Concerned about your future retirement income? You’re not alone. According to a study from Gallup, nearly half of all future retirees predict that they won’t have enough income to live comfortably in retirement. That’s a sharp increase from the first such survey, in 2002, when only a third of respondents said they wouldn’t have enough income in retirement.1
 
Past generations of retirees could rely on employer pensions and Social Security to fund their retirement. However, today’s retirees must shoulder much of the burden for funding their income. Few employers offer pensions these days, and while Social Security is a valuable resource, it usually isn’t sufficient to fund a full retirement.
 
If you’re like most people, you’ll have to fund much of your retirement with your own savings. Those savings could be vulnerable to market risk, and a downturn might lessen your ability to generate income.
 
Fortunately, there are steps you can take to guarantee* your income and provide yourself with a comfortable and stable retirement. An annuity is one tool that can be an effective income source. Below are a few ways you could use an annuity to create predictable, guaranteed* retirement income:

​Guaranteed* Income Now 
Is retirement on the horizon? Do you need to develop a stream of retirement income in the near future? If so, a single premium immediate annuity (SPIA) is one tool to consider. You contribute a lump-sum premium amount into an annuity policy. The annuity company then converts that amount of money into an income stream that’s guaranteed* for the duration of the contract.
 
Your income amount depends on a few factors, such as your premium amount, interest rates and the duration of the income. The longer the income has to be paid, the lower the income amount will be. SPIA contracts are often established for lifetime income. The insurer will use an actuary table to project your life expectancy and determine your amount. However, the income is guaranteed* no matter how long you live.
 
Life isn’t the only income period option, though. You could choose a joint life option to cover two lives. Or you could choose a lifetime payment with a period certain. If you pass away, your income continues on to your beneficiaries for the remainder of the payment period.
 
If you need retirement income immediately and you want some predictability in your cash flow, you may want to consider a SPIA. A financial professional can help you determine which type and which payment option is right for you.

Guaranteed* Income Later 
Not ready for income quite yet, but want something to depend on in the future? You may want to explore deferred income annuities (DIAs), also known as longevity annuities. As is the case with a SPIA, you contribute a lump-sum amount that’s converted into income payments. With a DIA, however, the income starts at some point in the future rather than immediately.
 
For instance, you could purchase a DIA at age 55 with income that starts at 65. Or you could choose to start the income even later, like age 70 or 80. One possible strategy is to purchase several DIA contracts with staggered income ages, like 65, 75 and 85. That way you could have guaranteed* increasing income throughout your retirement.

Lifetime Income With Growth Potential 
Perhaps you don’t know if or when you will need guaranteed* retirement income, but you’d like to have the option at some point in the future. You may want to consider a deferred annuity such as a fixed indexed annuity. These contracts offer tax-deferred growth and annual interest payments.
 
The amount of interest is based on the performance of a market index, like the S&P 500. If the index performs well, you get more interest, up to a maximum limit. If the index performs poorly, you get less interest, but your contract won’t decline in value.
 
You can also add an optional guaranteed* income benefit to your contract. These benefits allow you to take a certain percentage of your contract value as a withdrawal each year. As long as you stay within the withdrawal limits, the income is guaranteed* for life. That means you can use the annuity as a tax-deferred growth vehicle and possibly a guaranteed* income source in retirement.
 
Ready to develop your income strategy? Let’s talk about it. Contact us today at First Fidelity Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://news.gallup.com/poll/233861/update-americans-concerns-retirement-persist.aspx
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18406 - 2019/1/14

Market volatility is back. After nine consecutive years of positive returns, the S&P 500 posted a loss for 2018. The index declined nearly 7 percent, fueled in large part by an epic meltdown in the fourth quarter.1
 
If you’re approaching retirement or are recently retired, you may be concerned about volatility in the markets. You’ve worked hard to accumulate assets for retirement, and you’ll likely need them in the coming years to generate income and fund your lifestyle. A market downturn could threaten your ability to enjoy a stable and comfortable retirement.
 
There are a number of different strategies you can implement to protect yourself. However, one of your most effective options may be found in an unlikely source: life insurance.
 
Many people assume that life insurance is only for death benefit protection. It’s true that life insurance is a valuable protection tool for your spouse, children and other loved ones. However, it can also be a powerful tool for stable growth, asset protection and tax-efficient income.
 
Not sure how life insurance fits into your retirement strategy? Below are a couple of ways you can use cash value life insurance to protect your assets and help you enjoy a financially stable retirement:
​
Protection from volatility and downside market risk. 
Permanent life insurance policies, such as whole life and universal life, have a cash value component. When you make a premium payment, a portion of the premium goes to the insurer to pay for the cost of the death benefit protection. However, the remainder of the premium goes into the cash value account, which grows on a tax-deferred basis over time.
 
Where does the cash value growth come from? That depends on your type of policy. In a whole life policy, the growth comes from dividend payments from the insurer. In a universal life policy, you earn annual interest. Variable universal life policies let you place your cash value in the market via subaccounts, which are similar to mutual funds.
 
One interesting and relatively new option is an indexed universal life policy. In these policies, you can potentially receive interest each year based on the performance of a market index, like the S&P 500. If the index performs well, you earn more interest, up to a limit. If it performs poorly, you earn less interest. Your principal never declines, however, even if the index does.
 
An indexed universal life policy could help you achieve tax-deferred growth based on market returns without exposing yourself to market risk. If you want a consistent, predictable rate of return, consider a universal life policy, which pays a set interest rate each year and has no risk of market loss. In fact, any cash value life insurance policy, with the exception of a variable universal life policy, will provide tax-deferred growth potential without market risk.

Tax-efficient retirement income. 
If you’re like most Americans, you’ve used a qualified savings plan such as a 401(k) or IRA to save for retirement. These accounts are effective because they offer tax-deferred growth. As long as the funds stay inside the account, you don’t pay taxes on your accumulation. Distributions from these accounts, however, with the exception of the Roth IRA, are taxed as income.
 
If you will rely heavily on your qualified accounts for income in retirement, you could face significant tax exposure. Market volatility could also impact your retirement income. The combination of withdrawals and market declines could erode your savings, forcing you to adjust your income.
 
Life insurance can help with both taxes and potential market risk. When you take a withdrawal from your life insurance cash value, your original premiums come out first. Those distributions are tax-free, which means you can use your life insurance cash value to create supplemental retirement income that isn’t taxed as income.
 
Also, as mentioned earlier, your life insurance cash value may not have exposure to market risk, which means your income from those policies isn’t vulnerable to downturns. Some retirees opt to take supplemental income from their life insurance during years in which the markets perform poorly. That helps them take less from their other accounts and potentially preserve their assets.
 
Ready to learn how life insurance could offer you additional protection in retirement? Let’s talk about it. Contact us at First Fidelity Group. We can help you develop a full retirement strategy and determine which tools are right for you. Let’s connect soon and start the conversation.
 
1https://ycharts.com/indicators/sandp_500_total_return_annual
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18404 - 2019/1/11