tax deferred retirement plans Skokie IL
In the past, employer-sponsored pensions were much more common, and employees were encouraged to save more thanks to contribution matches. Now, 401(k)s are the leading retirement savings vehicle in the workplace, and self-directed savings, with varying degrees of employer matches, leave retirees’ financial futures all over the board.
As a result, more people lack the savings to last a lifetime when they leave the workforce. According to John Huff, the 2016 President of the National Association of Insurance Commissioners, four out of 10 baby boomers have no retirement savings. None at all.
As you can imagine, this poses a challenge for financial professionals working with clients who have little to no assets but still need retirement income solutions. And it’s not just an issue for people who didn’t save. Others may have experienced losses in the securities markets or had to make substantial withdrawals during the recession.
To find a retirement income strategy that may be successful, financial professionals have gotten resourceful. Some financial professionals who once eschewed annuities are now taking a second look.
Just because people don’t have a lot of money saved for retirement doesn’t necessarily mean they have no assets. For example, some boomers may be out of cash but living in an oversized house they no longer need. In this scenario, homeowners who downsize before retirement could use some of the proceeds to purchase an annuity that will provide a guaranteed stream of income during retirement.
Others may have either received, or expect to receive, a modest inheritance and can use an annuity to convert that fixed amount into a lifetime of retirement income.
While it’s becoming more common for financial professionals to recommend annuities, employers are still warming up to the idea. Eight in 10 U.S. employees say they’d like to have a guaranteed income option in their defined contribution plan, but only 50 percent of employers understand this — and less than 1 percent offer it.
The appeal of pensions was that they did more for retirees than just provide retirement income; they provided peace of mind. The same can be said of annuities. In fact, nine out of 10 affluent households with annuities say they’re confident in their retirement.
If you’re a Baby Boomer within sight of age 65, you’re probably thinking about your next move—and it may well be a career change instead of a traditional kick-back-and-relax retirement. Among 1,005 Boomers who haven’t yet left their full-time careers, 60% expect to keep working at least part-time after they “retire,” says a study from Bankers Life’s Center for a Secure Retirement.
The job market is ready for them. Of the 2,293 Boomers in the study who have already retired but have found other work, 80% reported it was “easy” to find the jobs they have now.
“As the next wave of Boomers retires, the competition is likely to intensify,” says Bankers Life president Scott Goldberg. “But, with part-time and freelance roles becoming more prevalent in the overall job market, there is good evidence to suggest that future retirees will have an even greater number of positions to consider, even if the competition for those roles gets more intense.”
Great, but anyone contemplating what lies ahead might want to consider two of the study’s less cheerful findings. First, it seems that most people overestimate their ability to choose when they retire. Nearly seven in ten (69%) of middle-income retirees would have liked to have stayed longer in their old careers, but had to leave earlier than they planned for “reasons beyond their control,” the report says—most commonly because of health problems (39%), being laid off (19%), or to care for a loved one (9%).
Second, Boomers’ expectations about what they’ll be able to earn in their post-retirement careers seem overly optimistic. Only about one in five (21%) of the people in the survey who are still working in their primary careers say they’d be “willing to take a pay cut” when they move on to another job in retirement. That doesn’t jibe with the experience of current retirees who are working, almost three-quarters (72%) of whom report earning less on an hourly basis now than they did in their old roles. More than half (53%) say they make “much less.”
That doesn’t mean they’re unhappy. About 80% of the people who retired and then found new jobs say they like their current careers better than their old ones. They also report less stress and “better relationships” than the Boomers surveyed who haven’t retired yet.
Even so, the study’s message is clear. Given your druthers, you might stay in your pre-retirement career until you’re 65, 70, or beyond, and then move on to something that pays equally well. But, just in case that doesn’t work out, it’s smart to have a Plan B.
AGT is here to help plan that option B
Ten thousand Americans a day are turning 65, including a couple we’ll call Stu and Helen. In excellent health, Stu and Helen could be facing a retirement of 30 years — or even longer. One of their biggest fears about their impending retirement is their potential longevity — and running out of money to not only pay their bills, but enjoy their free time.
Stu and Helen participated in their companies’ 401(k) plans. Like many workers, neither has a traditional pension, so they are solely responsible for their own retirement security.
Fortunately, couples like Stu and Helen have options for creating a “personal pension.” By using some of their savings to purchase an annuity, they can guarantee a steady stream of income for life.
With an immediate annuity, they can make a lump-sum payment to a life insurance company, and the company will send them their choice of monthly, quarterly or annual payments. They can choose to receive the income payments over a specified number of years or as a guaranteed stream of income they can never outlive.
They could also consider purchasing a deferred annuity, which allows savings to grow tax-deferred during an accumulation phase until they decide when payouts begin. People who are years away from retirement — or who are retired but don’t need income right away — might choose this type of annuity.
With a deferred annuity they decide how their money grows during the accumulation phase. A fixed annuity earns interest at a guaranteed rate. An index annuity is tied to a market index like the S&P 500 stock price index.
Surveys show that 90 percent of annuity owners think annuities are an effective way to save for retirement. And annuities are among the most regulated financial products in the marketplace. From product development to advertising to sales, life insurers must comply with state and federal laws and rules that help prevent fraud and protect consumers. In addition, most states provide a “free look” period allowing customers to return annuities to the insurance company for a full or partial refund.
Planning for retirement can be stressful. But for retirees like Stu and Helen, the guaranteed income from annuities can provide peace-of-mind for a lifetime.
As boomers retire from their jobs at unprecedented rates in the U.S., you’d think they’d be spending their free time with friends, lingering over the morning newspaper and coffee or taking January vacations in a warm place. But many seniors are finding themselves in a predicament that few anticipate in retirement: parenting for a second time. Census reports indicate that 2.7 million grandparents are responsible for their grandchildren. Their added duties may be fulfilling, but they may be stressful, too.
In fact, many things can trigger stress among retired adults — paying bills on a fixed income, failing health, caring for ill parents or spouses, or even grandparenting. Excessive stress can lead to serious health problems.
“When stressed, the body releases substances such as cortisol and adrenaline that affect every organ and can cause muscle tension, insulin secretion and increased heart rate,” said Arthur Hayward, M.D., a geriatrician and the clinical lead physician for elder care with Kaiser Permanente’s Care Management Institute.
“You can’t avoid stress, but managing it can help preserve your health and well-being,” Dr. Hayward added. He recommends identifying and understanding the cause of your stress and finding ways to relieve it, such as these eight tips:
Pace yourself. Don’t take on too much. Be aware of your limitations.
Set realistic goals and expectations, and don’t be afraid to ask for help.
Plan time for yourself. Recharge your batteries.
Exercise and eat a balanced diet. Get plenty of fruits, vegetables and whole grains.
Try relaxation techniques such as meditation or yoga.
Get enough sleep. If you have problems sleeping, talk to your doctor. Drinking caffeinated beverages and alcohol can affect your ability to get a good night’s sleep.
Talk with a loved one or write in a journal.
Stay positive. Positive thoughts can make a difference, such as “I am hopeful” or “Things will be better.”
For more information, go tokp.org/healthyaging. For questions or advice about a specific condition, talk to your physician.
We all know they’re coming . . . the dog days of summer. As parents or grandparents, we love having the kiddos home and the absence of the daily grind of the bus, lunch-making and homework, but with every upside, there is a downside. And for kids in the summer, it’s boredom!
For this reason, parents spend a good amount of time searching and registering their kids for activities to keep them engaged and out of trouble. With so many options available, where do you start? Where do you find activities that are of interest to your kids, while also being kind to your wallet?
A good place to start is online. There are some great parent resources available that provide parents the opportunity to search different activities — all relevant to your child.
For instance, ACTIVEkids.com is an easy-to-use website for parents to discover and register kids for activities, classes and camps. ACTIVEkids enables parents to find a broad spectrum of activities from art seminars to dance classes to local summer camps — search by gender, age and interests to find activities that are the most relevant to parent and child. It has a database of more than 120,000 activities nationwide and serves kids ages four to 18.
Another option is the local YMCA. If you’re not familiar with the YMCA in your area, we suggest you check it out. It’s a great family organization for kids and adults of all ages. Their programs focus on youth development, healthy living and social responsibility. Many local locations offer health and fitness programs that help children (and adults) to increase energy, decrease stress, prevent illness, maintain a healthy lifestyle and just enjoy quality time with family and friends.
The Y offers a number of different summer programs that promote positive self-esteem, good decision making and self-help and care. There are likely to be one or two great options for your child.
The recreation department in your town is another great place to look for activities — and they are usually very affordable. Most towns offer programs from tennis and swim lessons to painting and music classes. The programs are usually run by local experts and are located right in town. Plus, if you coordinate with some friends, you might be able to catch a morning break that can be enjoyed and filled with some “you” time.
Wherever you go to find fun, engaging activities for your kids, just make sure you remember to carve out some simple, relaxing family time, too. The summers fly by much faster than the school year.
Ben Franklin once declared, “A penny saved is a penny earned.” Yet, equally enlightening are his thoughts on expenses: “Beware of little expenses. A small leak will sink a great ship.”
And there are plenty of “leaks” that can scuttle an already-tight budget. For instance, a spouse idled by the sour economy, a fender bender with the family car, or an unexpected hospitalization. That’s why financial advisors recommend that you have a rainy-day fund—enough liquid assets to cover three to six months’ worth of emergency living expenses. In case of financial emergency, access to additional money will save you from relying on credit cards or loans that simply compound the problem.
When starting an emergency fund, here are a few tips to abide by:
- Determine what amount is best for you. Most experts agree that you should keep between three and six months worth of your living expenses set aside in your emergency fund. Your specific situation – whether you have children, carry substantial debt and types of insurance coverage you have – will determine what amount is best for you. Examine your situation — your income and your needs — to decide how much you should save.
- Start small. Starting an emergency fund can be as simple as depositing $100 into your high-interest savings account. But before you begin, be sure that you’re meeting your basic living expenses. And as you build your emergency fund, be sure you’re also reducing your spending and avoiding debt.
- Stick to a schedule. Get into the habit of making regular deposits. Whether it is weekly, bi-weekly or monthly, create a schedule and stick to it. Once you make saving automatic, you won’t even have to think about it.
- Consider an online savings account. In many cases, an “online” savings account may make more sense than an account at a traditional, bricks-and-mortar bank. That’s because many traditional banks are not currently offering a savings option with interest rates high enough to meaningfully beat inflation. In addition, an online savings account is a reliable way to manage your money.
You know you’ll be eligible for Medicare when you turn 65, but what does that mean? More than 10,000 people age into Medicare eligibility every day, but many have questions about how to enroll and which plan will best meet their health and budget needs.
Medicare provides important benefits for people who qualify, including preventive care, hospital care and even prescription drug coverage. While there are multiple plan choices available, selecting the right Medicare plan may be easier than you think.
It’s important to note that people who are recently disabled — and haven’t turned 65 — may also qualify to enroll in Medicare. The disabled segment of the population is growing. According to the Centers for Medicare & Medicaid Services, the disabled now total some 5 million Medicare beneficiaries. To determine if you or a family member may be newly eligible for Medicare, visit http://www.medicare.gov or call toll-free 1-800-MEDICARE (TTY: 1-877-486-2048) 24 hours a day, seven days a week.
Enrolling in a timely manner is also important in order to avoid potential financial penalties. Equipped with the correct information, people qualifying for Medicare can select the plan that best suits their lifestyle and health care needs.
Here’s what you need to know:
Anyone who has legally lived in the United States for the past five years qualifies for Medicare at the age of 65. People eligible for Medicare have three options: Original Medicare, Medicare Supplement and Medicare Advantage.
Original Medicare is broken into two parts — A and B. Medicare Part A helps cover hospital expenses, and Part B helps cover everyday health care costs like doctor visits, outpatient care and some Part B prescription medications. Both Parts A and B have a deductible, as well as coinsurance once the deductible is met.
Medicare Supplement insurance plans, sold by private insurers, can help pay some of the health care costs that Original Medicare doesn’t pay, like copayments, coinsurance and deductibles. If you have Original Medicare and you buy a Medicare Supplement plan, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then, your Medicare Supplement plan pays its share. Medicare Supplement plans, however, do not cover prescription drug costs.
Medicare Advantage plans are run by private insurance companies, and all plans cover everything Original Medicare plans pay, as well as extra benefits and services. Medicare Advantage plans often include coverage for prescription drugs, vision and dental benefits, along with fitness programs and comprehensive preventive care. More than 16 million Americans have signed up for Medicare Advantage plans.
Medicare Part D provides prescription drug coverage for people with Medicare. These plans are available as standalone plans or as part of an all-in-one Medicare Advantage plan. Some Medicare Advantage plans, however, are sold without Part D included.
Enrolling in the right Medicare plan is an important decision, and by understanding the facts, you can navigate the process with ease. For more information about Medicare plans and their coverage, visitwww.Medicare.gov orwww.Humana.com/medicare or call a licensed Humana sales agent toll-free at 1-844-663-8090 (TTY: 711) between 8 a.m. and 8 p.m. Monday through Friday.