When you sit down with a traditional financial advisor to plan your retirement you will provide her with the spending budget you have in mind. The advisor will adjust that amount for inflation and after running through a “black box” model, will predict how many years your retirement savings – typically made up of cash, stocks and bonds — will last.
The model to make this prediction is called “stochastic” — a fancy way to describe what is a typical Monte Carlo simulation model.
MoreA reporter called me to ask whether investing in a QLAC would reduce a retiree’s RMDs and the tax that must be paid on them.
The short answer is Yes.
The complete answer is, think about the QLAC decision as part of a broader consideration of your retirement finances. Properly combined with your IRA investments, it can provide steady, lifetime income and may help you to fund a legacy to your heirs.
Let’s examine how you might create a retirement income plan that balances various investment opportunities.
A recent New York Times article discussed ways to improve your retirement with investments in low-cost index funds. While it’s hard to argue against lower-cost funds for your stock market investments, particularly if they outperform higher-cost actively managed funds, the planning for earning high investment returns should start long before you choose a fund.
If you are ready to dive into more detail about how to improve your returns, keep reading. Following these steps will lead to more, and safer, income during retirement, driven in part by better investment returns.
News from the financial world has been confusing lately. Is the economy strong or about to bust? Is the inevitable recession close or still years off?
What will the Fed do about interest rates? We do know that over the past eight months, interest rates have decreased.
If you get a chance, you might read this article “Why Retirees May be Wary of Annuities”. Written by two knowledgeable academics and based on a study of consumers, the authors concluded that the aversion to income annuities may be related to a question of fairness, i.e., insurance company holds on to part of the annuity reserve at the death of the annuitant.
At the end of the article, the authors suggest that what’s needed for annuity acceptance is a “highly personalized approach, in which the [planning] solutions are tailored to reflect the goals, circumstances of the individual.” That’s what we’re trying to do with our new Income Allocation Tool.
More