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MINIMIZE Taxes, MAXIMIZE Income

Have you ever wondered if it’s possible to limit withdrawals from your investment accounts and stay in the lowest tax bracket possible while still reaching a specific retirement income goal?  Well it is…. and this quick video shows you how!

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I DON’T LOSE WHEN THE MARKET IS BAD? Tell me more….

Untitled-10I wonder how many people truly understand an Indexing Strategy in  an insurance based environment?

We’ve all been educated about Indexing Strategies in mutual funds, ETF’s and so on. But as a rule,   people have very little knowledge when it comes   to insurance indexing strategies—yet they do exist.  What’s more, the money in these assets grows tax free—like a 401 (k) – and can be accessed through policy loans, thus avoiding income taxes and allowing constant liquidity throughout the life of the assets.

So what exactly is an Indexing Strategy in an insurance based environment?  This kind of strategy has two key components:  a CAP or limit as to how much you can earn when the market is good and a protective floor of ZERO when the market is not good.  How is this different to the S&P Index?  The S&P Index spreads the investments evenly between 500 different stock companies. There’s no cap, so it lets you keep all the gains when the market is good, but  when the market is bad, you suffer the loss.

Now look at the chart below. This illustrates how a total of $100,000 would have performed  during the period 1998-2015 based on these two strategies. The top line of the graph represents the Insurance Indexing Strategy: you can see that in the years where the market loses money, you’re protected from losses due to the floor which protects principle.  The same doesn’t apply if you’re invested in the market—where you’re subject to the lows as well as the highs of the S&P 500 Index.  You can see that over time your assets in the Indexed Strategy are protected from loss  and have the potential for substantial growth. Over the 17 year period 1998-2015, the total yield of the Indexing Strategy was 114.9% with an effective yield of 6.75% compared to the total yield of the S&P 500 Index which ended at 83% (effective yield 4.88%).

As a point of note a Nominal yield is what one makes on an annual basis (Bank paying 1 % annually on a CD is a nominal yield).  An  Effective yield:  what one earns over a period of time greater than one year (for example, earnings of 5% in Year 1, 7%  in Year 2 and 12% in Year 3 gives an effective yield of 24% over 3 years).Updated Annuity Graph - May 2016

Over the 17 year period 1998-2015, the effective yield of the Indexing Strategy was 6.75%  while the effective yield of the S&P 500 Index was 4.88%

For more information on how an Indexing Strategy works and how you can incorporate into your portfolio, call Barry Goldwater at 617-527-9736 or email at barry@goldwaterfinancial.com

DISCLAIMER:  This graph is based on actual credited rates shown on the Index-5 product which is no longer available for sale.  Past performance is no guarantee of future performance and  should not be relied upon as such.
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Deferring Retirement Income with a QLAC

 

To find out more about deferring retirement income with a QLAC check out our QLAC Bulletin HERE or contact us at (617) 527-9736.

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Why Annuities are Gaining in Popularity

JigsawWe’re hearing more and more about indexed annuities in an insurance based environment and their increasing popularity when it comes to retirement planning, Yet naysayers are quick to decry them with arguments such as “what does minimum guarantee really mean?”, “too complex”, “limited earnings because of the CAP” and—my particular favorite—”beware of agent bonuses”.

But when it comes down to it, it’s difficult to argue with hard numbers and proven results.

So what exactly is an Indexing Strategy in an insurance based environment? This kind of strategy has two key components: a CAP or limit as to how much you can earn when the market is good and a protective floor of ZERO when the market is not good. How is this different to the S&P Index?  The S&P Index spreads the investments evenly between 500 different stock companies. There’s no cap, so it lets you keep all the gains when the market is good, but when the market is bad, you suffer the loss.

Now look at the chart below: this graph is based on ACTUAL CREDITED RATES for the period shown on a particular product* over the period 1998-2014.  It shows how $100,000 would have performed during this period had it been invested in the S&P (with dividends) and the actual credited rates of the Indexed Strategy.

With the Insurance Indexing Strategy, you can see that in the years when the market loses money, you’re protected from losses due to fixed zero floor.  The same doesn’t apply if you’re invested in the market.

 When it comes down to it, it’s difficult to argue with the numbers:

IS Graph 300 dpi

*This graph is based on actual credited rates for the period shown on the Index-5 product from American Equity which has since been replaced
 **Past performance is no guarantee of future performance and should not be relied upon as such
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Healthcare Costs in Retirement

Infographic 7 - Medical Realities - low res

 Medical Realities & Your Financial Assets

As we all live longer lives, we are all at a higher risk for a serious illness than we think. These statistics tell a scary story and healthcare costs in retirement are becoming a major concern. Make sure your financial assets are protected against tomorrow’s medical realities…