Since most people have Social Security and/or 401Ks or IRAs or Roths (or the like), we will focus on what to do with these assets as you draw near to retirement.

GETTING READY: When is the best age to retire?

If you are eligible for Social Security Benefits, you can apply for your monthly retirement benefit any time between age 62 and 70. The payment calculation is based upon how much you've earned throughout your life. The amount will be higher the longer you wait to apply, up until age 70. The timing is up to you and should be based on your own personal needs. Here is a summary of the Social Security Benefits:

1. Age 62-67: Reduced benefits AND Benefits deduction (if earnings are >$22,320 1as of 2024; $1 benefit deduction for every $2 earning above the yearly limit)

2. Age 67 (full retirement age): 100% benefits AND No-deduction benefits (earning won’t affect)

3. Age 67-70 (delayed retirement credits for every month you delay)

What are your retirement options?

In addition to Social Security Benefits, if you have a 401K or IRA, you may consider the following:

1. Leave your money in the plan until you reach the age (73 as of 2023) when you start to take required minimum distributions (RMDs), an amount calculated based on your account balance and age and the IRS table. However, in a 401K plan, fees may apply upon retirement.

2. Invest the money in stocks, mutual funds, real estate, etc. But these can be of high risk, and real estate may require a lot of time and energy.

3. Convert the entire account into a Roth IRA, to avoid RMDs and future taxation. This is an especially good strategy if your tax bracket in retirement is actually going to be higher than it was in your working days; however, bear in mind you will owe income taxes on the entire account in the year you convert and will likely incur a hefty tax bill in the short run. However, it may be worthwhile to do it now than later, if you consider the unpredictable and possible tax rise that may incur due to our current economic national debt.

4. Rollover your IRA or Roth IRA or 401K to Gold Roth IRA, to protect yourself from inflation & RMDs & future taxation (understanding that you would be taxed for the conversion from Traditional IRA or 401K to Gold Roth IRA).

5. Rollover your IRA or Roth IRA or 401K to an IRA Indexed ANNUITY or Roth Indexed ANNUITY, to protect yourself from market downturns and acquire a Guaranteed Lifetime Income Rider (at an additional fee), even with an option of 25% Bonus on initial single-premium (at an additional fee)

How to protect retirement savings from market downturns?

A. Problem with having your 401Ks/IRAs/Roths in the market

When you have a Traditional IRA or Roth IRA, you will need to allocate your contributions into different investment options, such as stocks, bonds, ETFs, Index Funds, mutual funds, etc. The problem with these is that your investments go up and down according to the market. Every time you lose, you would need to gain “even more” to recover your loss.

Consider the following illustration.

Case 1. If you invested $100, and the market goes UP 50%, you would end up with $150.

Case 2. If you invested $100, and the market goes DOWN 50%, you would have $50 left. Now, would you recover your loss if the market goes up 50%? No!!! 50% of $50 is only $75! The market needs to go up 100% to recover your $100!

The following chart illustrates how much percentage is required to fully recover from a loss in the market.

As you can see, the more you lose in the market, the more you need in return in order to recover to your initial state. That is why an Indexed Annuity could be a better option.

B. Why an Indexed Annuity could be a better option

An Indexed Annuity is designed in helping you “grow” AND “protect” your retirement savings, because it credits interest based on the performance of an index, like the S&P 500, without actually participating in the stock market. There is a 0% floor guarantee, where premiums paid and interest credited are not affected by market downturns (though there also is a cap when the market performs very well). This is a great advantage, since we’ve seen that every loss needs a greater gain to fully recover from a loss.

Indexed Annuities also have the following characteristics:

1) Tax deferral. This helps your savings grow faster than if you paid taxes on your earnings each year.

2) Investment strategies. With several index strategies to choose from, your account can benefit from interest crediting tied in part to the change in a major market index.

3) Death Benefit protection. Upon death, the accumulated value passes to your beneficiaries.

Short -Term Retirement Investment

In addition to protecting your money from market downturns, there is a type of Indexed Annuity that may benefit those age 45 and above.

This type of Indexed Annuity is designed with as a Short-Term Retirement Investment which has a “rider” that permits you to convert your retirement savings into guaranteed income for life, called “Guaranteed Lifetime Income Riders (GLIR)”.

Here are some features of this particular type of short-term Indexed Annuity:

• Available as 7-year and 10-year policies, where your savings grow tax-deferred until the GLIR kicks in after the 7th or 10th year.

• The Benefit Calculation Base grows at an 10% simple roll-up rate until you activate the GLIR or after the 7 or 10 years of policy

• You will receive an annual increase of either 10% simple roll-up rate or a higher index interest rate (whichever is higher)

• $25,000 minimum premium.

• Guaranteed Lifetime Income Rider GLIR options of 25% BONUS or NON-BONUS, Income Doubler, Income Options. See below for details.

1) GLIR options of 25% BONUS (fees applied) or NON-BONUS (no fees applied).

Let’s see a hypothetical case WITH THE 25% BONUS (fees applied) and another with NON-BONUS (no fees applied).

Let’s say you have an initial single-premium of $200,000 that you want to put in an annuity with GLIR.

If you get the 25% BONUS GLIR, you would be paying an annual fee. If you activate your Bonus GLIR after year 7, you will receive at least $24,012 in guaranteed income every year for the rest of your life.

If you get the NON-BONUS GLIR, you would NOT be paying an annual fee. If you activate your Bonus GLIR after year 7, you will receive at least $19,210 in guaranteed income every year for the rest of your life.

Additional benefits at no extra cost:

• 10% Free Withdrawal in Policy Years 2+. We know there are times when you may need to access your policy values. That is why you can take up to 10% per year from your policy without a withdrawal charge. However, be reminded that you may be taxed if you have an IRA.

• Required Minimum Distributions: (not needed for Roth IRA or non-qualified plans) Surrender charges will not be applied to any amounts withdrawn from your policy to satisfy IRS required minimum distributions (RMDs), should you have an IRA Annuity.

• Terminal Illness Rider, Nursing Care Rider, & Emergency Access Waiver (Only for 403b)

2) Income Doubler

Should you become incapacitated, both Bonus and Non-Bonus GLIR offer the Income Doubler.

Your income can be doubled for up to five years if:

• Your policy has been in force for two years

• You cannot perform two of the six activities of daily living without the assistance of another individual permanently: bathing, dressing, transferring, toileting, continence and eating (must be medically certified)

• Your policy has an accumulation value greater than zero

• Elected income is based on one life only

• No withdrawals in excess of the current lifetime income have been taken in the current policy year

Your current lifetime income will double until the sooner of five years or the accumulation value of the policy reaching zero. When the doubler period ends, your lifetime income will go back to your income prior to qualification

3) Level or Increasing Income, It is Your Choice

When you activate your Guaranteed Lifetime Income Rider, you can choose to have a level payment for life or an amount that will increase over time. If you select increasing income, your initial income will be lower than level income but will increase by 2.5% per year until your accumulation value reaches zero dollars. At that time, your income will lock in at the current amount.

Contact us for any questions. Our goal is that you are educated and well-informed. We are here to answer your concerns at no cost and without pressure to apply or commit. We give you our word.