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Why is Laddering a Smart Strategy For Your Finances?

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Here’s how laddering works. This strategy is based on the investment principle that the longer you commit your money, the higher your rate of return will be.

For instance, A 5 year CD pays more than a 1 year CD. A ten year surrender annuity pays more than a five year.But you don’t want to tie up all your money for a long period in case you need that money. Or maybe interest rates rise and you could get a better return elsewhere. Laddering is a strategy where you split your money between, for instance, 5 and 10 year surrender period annuities. This allows you to earn the higher rate for longer periods with the 10 year annuity, but still get the benefit of liquidity beginning in year 5. This money could be used as income or reinvested again at a higher rate.

The ladder concept has been used for years with CDs and bonds. And now it also works well with annuities.These are complex issues and terms change regularly.

Give us a call to find out how this laddering strategy could work for you.

(719) 597-2179

 

What Can Indexed Annuities Do For You?

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A fixed index annuity is a contract between you and an insurance company that may help you reach your long-term financial goals. In exchange for your premium payment, the insurance company provides you with income, either starting immediately or at some time in the future.

Most fixed index annuities have two phases. First, there’s an accumulation phase, during which you let your money earn interest. This is followed by a distribution or payout phase, during which you receive money from your annuity. Your annuity can earn a fixed rate of interest that is guaranteed by the insurance company or an interest rate based on the growth of an external index.

With a fixed index annuity, you defer paying taxes on your contract’s interest until you receive money from the contract. This tax deferred growth in your asset can really add up. These annuities provide for additional growth in value by sharing in stock market growth, often without market risk. Fixed index annuities vary in their benefits depending on the company offering them.

To understand which fixed index annuity may be right for you, give us a call today.

(719) 597-2179

 

How Can You Plan For Long-Term Care?

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Statistics say there is a seventy percent chance that you or your spouse will experience a need for long-term care! Long-term care includes a range of services and supports you may need to meet your personal care needs.

Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (or ADLs). These include Bathing, Dressing, Using the toilet, Transferring to or from bed or chairs, Caring for incontinence, and Eating. Other common long-term care services and supports are assistance with everyday tasks, sometimes called Instrumental Activities of Daily Living (or IADLs). These include Housework, Managing money, Taking medication, Preparing and cleaning up after meals, Shopping for groceries or clothes, Using the telephone or other communication devices, Caring for pets and Responding to emergency alerts such as fire alarms.

The cost of Long-Term care varies with the amount of coverage, length of care, and deductibles. The initial premium level will increase based upon the age at which you apply. Like all insurance, most people wait too long before applying. 1 in 4 who apply between the ages of 60 and69, don’t qualify.

You owe it to yourself and family to know the options and prepare well today. Call us to find out more.

(719) 597-2179

Do You Have to Take Your Required Minimum Distribution?

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You might be thinking, “Since I don’t need the required minimum distribution from my retirement accounts in order to live on, can’t I just leave it in my retirement account?”

If you do not withdraw the required minimum distributions, the IRS will impose a penalty of 50%. Further, after imposing the penalty, you are still required to make the withdrawal. You must make the withdrawals so that you can pay taxes to the government. The remainder of the withdrawal after taxes can be invested with the goal of building wealth outside your IRA.

Let’s discuss strategies to help you invest money both inside and outside of your IRA. Give us a call today.

(719) 597-2179

 

How to Double Your Money

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People often ask us, “How long will it take to double my money?’ You can find the answer with the rule of 72.

Here’s how it works. Compounding interest is the interest you earn on a growing amount of money.) To find out how long it will take your money to double, take the number 72 and divide it by the interest rate earned. This will give you the number of years it will take to double your money.

For instance, If you can earn 6% it will take 12 years to double. This is because 72 divided by 6 equals 12. If you want your money to double in 9 years you would have to earn 8%, because 72 divided by 9 equals 8. This rule gives you a good rule of thumb to find out what interest rate you need to double your money in the time you want, and it’s easy to calculate.

How fast do you want to double your money? Give us a call and we’ll help you get there.

(719) 597-2179

 

How to Set and Keep Financial Goals

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Written goals are your road map to financial success. Be specific, simple, and realistic and include time frames and dollar amounts. Have some big goals and some small ones.

Include a savings plan and an emergency fund. Pay off high-interest debt and control the amount of your debt. Then, take action to achieve your goals. Review your goals often and remember it takes time to achieve goals so be patient. Without a plan, your path waivers and valuable time is lost.

So don’t wait. Let us help you create an investment plan for your future today.

(719) 597-2179

What’s the Difference Between a Will and a Living Trust?

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A “Living Trust” is a trust you created that is active while you are alive versus a Testamentary Trust which becomes active at your death. When you create a Living Trust, you ensure that your assets will be disbursed efficiently to the people you choose after your death.

The big advantage to a Living Trust is that the trust doesn’t have to go through probate court like a will does. Probate can be expensive in attorney and court costs while also causing long and frustrating delays. A Living trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can even act as your own Trustee if you’d like.

When you create a trust, the titling of assets is changed into the trust’s name, as if it was a living entity. Specific details of your wishes upon death can be provided for in the trust. But not everyone needs a trust. Transfer of assets at death may be handled through a beneficiary designation on some holdings and investments. If you’re using beneficiary designations, make sure all your paperwork is up to date. For instance, if you get divorced, be sure to remove your ex-spouse as a beneficiary.

For more information about how to plan well for your family’s future, give us a call today. (719) 597-2179

 

What is an Annuity and How Does It Guarantee Income?

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What are annuities and how do they work? Annuities are both a savings and an income investment that pays out over a period of time.

It’s actually a steam of income you can’t outlive. An annuity is a flexible insurance contract that allows retirement savings to grow income tax deferred and then payout to you in a lump sum, income for life, or income for a certain period of time.

There are two basic types: Fixed and Variable. The Fixed Annuity earns a set yield and payout set by the contract. The Variable Annuity is invested in stocks and bonds. The growth value and potential income stream will depend on the investment returns and losses could occur. In both annuities the growth is income tax deferred and the contract terms control growth and income.

In today’s market there has been a blending in the qualities of these two kinds of annuities to generate the best return for investors yet maintain the guarantees needed in retirement. There are a lot of choices and your personal situation needs to be considered.

We can help you develop a plan to meet your specific needs towards a comfortable retirement, so please give us a call today.

(719) 597-2179

How To Strategize For Your Social Security Benefits

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As life expectancy has grown, your retirement now can last between 20 and 30 years. So Social Security planning is critical, no matter how much money you have. It can make a difference of hundreds of thousands of dollars.

For example, if you retire at age 62 and pass away at age 86, you’ll receive at least 25% less for 24 years. But, if you wait to retire at age 70, you’ll receive 32% more for 16 years. If your retirement income at age 66 was $2,000 per month, this could be a difference of over $200,000 during your lifetime. Arriving at a decision on when to retire is not easy. If you retire early, it could affect your spouse’s benefits. And wages and other taxable income could cause up to 85% of your Social Security benefits to be exposed to income taxes.

Proper planning takes all of these factors into account to determine a Social Security strategy. For instance, a repositioning of assets could reduce taxable income and provide for more reliable monthly income. With over 500 different combinations of factors affecting benefits, it makes sense to talk to a financial advisor and get it right.

(719) 597-2179

How Are Your Social Security Benefits Calculated?

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We all think we know the basics about Social Security, but do we really know how different the benefits can be?

The standard retirement age is between 65 and 67, depending on your birthday. Your monthly income, also called your PIA, is determined by your highest 35 years of indexed earnings. You can start taking benefits as early as age 62, but your monthly income will be reduced by at least 25%.

Say your full retirement age is exactly 66 years old, then you can delay until age 70 and your monthly income will be 32% higher. Your strategy needs to be based upon a number of factors: how much retirement income you need, other sources of income, income taxes and your general health condition. Other factors also weigh in, like survivor needs, divorce, dependent children, and available liquid assets.

Proper planning requires attention to all these details. Give us a call today for help with planning your Social Security strategies.

(719) 597-2179