Fixed and fixed indexed annuities vs. other financial instruments

Simple table comparing most important features everyone should consider:

FIXED AND FIXED INDEX ANNUITIES VS. OTHER FINANCIAL INSTRUMENTS
Feature	Annuity	CD	Taxable Bond	Municipal Bond	Stocks, Mutual Funds	Money Market
Free from market risk. Principal and interest protection.	Y	Y	N	N	N	N
Earnings free from current taxation while in instrument	Y	N	N	Y4	N5	N5
Interest earnings reinvested automatically with no current income taxation	Y	N	N	N	N	N
Ability to make additional deposits	Y1	N	N	N	Y	Y
Tax liability on Social Security income eliminated on deferred accumulation	Y	N	N	N	N3	N3
Liquid	Y	Y	Y	Y	Y	Y
Flexible	Y	Y	Y	Y	Y	Y
Penalty Free Withdrawals	Y	N	Y3	Y3	Y3	Y3
Funds not reduced by commissions	Y	Y	N	N	N	Y
Probate Avoidance	Y	N	N	N	N	N
Guaranteed lifetime income with tax benefits	Y	N	N	N	N	N
Totals	11	4	3	4	4	5
1 Tax-Deferred Annuity is a Flexible Premium Deferred Annuity versus a Single Premium   Deferred Annuity, additional deposits are allowed. 2 Some tax deferral can take place to the extent that capital gains take place.  Dividend income and capital gain distributions are taxable, and cause tax liability to Social Security income in certain circumstances. 3 Sales commissions and/or market risk losses may occur. 4 Interest from qualified municipal bonds is usually save in a taxable account, thus   diluting, degree of taxation does occur and the effect of compounding is reduced. 5 Capital gains taxation may occur.

Ask Suze: What's wrong with annuities?

Suze Orman, and her take on annuities.

CNBC panel on fixed indexed annuites.

Here at Retirement M.D. we share same views, and we strongly believe in potential of fixed and fixed indexed annuities (single or flexible premium deferred). One approach many people have used is the benefits provided by annuities. Annuities are safe and secure and out of the reach of an unexpected event.

Fixed and fixed indexed annuities also provide: 

• Guaranteed income 
• Guaranteed rate of return 
• Avoidance of probate 
• Protection from risk of loss 
• And more...

Fox Business Video - Safe Money for Retirement

Please watch this video to learn safe money retirement strategies from the Fox Business Network.

with questions or concerns.

Protect retirement savings with FIA's Annual Reset.

Annuities are excellent long term products to save for retirement or just to grow your savings. They offer many benefits, such us protection of principal and credited interest, possibility of income stream you can not outlive, or tax deferral. Different annuities have different ways to earn interest. For example fixed index annuities (FIAs) offer interest credit based on changes in a market index (S&P 500, Nasdaq-100, just to name a few), furthermore they offer annual reset feature, which is very often overlooked by potential clients and advisors. FIA with annual reset will perform much better than those annuities or other products without this feature. Simply put, annual reset protects your principal and interest when market is heading down. Your FIA won't suffer losses in value due to market downturns. This is very important a specially when you are retired or close to retirement, because there is no time to makeup losses when you need to start your income.

Last decade was an example of turmoil which wiped-out significant portion of retirement savings. If you were lucky, you probably have same what you have started with in 2001. Many retirees found themselves in difficult situation with limited income base, and worry of outliving their resources in golden age. Good news is, that you still can secure your income and even possibly increase it each and every year (get connected, and find out how). With unstable economy, uncertain future of medicare and social security it is crucial to protect retirement savings, and at the same time position it for possibility of healthy gains. This is where annual reset plays major role.

Let's take a look on hypothetical example. Fixed indexed annuity (FIA) with annual reset, initial deposit of $100,000 was purchased (please see chart below representing last decade 2001-2011). Current FIA's value marked  (yellow line). Market index S&P 500 marked (red line) representing actual index values throughout the decade. S&P 500 index is used as a benchmark to determinate each contract year's interest. Please note the values of of the index at the beginning and end of each year. In the first three years the S&P 500 was down and your savings allocated on the market plunge about 40% in the lowest point. It took another 3.5 years just to regain losses and get to initial $100,000. At the same three first years FIA's annual reset protected your savings. It didn't earned interest, it also didn't lose value. Your retirement income base was protected in case that was a time to retired. In the next five years S&P 500 values increased and FIA was credited with interest. And again in year ninth S&P 500 was down losing all gains and shrinking principal, while FIA kept its value. Annual reset allows for growth when market index is up, and protects your principal and interest when index is down.

Click on chart to enlarge


Using historical data for S&P 500 1/1/2001-1/1/2011 and assuming hypothetical FIA with annual point to point crediting method and 4% annual cap.  

In summary, S&P 500 does not have to make up previous losses in order for FIA to earn interest. Each contract year, S&P 500 ending value becomes next years FIA's starting value. 

with questions or concerns.

Ten Signs The Double-Dip Recession Has Begun.

We are living in interesting times. Today like never before you should pay attention to all the news and reports in order not to only grow your retirement and savings, but most important to protect what you already have. Here are a set of interesting facts you need to know. Take your time, read this article and answer for yourself. What's ahead?

Ten Signs The Double-Dip Recession Has Begun - 24/7 Wall St.

With all the uncertainty, here are some alternatives so you may enjoy your retirement worry free.
If you are like me, concerned about your financial future, you will enjoy these benefits fixed and fixed index annuities may provide:

-Protection of principal and interest with guarantees that protect your money from losses  associated with a market downturn.

-Guaranteed minimum rate of return.

-Competitive rate of return. 

-Advantage of potential growth from indexed interest based on growth in a market index.

-Generous bonus on money received in the first few years.

-Opportunities for income increases each and every year.

-Never ending reliable income for life.

-Annual reset.

-Probate avoidance.

-Stretch IRA's tax free to heirs. 

-Benefit from tax deferral and a death benefit.

These are just a few of the benefits you can achieve when you consider fixed or fixed index annuity as an important part of your overall long-term financial strategy.

When it comes to your financial future, you may have much less to worry about than you think. 

Month of May is Disability Insurance Awareness Month. Win $500 and protect your Paycheck.

Could you use an extra $500? I’m affiliated with the LIFE Foundation, a nonprofit insurance education group that is sponsoring the “This Moment Made Possible by My Paycheck” Photo Contest during May, and the person who submits the best photo will win $500. Entering is simple: Find or snap a photo that captures a moment in your life that was made possible by your paycheck and add a few words describing it. It can be a simple moment, like spending time at home with your family or perhaps a shot of a great vacation you took.

But why all the attention on your paycheck? Well, many people don’t realize that just as they protect their cars and their homes with insurance, they need to be insuring another valuable asset—their paycheck. That’s where disability insurance comes in: Think of it as insurance for your paycheck. It ensures that if you are unable to work because of illness or injury, you will continue to receive an income, enabling you to make ends meet until you’re able to return to work.

To enter the “This Moment Made Possible by My Paycheck” Photo Contest, go to www.protectyourpaycheck.org. Entries must be submitted during May, which is Disability Insurance Awareness Month.

Here’s hoping that you win the contest! The chances of becoming disabled are much greater than you might think. to make sure your insurance needs are up to date. 

President Obama on Annuities.

Here are very interesting articles. I think they worth of sharing with you. What president Obama and his administration think, and how they view the future role of annuities. As always  with your questions.

1 Your Money - The Unloved Annuity Gets a Hug From Obama - NYTimes.com

2 Retiree Annuities May Be Promoted by Obama Aides (Update2) - Bloomberg

3 Obama and Annuities . . . The news might be better than you think

4 Obama administration will promote the use of annuities to fund ...

5 Obama and the Future of Annuities - Annuities - Agent's Sales Journal

Putting Business Dollars to Work for You and Your Family.

As a business owner, you know where the buck

stops. Now, see where it can start working for you

and your family.

Qualified Retirement Plans

These plans can create benefits for your

business and family while building values in

your retirement fund.

Estate Planning

Your business is a large part of your estate. It

makes sense to implement a sound plan for the

distribution of that estate in the most efficient

and tax advantaged manor.

Split Dollar Life Insurance

This plan enables you, as the business owner,

to purchase needed life insurance for a lower

cash outlay. Premiums, death benefits and cash

values can be split with your business, and your

business can recover its share of the premiums

from the policy’s death benefit.

Putting Business Dollars to Work

for You and Your Business.

If the unexpected happens, who’s going to run your business? A thorough business succession plan can ensure that retirement, death or disability won’t force your family to sell or liquidate your business. By planning now, you can make sure you and your family will receive the full value of your life’s work.

Buy-Sell Funding

Life insurance can provide the funds to support your

business succession plans and protect your business’ financial security after your death. Critical iIllness insurance can help ensure a smooth transition if you’re diagnosed with cancer, heart attack or stroke and unable to continue running your business.

Business Loan Insurance

You can use life insurance to cover your business debts and allow your family to assume a debt-free business should you die unexpectedly.

Key Employee Insurance

You depend on your key employees. Chances are they contributed to the success of your business. If one dies, life insurance owned by your business can help cover the cost of finding and training a replacement.

Business Overhead Expense

As a working business owner, your disability could

reduce your business’ cash flow. This insurance plan can provide money to help cover normal operating expenses if you can’t work due to a covered illness or injury.

Retirement Distribution Planning Strategies.

When you retire, do you know how and when you’ll receive payouts from your retirement plans? To assure that you don’t run out of money in retirement and that your heirs receive the assets you want them to when you die, you need a distribution plan.
Distribution planning can dramatically increase the benefits you receive from an IRA or company retirement plan. A solid plan allows you to take full advantage of tax saving opportunities while keeping the flexibility to take payouts whenever you need to. Good planning can also lower income and estate taxes. Get connected to learn more.

Did Your Savings Take A Hit When The Market Dipped?

Are you looking for some relief from the drama associated with market volatility?

If you are like many people today, when you thinking about the future, you may have concerns about predictability of the market, increasing longevity, the eroding effect inflation can have on your purchasing power, and possibility of outliving your assets during retirement.

If you share these concerns, please  fill out the simple form to the right and we will show you product choices that can help you overcome them.

These choices include products and riders from an  A and A+ rated companies that offer guaranteed interest during accumulation, income payments during distribution that can increase (and will never decrease), and income payments guaranteed to last as long as you live. Further more you can:

Protect your principal and interest with guarantees that protect your money from losses associated with a market downturn

Take advantage of potential growth from indexed interest based on growth in a market index

Enjoy bonus on premium received in the first few years

Have opportunities for income increases each and every year

Have reliable income for life

Benefit from tax deferral and a death benefit.

These are just a few of the benefits you can realize when you consider fixed or fixed indexed annuity as an important part of your overall long-term financial strategy.

When it comes to your financial future, you may have much less to worry about than you think. Get connected today to learn more about the entire line of solutions.

Need to boost retirement income...?

Need to boost retirement income? Consider one of the newest Fixed Indexed Annuities and receive generous bonus with new contract, guaranteed 8% annual simple interest credited to your simple withdrawal value while in deferral. When you are ready to start income stream, between ages 50 and 90, you will receive certain percentage of your total withdrawal value based on current age for as long as you live. Depends on option you choose, your income may increase every year. For the life of the contract, your principal and credited interest is protected against market volatility.

Could long-term care short circuit your retirement income security?

Americans are living longer than ever before.

Well into retirement, we are traveling, gardening, or just running to keep up with grand kids.

In fact, 70% of individuals age 65 or older will need some type of long-term care.1

Whether it's temporary or permanent, it could devastate our future and our retirement income security.

There are national averages of long-term care costs:

• Nursing home, semiprivate room: $181 per day, or $66,065 per year.1
• Nursing home private room: $205 per day, or 74,825 per year,1
• Home health aide: $25 per hour.1

Preparing for potential need for long-term care makes sense, especially if you can help protect your existing assets at the same time. Your loved once will also appreciate your preparations.

1Cost as of 2007. U.S. Department of Health and Human Services-National Clearinghouse for LTC Information, www.longtermcare.gov 03/26/2008

Today I met (for purpose of this blog I call her 'Mary'). Mary, healthy 65 year old nonsmoker is enjoying retirement. She set aside $300,000 in the cash portion of her retirement portfolio in case she should ever need long-term care. After talking with Mary she moved $105,000 into single premium product and freed up the remaining $195,000 to seek further growth. Now, Mary's prepared for three possibilities, all of which are guaranteed... in case of long term she will have more than $500,000 for LTC related expenses, more than $200,000 in case of unexpected death, and at any time Mary may request return of her initial payment of $105,000 no question ask just in case she will change her mind.