Annuity Watch

How to Find the Most Tax-Friendly Places for Retirees

Posted Tuesday, September 1, 2009

Maybe you are one of the many Baby Boomers who are in the process of dreaming up where to retire. Maybe you want to be near the water, perhaps the weather is what matters most to you. These things are important, but to truly live the good life, you want to strongly consider the tax responsibility your new home will put on you.

Typically, your federal taxes stay the same regardless of where you live. The state and local taxes can fluctuate greatly, however. Your first instinct may be to only look at states that have no state income tax (which currently is only seven states). However, something to keep in mind is how they will fill these gaps when budgets are cut (such as higher sales or property taxes). 

Although the other 41 states (plus District of Columbia) require you to shell out income tax, many of them give retirees monetary incentives that quickly add up. This could result in an overall more attractive bottom line for you that wouldn’t limit you to Alaska, Florida, Texas, Wyoming, Nevada, Washington or South Dakota.

Below are some other things to include in your research:

Plummeting home prices: Lower home prices have hit pretty much everywhere, including your dream retirement location. Don’t rule your favorites out before checking out up to date numbers.

Effect on pension: Some states give different breaks depending on income or age. The article in Kiplinger.com covering this subject reports “New Jersey allows residents 62 and older with incomes of $100,000 or less to exclude up to $20,000 of private-pension income from taxes.” This is just one example.

Social Security: How much of your Social Security benefits will your state require you to claim as income? Look into it. Arizona, California, and Alabama to name a few, won’t tax your benefits at all.

Property Tax: This can be a biggie. Due to property taxes being a huge source of revenue for local government, this is an area that can vary from state to state, county to county. Study whether your state gives breaks connected to age, income, residency, etc. 

Sales Tax: Some states want to tax everything from your morning waffles to aspirin. Some have no sales tax. In order to know what you will realistically be spending, you will need to find out where they stand. 

The overall quality of life should rank right up there with the cost of living when choosing where to retire. But one can greatly affect the other. So even though the future of your tax burden may be somewhat beyond your control, the more planning and assessing you can do before choosing… the higher your chances will be of achieving both.

Choosing where to retire is only part of the retirement planning puzzle. Call us. We're happy to help.

Ever Thought About Tailoring Your Pension?

Posted Friday, August 28, 2009

Why not?  You can use annuities to personalize your pension to fit your specifications.  Annuities should no longer be viewed with a one-size-fits-all mentality, but rather a “tailor-made” version that will fulfill the needs and wants of the consumer while being advantageous to the insurer.  

In a recent FOX Business article, Moshe Milevsky who is the author of “Are You a Stock or a Bond?” gives some valuable advice. He suggests that people should strongly think about placing some of their money in annuities - especially if a person doesn’t have a traditional pension plan that gives them the majority off what they will need when retirement comes around. This proves to be that much more beneficial when your annuity provides you with some type of lifetime income guarantee.

Milevsky goes on to say that consumers should purchase their annuity from a group of exceedingly rated insurers. This assures that if one of the companies falls through on the promise, one of the other companies is the safety net; therefore, protected much more than they would be with one. 

Get the information here you will need to choose carriers that have a greater chance of being here next year, by requesting our free Vital Signs report. The definition of the rating systems for each firm is in black and white.

Making Sure You're Bank is Secure

Posted Thursday, August 27, 2009

The severity of failing banks shows no sign of letting up. According to Smart Money, a report put out by Rochdale Securities tells us the number of banks that have met their doom has reached 250; with 81 of those occurring this year.  So we know this unfortunate news puts us all in a place of uneasiness, but what can we do to protect the money we’ve worked so hard for?

First and foremost, don’t rely on flashy advertising. In other words, do your part to ensure that your funds are in the hands of a bank that is not only FDIC-insured, but stay on top of the “ongoing health” of your bank. Are you with a publicly traded institution? You can check them out by taking a look at their Securities and Exchange Commission (SEC) filings, or go straight to sec.gov for current information.  Do you stick with the smaller, privately held banks? You have the right as a consumer to make inquiries for copies of balance sheets and other various financial documents. 

Although the U.S. government is there to back up the FDIC, it’s always smart to protect yourself. At The Annuity Connection, we do the work for you with our Vital Signs Report. Here you will find detailed analysis on any insurance company encompassing the details of the financial health of your carrier.

Working Toward the Financial Kind of Independence

Posted Friday, July 10, 2009

Long after the fireworks have burned out and the grill is shut down, “independence” is still on our minds - financial independence. Reaching retirement goals for this financial autonomy can be achieved with two things: balanced lifestyle and wise capital management.

Robert Powell writes in FOX Business that the trick is to spend less while you are still working. This includes gaining control over your debt, avoiding it, and saving all you can. "Think guarantees. Besides being smart about which assets go into which accounts, build guaranteed investments into your portfolio."

You also want to manage what you do have in ways to “produce the greatest after-tax wealth” as the article goes on to say. You need to be aware of your asset location, for example keeping your fixed-income investments that are susceptible to taxes within tax-deferred accounts.

Everyone hopes to have financial freedom and long-term health throughout retirement years. Increase the odds of obtaining both through not only taking care of your investments, but also yourself. Strong long-term care insurance, along with life, disability, property and casualty insurance will ensure you will be protected when the unforeseen occurs.

Where to Retire? State Asset Laws May Come Into Play

Posted Wednesday, July 8, 2009

What’s important when planning on where to retire? Good weather, housing, amenities, state laws on asset protection. Eh? There are many things to consider when choosing where you will retire, but state laws that determine how your assets will be protected may not be one of them. But maybe it should it be.

KCI Investing reports that each state holds its own individual laws regarding asset protection, the exception being employer pension plans within bankruptcy actions; other actions depend on the state law. So what to do?

One strategy mentioned is insurance products. Annuities and value of life insurance policies can be off the hook when it comes to creditors. Transferring some of your investments “from unprotected taxable accounts to appropriate insurance contracts” can be the way to go when concerns are keeping you up at night.

Bottom line? Don’t wait. Plan ahead and meet with a protection professional to help establish the appropriate action. As an investor, you will want to conduct your own research on your individual state’s laws before planning an approach. Deciding where to purchase real estate and retire while keeping your assets close should not be something taken lightly.

Insurance Company Upgrades & Downgrades For July 6th, 2009

Posted Monday, July 6, 2009

No one lost money in a fixed annuity last year

Posted Monday, July 6, 2009

Why do annuities get a bad rap? Even with all the recent news from financial pros and government officials singing their praises, annuities are still often vilified. Most often by people who lump all annuities together. That's a gross over-simplification and large error. But the Examiner's Robert Stack paints his real-world story that sums up why that picture is false:

[N]o owner of a Fixed Annuity lost a penny last year to the market collapse. The WORST any annuity owner did was keep what he already had, including earnings from the year before. That was the case for my own annuities. Not one single cent less in 2008 than I had in 2007. Those that lost large sums in the market should ponder why an annuity was not "no good" and not part of their own plan.

Hello, news people? Read that. Read it again. And then print it, would you? Because the troubles are far from over, particularly those entering or already in retirement. If you're ready to find out how fixed annuities can be used as a part of your smart retirement planning, we can help.

 

Free lunch + fraudulent variable annuties = SEC charges

Posted Thursday, July 2, 2009

The SEC has alleged that four employees of Prime Capital Services were pushing fraudulent variable annuities on unsuspecting seniors. Not surprising was the vehicle the alleged scammers used to gain the trust of the seniors -- a free-lunch seminar. From Directorship.com:

The SEC alleges that Prime Capital Services (PCS) recruited elderly investors to seminars in which a free lunch was provided, seminars which revolved around the sale of variable annuities. After the lunch, seminar attendees were persuaded to schedule one-on-one appointments in which representatives from PCS pitched the annuities.

PCS representatives allegedly concealed high costs, lock-in periods, and other information relating to the sales contracts.

It's actions like these alleged ones that give all annuities a bad name. And it's why we focus on selling fixed annuities. No high commissions. No high costs. And no reason to not fully disclose the terms. Yet things like this happen. It's one of the reasons we wrote our free eBook, How To Avoid The Seven Mistakes Annuity Investors Make. Download it today!

273 billion reasons why the insurance industry does not need a bailout

Posted Thursday, June 25, 2009

Barring some notable exceptions, the insurance industry remains financially healthy. No, that doesn't apply to every insurance company, but it does apply to the industry as a whole. Yes, the 2008 market tumble has taken it's toll on the industry as a whole. To the tune of a $51 billion loss. But the industry still has a $273 billion surplus.

Surplus!

That's the news from a recent report by Conning Research. It's odd to me that the report uses language like "...still struggling to shake off the impact of the financial crisis..." and "...capital losses will continue to challenge the industry...". Challenge? Shake off? They have a $273 billion surplus of assets! OK, let's assume that some of those "assets" are more toxic than others. That could be influencing the language.

But the report goes on to report a much rosier future for the industry -- and therefore annuity investors as well. Here's how Stephan Christiansen, director of research at Conning, puts it:

We project that surplus plus AVR will increase 23 percent to $337 billion by 2011 as the industry adapts to the new environment and due in part to additional capital paid in to the industry. Additionally, we forecast premium growth through 2011 based in part on demand stimulated by estate planning, a focus on savings and more conservative protection needs, and by a need for more stable investment alternatives.

In short: the insurance industry has an extremely stable financial footing. Of course, things might not be so great for your carrier. And many carriers are in fact, in trouble. Protect yourself. Get a free heath-check of any insurance company right now. If you own an annuity or are thinking of purchasing an annuity, you must know the health of the company to make sure you have the safety and guarantee your investment can and should provide.

Then call us. We're happy to help.

U.S. Senate jumping on the immediate annuities bandwagon

Posted Wednesday, June 24, 2009

Two Senators are jumping on the "let's provide tax breaks for seniors who invest in annuities" bandwagon. North Dakota and Kansas Senators Conrad and Roberts have proposed S 1297, called the "Retirement Security for Life Act". You'll recall a similar announcement by us of HR 2748, where two members of the House called for something similar. 

With both the House and Senate calling for nearly the same legislation, it's looking likely that the legislation will pass. When? That's hard to say. The government's wheels turn slowly.

But even without the proposed tax incentives, there are still plenty of reasons why you should convert a portion of your retirement savings into an immediate annuity. There are already great tax savings that come with this investment vehicle that provide guaranteed income for life. So act now with a portion of your nest egg. Then when -- if -- this legislation finally comes to pass, invest a bit more and keep saving. We can help you with that.