income for life - stratton & company
TRANSCRIPT
WelcomeCreative Solutions for Your Long-Term Income Needs
FocusOn®
Income for Life(904) 425-0943
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Workshop Objectives
Introduce
Educate
Illustrate
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Our Commitment
Provide useful and applicable information
Help you identify goals
Offer no-obligation review
The information provided in this presentation is not written or intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel.
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18%
Financial Challenges
Only 18% ofworkers are very confident that they will have enough money for retirement.
Source: 2014 Retirement Confidence Survey, Employee Benefit Research Institute
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Income for Life
1. ANNUITIES FOR AN INCOME YOU CAN’T OUTLIVE
2. TAX CONSIDERATIONS
3. CASE STUDIES
4. IMPORTANT QUESTIONS
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According to SSA.gov more than one in three 65 year olds today will live to be age 90 and more than one in seven will live to age 95.
The information provided in this presentation is not written or intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel.
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Income You Can’t Outlive – The Annuity
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What Is an Annuity?
You
Premiums
Income
Insurancecompany
Insurance-based contract
Option for lifetime income
Tax-deferred accumulation
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Types of Annuities
Deferredannuity
Immediateannuity
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Fixed vs. Variable Annuity3
IMPORTANT QUESTIONS
Fixed Indexed Annuities Must have fixed account
Cannot credit negative interest
Interest is based on performance of one or more indexes
Account balance will not be reduced by negative interest
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Fixed Indexed Annuities
Preservation
Accumulation
Guaranteed income
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Guaranteed Lifetime Income
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Now it can.
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1. ANNUITIES FOR AN INCOME YOU CAN’T OUTLIVE
2. TAX CONSIDERATIONS
3. CASE STUDIES
4. IMPORTANT QUESTIONS
Income for Life
Stratton & Company does not provide tax and legal advice. You are encouraged to consult your tax advisor or attorney.
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Tax-Deferred Compounding
Earnings are not taxed until withdrawn
Postponing taxes keeps more of your money working for you
Stratton & Company does not provide tax and legal advice. You are encouraged to consult your tax advisor or attorney.
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Taxable (28%)
Tax-deferred fixed annuity
Tax-deferred fixed annuity after taxes$202,763
30 years
$123,825 $134,392$153,327
$180,611 $189,857
$242,726
10 years 20 years
$100,000 initial premium 3% rate of return 28% tax rate
Annuities and Taxes
This hypothetical example is used for illustrative purposes only and does not represent any specific investment or annuity. Annuities typically have mortality and expense charges, surrender charges for early withdrawals, and administrative fees. These fees and charges are not reflected in this example and would reduce the performance shown if they were included. Any guarantees are contingent on the claims-paying ability of the issuing company.
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Penalties and Surrender Charges
10% federal income tax penalty on withdrawals taken prior to age 59½
Most annuities are subject to surrender charges in the early years of the contract
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1. ANNUITIES FOR AN INCOMEYOU CAN’T OUTLIVE
2. TAX CONSIDERATIONS
3. CASE STUDIES
4. IMPORTANT QUESTIONS
Income for Life
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Case StudyThe Millers
Bob: 65, retired at 62 Susan is 62, lost her job Could not continue her health insurance, not
old enough for medicare Great savers Large IRAs, joint NQ accounts
SITUATION
This hypothetical example is used for illustrative purposes only. It does not consider the effects of sales charges or other expenses. Actual results will vary. The FDIC currently insures bank CDs for up to $250,000 per depositor, per insured institution. The issuing insurance company guarantees fixed annuities, but these guarantees are contingent on the claims-paying ability of the issuing company.
Case StudyThe Millers
Fixed indexed annuities for their IRAs and purchased life insurance on each of them
– Take single life distributions from Susan’s pension and each of their annuities
– Yield - increased monthly income
SOLUTION
This hypothetical example is used for illustrative purposes only. It does not consider the effects of sales charges or other expenses. Actual results will vary. The FDIC currently insures bank CDs for up to $250,000 per depositor, per insured institution. The issuing insurance company guarantees fixed annuities, but these guarantees are contingent on the claims-paying ability of the issuing company.
1. ANNUITIES FOR AN INCOME YOU CAN’T OUTLIVE
2. TAX CONSIDERATIONS
3. CASE STUDIES
4. IMPORTANT QUESTIONS
Income for Life
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Social SecurityAge to receive full Social Security benefits
Year of birth Full retirement age
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67
NOTE: People who were born January 1 of any year should refer to the previous year.
information from socialsecurity.gov
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Sign up for Social Security
You can apply for retirement benefits online at ww.socialsecurity.gov or call toll-free at 1-800-772-1213 or make an appointment at the office.
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Medicare has four parts
Hospital insurance
Medical insurance
Medical Advantage plans
Prescription drug coverage
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How Do You Select an Insurance Company?
DescriptionA.M.Best
Standard& Poor’s Moody’s
FitchRatings
SUPERIOR A++ AAA Aaa AAAVery little risk A+
EXCELLENT A AA+ Aa1 AAASlightly higher risk A– AA Aa2
AA– Aa3
GOOD B++ A+ A1 BBBHigh claims- B+ A A2paying ability A– A3
ADEQUATE B BBB+ Baa1 BBLess protection B– BBB Baa2against risk BBB– Baa3
BEL0W AVERAGE C++ BB+ Ba1 __Relatively high C+ BB Ba2risk factor BB– Ba3
WEAK C B+ B1 BVery high risk factor C– B B2
B– B3
NONVIABLE D CCCCCR
Caa CDE Ca
F C
4IMPORTANT QUESTIONS
Selecting an Insurance Company
A.M. Best 908-439-2200
Standard & Poor’s 212-438-2400
Moody’s 212-553-1653
Fitch Ratings 800-893-4824
OBTAINING RATINGS
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Annuities and Creative Solutions
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Where Do You Go from Here?
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Do it yourself Work with others Work with us Procrastinate
Where Do You Go from Here?
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Thank YouThank You(904) 425-0943
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