Income Planning

 

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For even the most financially literate individual, planning for retirement can be a very challenging undertaking. The days of relying solely on your pension and Social Security benefit to satisfy your income needs during retirement are long gone. In today’s economic climate, historically low interest rates coupled with high market volatility rates have made planning for retirement difficult and more important than ever.

One of the most difficult aspects of retirement planning is the mental shift it requires. Prior to retirement, your financial life was dictated by an earning and saving paradigm. Once you retire, however, you will no longer be earning a paycheck you can save which means you will need to generate an income through other sources.

A crucial first step toward helping ensure adequate funding throughout your retirement is understanding that having retirement savings is not the same thing as having retirement income. Saving for retirement is what you have spent most of your working life doing, but now is the time to begin using those savings to create the retirement income you’ll need. This can represent both an incredible investment and mental challenge and is a process that can be made much easier by enlisting the services of a financial professional.

Our firm can help you define your retirement goals and evaluate your current financial state. In addition, we can help you design a retirement plan capable of generating, in a reliable and sustainable manner, the income you need.

You’ve spent your life working hard for your money and now is the time to let us help you make it work hard for you!

Fixed index annuities provide the guarantees of fixed annuities, combined with the opportunity to earn interest based on changes in an external market index. But because you’re not actually participating in the market, the money in your annuity (your “principal”) is not at risk.

A fixed index annuity may be a good choice if you want the opportunity for accumulation, but don’t want to risk losing money in the market.

Fixed index annuities can offer:

  • Principal protection
  • Tax-deferred growth
  • One or more index allocation options
  • A choice of crediting methods
  • Income options, including income for life
  • Death benefit options
  • Optional benefits that may help protect your retirement assets and income

How do fixed index annuities work?

  • You give the insurance company money in one or more payments.
  • The insurance company then invests it on behalf of all annuity owners.
  • During the accumulation phase, your annuity will earn a fixed rate of interest that is guaranteed by the insurance company.
  • You defer paying taxes on your contract’s interest until you receive money from the contract. Tax-deferred interest means the money in your contract can grow faster.
  • After a period of time specified by your contract, you may then receive the amount allowed by your contract in a lump sum, over a set period of time, or as income for the rest of your life. This is known as the distribution phase.
  • You can also choose a guaranteed lifetime income option that allows you, or you and your spouse, to have a lifetime income based on a higher amount than the cash value of the annuity.

*Annuities are designed to be long-term investments. Early withdrawals may impact annuity cash values and death benefits. Taxes are payable upon withdrawal of funds. An additional 10% IRS penalty may apply to withdrawals prior to age 59 ½. Annuities are not guaranteed by FDIC or any other governmental agency. Guarantees are based on the claims paying ability of the issuing insurance company. Fixed Indexed Annuities are insurance products and not considered a security or investment. Some restrictions may apply. Call for specific details and availability.

Life insurance may provide unique solutions for retirement income planning.

Many people fail to think of life insurance as a means of providing income in retirement. Most envision life insurance as something that will not benefit them directly, but will instead help their beneficiaries and provide protection of their assets after they pass away. However, for many Americans thinking about their retirement, using cash value life insurance as a tool to build wealth and provide tax diversification is becoming increasingly popular.

One major reason is because of the potential tax advantages that may come with a life insurance policy with cash value. Life insurance policies with a cash value typically allow the cash value to grow in a tax-deferred manner, similar to a 401(k) or an IRA. The cash value component of life insurance allows the policyholder to accrue funds in the policy’s cash value that can be used as a living benefit. Utilizing a life insurance product that provides both a death benefit and a cash accumulation component, a policyholder funds their policy with their monthly premium payments, and the policy’s cash value typically grows tax-deferred. If the policyholder has maxed out their contributions in other investment vehicles, such as 401(k)s or IRAs, or is looking for ways to minimize taxation in retirement, a life insurance policy can serve as an excellent vehicle to supplement retirement income and obtain potential tax advantages.

There are a number of scenarios in which a life insurance policy with a cash value can be a great way to have access to funds while minimizing the potential tax liability. For example, a client is seeking $15,000 for typical retirement expenses. The client obtained a life insurance policy and over time accumulated $50,000 in the policy’s cash value. The client might choose to withdraw the $15,000 from their life insurance policy’s cash value since the funds may not be considered taxable income in some circumstances. In contrast, if the owner had withdrawn the funds from an IRA, the funds may be considered taxable income. Also, since the IRA withdrawal may be considered taxable income, the client may need to be determine if the withdrawal caused them to move into a higher tax bracket than they would have been in prior to the withdrawal. Additionally, if the client is in the 25 percent federal tax bracket, they may need to withdraw $20,000 from their IRA in order to receive the $15,000 they were seeking. It is important to consider the impact that any withdrawals from a life insurance policy will have on the policy’s death benefit, cash value, features, and taxation, and to also make sure to speak with a qualified professional before making any decisions regarding withdrawals from a life insurance policy.

In addition, withdrawing from a life insurance policy’s cash value for typical life expenses may also enable a retiree to defer taking their Social Security benefit until they are slightly older. Waiting to take their Social Security benefit may increase their monthly benefit once they do decide to begin taking Social Security benefits.

Verble Estate Preservation & Advisors, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency. This content is for informational purposes only and should not be used to make any financial decisions. Life insurance is an insurance product and is subject to state insurance laws and regulations. The above is for informational purposes only and is not, and should not be construed as, advice or a recommendation. The above information is not legal, tax, or accounting advice and you should consult an appropriate professional regarding tax, legal, or accounting advice. It is important to consider the impact that any withdrawals or loans from a life insurance policy will have on the policy’s death benefit, cash value, and other features prior to making such election. Withdrawals from a life insurance policy that are more than the investment in the policy, or cost basis, may be taxable. It is recommended that you speak to a qualified professional before taking a withdrawal or loan from a life insurance policy. In some instances, an unpaid loan on a life insurance policy could cause the policy to lapse.

Perhaps the most impactful piece of retirement planning is determining your current and future tax liability and developing strategies to minimize the amount of taxes you pay in retirement. Tax planning can have a large impact on the amount of wealth you will be able to transfer to your heirs. We will help ensure that your retirement plan takes full advantage of available tax credits and deductions to help certify you and your heirs are maximizing wealth for generations to come.

Verble Estate Preservation & Advisors, LLC has a strategic alliance with Stovall & Associates, Ltd.; utilizing their team of CPA’s to provide tax planning, preparation and filing services for our clients. Our clients receive proactive advice on tax reduction strategies based on income, expenses, individual needs, and goals. Proactive tax planning allows our clients the opportunity to minimize tax burdens and build a solid foundation of tax reduction strategies that can result in years of tax savings.

Throughout the year, Stovall & Associates, Ltd., will monitor tax law changes that could affect our clients, recommending tax savings strategies as well as serving as your advocate in tax matters. Our client’s tax returns are prepared to take advantage of all the deductions, credits, and exclusions allowed to minimize your tax burden.

Based on this strategic alliance, we will implement a sound, well-thought-out financial strategy to minimize year-to-year tax liabilities and provide the opportunity to maintain your current standard of living throughout retirement.

Tax Planning services

  • CPA prepared Roth conversion analysis
  • CPA prepared 2nd opinion prior year individual and business tax return reviews
  • CPA prepared year-end tax filing services
  • 1040 tax optimization reports
  • Personalized tax reduction reports

Strategic Alliances

nickNick Stovall, CPA/PFS, Stovall & Associates, Ltd.

Founder and President for Stovall & Associates, Ltd., Certified Public Accountants

Nick Stovall is at the forefront in accounting; strategic retirement planning; business, IRA and technical taxation; tax law and policy; and investing. With his extensive knowledge and background, Stovall also wrote “The Future of Taxation: And How to Prepare.” Stovall has been featured on national media outlets including The Wall Street Journal’s MarketWatch, Investment News, Financial Planning Magazine, Bloomberg and numerous radio broadcasts. In January 2010, after two decades of public accounting and C-level private industry experience, he founded what is now Stovall and Associates, Ltd., an independent certified public accounting firm located in Minnesota. As owner, president, and chief tax strategist for the company, Stovall provides an invaluable perspective on the intricate relationships between tax and business issues to clients across the United States and Europe.

Michael Verble does not offer tax planning services, but has a strategic alliance with Stovall & Associates, Ltd., to provide account and tax services.

5 Important Social Security Questions You Should Know

 

For many retirees, Social Security benefits form the foundation of their retirement income. In order to make sure you get the most out of your benefits, you should have a solid grasp on this complex matter.

We have put together an informative brochure that helps answer the following questions:

  1. What is your Social Security amount?
  2. When is the best time to start taking your Social Security benefit?
  3. Are there different options if you are married?
  4. Does earning additional income while you are on Social Security impact the value of your benefit?
  5. Do you pay tax on your Social Security benefit?

Please contact us to receive your complimentary Social Security Maximization Report!

Your Social Security retirement benefit represents a lifetime’s worth of savings, time and work, and is most likely your oldest and largest retirement account. Although many Americans are familiar with the basics of Social Security, very few are able to figure out – on their own – exactly the best way to file so they can get the most out of all they have put in.

At Verble Estate Preservation & Advisors, LLC, we help our clients understand their Social Security benefits and educate them on how they can maximize their benefits. Delaying filing for Social Security can potentially increase your benefit amount each year you wait.*

There is a lot to know about Social Security, and the more you know, the better decisions you can make, helping to bring you that much closer to maximizing your benefit. We will help you get the most you can out of your benefit, so you can take one step closer towards the comfortable and happy retirement you have worked so hard for!

Verble Estate Preservation & Advisors, LLC and Michael Verble are not affiliated with or endorsed by the Social Security Administration or any government agency. This content is for informational purposes only and should not be used to make any financial decisions.

*https://www.ssa.gov/pubs/EN-05-10147.pdf