Fixed Annuity Could Help Extend Lifespan of Retirement Accounts

Submitted by Edward JonesPrint Story | Email Story

It's almost impossible to save too much for retirement. After all, you could spend two, or even three, decades as a retiree. And retirement is not cheap – even if you maintain a relatively modest lifestyle, some of your expenses, especially those involving health care, may continue to rise over the years. Consequently, you will need several sources of reliable income – one of which might be a fixed annuity.

Fixed annuities are essentially contracts between investors and insurance companies. When you purchase a fixed annuity, the insurer will guarantee the principal and a minimum rate of interest. This means the money you invest in a fixed annuity is designed never to drop in value. (However, this guarantee is based on the claims-paying ability of the insurer that issues the annuity.)

You can structure a fixed annuity to pay you for a certain number of years or for your entire lifetime, which is the route many people choose. This is advantageous not only because of what it provides you – income for life – but because it also may allow you to take out less money each year from your other retirement accounts.

Here’s some background: Once you turn 70 1/2, you are required to begin taking withdrawals from your traditional IRA and your 401(k) or similar employer-sponsored retirement plan. (This requirement does not apply to Roth IRAs.) You must take out a minimum amount, based on your age and account balance, but you are free to exceed that amount each year. But the more you withdraw from these accounts, the faster they are likely to be depleted. So, when you reach retirement, it's a good idea to establish an appropriate annual withdrawal rate, based on your retirement plan balances, Social Security, lifestyle, longevity expectations and other factors. You may want to work with a financial professional to determine a withdrawal rate that's suitable for your needs.



If you can count on the income from a fixed annuity, you might be able to take out less each year from your traditional IRA and 401(k), giving these accounts more tax-deferred growth opportunities. Plus, if you don't withdraw all the money from these accounts during your lifetime, you can include the remainder in your estate plans.

A fixed annuity's potential to help you extend the lifespan of your IRA and 401(k) can clearly be of value to you. Still, a fixed annuity does carry some issues about which you should be aware, such as surrender charges for early withdrawals, along with other fees. Also, if you take withdrawals before you reach 59 1/2, you likely will face a 10 percent penalty. And annuities can have tax implications, so before you start taking withdrawals, you will want to consult your tax advisor.

Is a fixed annuity appropriate for you? There’s really no one correct answer because everyone’s situation is different. However, if you consistently max out your IRA and 401(k) contributions, and you still have money left to invest for retirement, you might want to think about an annuity. An income stream you can't outlive – and that may help you protect your other retirement accounts – is worth considering.

This article was written by Edward Jones for use by your local Edward Jones financial advisor. Courtesy of Rob Adams, 71 Main Street, North Adams, MA 01247, 413-664-9253.. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. For more information, see EdwardJones.com.

 

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'Joker': Doesn't Kid Around

By Michael S. GoldbergeriBerkshires Film Critic
If van Gogh were alive today and dabbling in film, I expect that he might create something as artistically maddening as Todd Phillips' "Joker." But we must tread carefully. The controversy is there for the taking. 
 
Joaquin Phoenix's Arthur Fleck, who will ultimately evolve into his alter ego, the Joker, before the closing credits fall on this fantastically directed, acted and produced "Batman" offshoot, is off the hook in every definition of the term. Thus the question is begged: Is it OK to derive entertainment from the criminally insane?
 
Phillips, who co-wrote this magnum opus with Scott Silver, throws all decorum and caution to the wind as he lavishes broad, violently-infused brushstrokes across a canvas hellbent on saying whatever it takes to get across its explosive meditation on the shocking sources and depths of evil. As we follow Arthur's devolution from simply sad Momma's Boy working for a clown rental company to a full-fledged crazy man on the loose in Gotham City, only our variety of cringe changes ... a different one for each new and expanded atrocity.
 
But what we suspect disturbs us most is the horrible, enigmatic truth that swirls at the vortex of the tale. It's something about the human animal either deep in our DNA and attributable to a brutal, prehistoric past, or, much worse, an ignominious, bad person gene we'd like to believe doesn't exist. It's precisely the perversity that has us so freaked out about the current situation in Washington ... the total disconnect from, and abandonment of, propriety and the nobility of truth.
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