the offerings. Which company do you recommend? From my own research Lincoln National Corp seems to offer the best rates for what I am looking for - fixed term payout. I am looking at buying a 10-year fixed return and then another 15-year fixed return after the 10-year fixed return runs out. Lincoln came up on top on the rate of return.

Well, I'll get you a list for your meeting. I can also represent most carriers including Lincoln Financial. Some including Jackson National, Midland National, Great American, Guggenheim, Security Benefit, Oxford, American Equity.

The withdrawal rate is just as important as the 'rate of return' because, as we know, the income account is far different than other cash surrender value at that 10 yr or 15 yr mark. Offhand, I think Midland, American Equity and Security Benefit might edge Lincoln out by a significant amount when looking at the payout period (withdrawal rate) as well might have other more competitive strategies.

I'm not asking for your business however, it is my experience that no matter how large they are, many FINRA related entities do not offer the entire marketplace. As such, many brokers will only like the one's they can offer. those carriers have relationships with their broker dealer and their compliance people limit how many companies they choose to monitor and bless.

I need to get more current on the rates offered in this area, so I'll report back. It might be very technical info but I'll share it as I am not soliciting you in California where I am not currently licensed. I have been in the past and could be if I wanted to.

It'll help me brush up my competitive skills and we'll see where the chips fall.

 

[VacationForever]

Well, I'll get you a list for your meeting. I can also represent most carriers including Lincoln Financial. Some including Jackson National, Midland National, Great American, Guggenheim, Security Benefit, Oxford, American Equity.

The withdrawal rate is just as important as the 'rate of return' because, as we know, the income account is far different than other cash surrender value at that 10 yr or 15 yr mark. Offhand, I think Midland, American Equity and Security Benefit might edge Lincoln out by a significant amount when looking at the payout period (withdrawal rate) as well might have other more competitive strategies.

I'm not asking for your business however, it is my experience that no matter how large they are, many FINRA related entities do not offer the entire marketplace. As such, many brokers will only like the one's they can offer. those carriers have relationships with their broker dealer and their compliance people limit how many companies they choose to monitor and bless.

I need to get more current on the rates offered in this area, so I'll report back. It might be very technical info but I'll share it as I am not soliciting you in California where I am not currently licensed. I have been in the past and could be if I wanted to.

It'll help me brush up my competitive skills and we'll see where the chips fall.

Thanks. We can take the discussion offline if no one else is interested in this discussion. The annuities that I have been researching do not have surrender values, only a monthly income stream for the duration of the policy.

 

[MULTIZ321]

I'm curious if any Tuggers have investigated First Position Commercial Mortgage Notes and if so, are they a worthwhile option to include in one's retirement portfolio?

Also called Modified Endowment Contracts (MEC's) they are similar to deferred annuities in that they both grow tax deferred but MEC's are reportedly more tax efficient than annuities because they have a tax-free death benefit.

In addition, another claimed benefit is that if one compares interest you can earn from MEC's, the more competitive contracts will offer the oppotunity to earn much higher interest than most deferred or indexed annuities.

Also some highly rated insurance companies have started offering MEC's with no upfront load, and no back end surrender charges and some have a Long Term Care Benefit.


Thanks for any input.


Richard

 

[Talent312]

When you buy life insurance, you win when you die. When you buy health insurance, you win when you get sick. At least when you buy an immediate annuity, you win by living a long life. Seem like more fun to me than the other options I mentioned.

Unless you die before collecting the price you paid for the annuity.

I may be "out to lunch," but IMHO, I can get as good a return on my nest-egg as any annuity could provide by investing the $$ myself. Then, if I die b4 withdrawing it all, at least my heirs will enjoy the fruits of my labors.
.