A lot has happened in 2020, from the novel coronavirus and its effects on the economy to Congress adding trillions to the national debt for economic relief. Many financial advisors see the situation now as a major opportunity for tax planning.

Recent market drops allow them to take advantage of reduced retirement account balances and to do Roth conversions. Their clients would save on the amount of taxes due, thanks to the lower account balance.

With national debt approaching new highs, advisors believe that an increase in tax rates is inevitable. Not only that, the CARES Act, passed by Congress for coronavirus relief, also put a pause on required minimum distributions for 2020.

For advisors, the opportunity for tax planning is ripe. But on the flip-side, many financial professionals also disagree about how and when is the best time to go about these strategies.

In an article on InvestmentNews.com, many advisors shared their thoughts on how they were coordinating tax strategies for their clients.

In the wake of the coronavirus pandemic, a new study shows that Americans are becoming increasingly anxious about their finances.

Back in April, Fidelity asked 3,062 retired and working-age Americans about their concerns and what they were doing to shore up their confidence gap. In the survey, 60% of Americans said they were concerned about their finances now. Thirty-eight percent were extremely or very concerned, while over twenty percent were just moderately concerned.

Six in 10 (62%) Americans said they worried about job security, with 43% being extremely or very concerned. 51% of baby boomers said they were worried about their finances over the next 6 months. Meanwhile, 69% of millennials and 68% of Gen Xers also shared that concern.

While times change, the need for quality financial guidance doesn't. Many financial advisors do things old-school. Nevertheless, with everything happening right now, that might well be changing.

It may not be the most exciting topic around, but working with a virtual financial advisor can be beneficial in many ways.

You don't have to take time out of your busy schedule to go to an office location. Nor do you have to worry about the logistics of what it would take to make that appointment.

You don't even have to be in the same city as where your financial professional resides. Virtual advisors use communication methods such as videoconferencing, email, the internet, and (for some) even texting to stay in contact with their clients.

If you aren't working with a virtual financial professional yet, here's a look at how it can be beneficial in the short and long run.

If you asked a hundred financial advisors about what they use to construct retirement strategies, you would surely get as many opinions as there are flavors of ice cream.

Many portfolio strategies today call for strategic mixes of equities and bonds. Lots of research is on the so-called 60/40 portfolio, made up of 60% equity assets and 40% bond assets.

The problem is that bonds are particularly vulnerable to interest rate risk, which is the danger of an asset losing value when interest rates rise. And with interest rates sitting at basically zero percent for the foreseeable future, the only direction they can go is up.

This isn't to say that bonds don't have a place in a retirement income strategy. But there is also the flip-side to consider.

Do you really have all options on the table if your advisor leaves annuities out of the conversation? Unlike bonds of any sort, annuities are unique in that life insurers include estimates of people's expected mortality into their payouts.

After we enjoyed the sweet ride of an 11-year bull market, market volatility is back in style now. Where things will go from here is anyone's guess. But even more importantly, what about you and your personal outlook?

How can you take steps to protect what you have accumulated over the years? Can you do anything to help you ride out this wild wave of volatility?

You can, and there are steps you can take right away. If they make sense, some tools and strategies that you might consider could add more stability, predictability, and certainty to your portfolio.

Here are six ideas that you can put to work right now.

If you really think about it, there is risk in almost everything we do. As journalist and economist Allison Schrager has noted, people often manage risk in their lives and careers in surprising ways.

The description of a book that she wrote on risk management says it well: "Whether we realize it or not, we all take risks large and small every day. Even the most cautious among us cannot opt out--the question is always which risks to take, not whether to take them at all."

Now, for retirees, one of the major risks to financial security is sequence risk. What is that?

It's the probability of having losses early in retirement or just before you retire. Financial pundits fondly call this period the "retirement red zone."

Even a 15% loss can throw a retirement plan off track, especially if you are already taking money from your accounts for income. Then it simply compounds the losses.

It's a challenging time for retirees, who now are taking a triple-hit. Never-before-seen market swings are reducing the value of their portfolios. The novel coronavirus pandemic is shutting down many workplaces, which means that workers don't have regular income to save.

Many retirees who are still working were likewise affected. And low interest rates continue to be unfriendly to retirees with fixed-interest holdings.

Meanwhile, Michael Finke, professor of wealth management at The American College of Financial Services, points out another area to keep an eye on: how the pandemic is affecting the probability of success of our retirement plans.

The novel coronavirus pandemic has impacted all of us in some way. Almost overnight, the U.S. was hit hard with record unemployment.
Many household incomes have been abruptly shut off. Several industries have slowed down to a crawl or else been shut off.
Millions of former workers have been forced to dip into their savings accounts in order to pay their monthly bills. Some have even been forced to take distributions from their retirement savings in order to make ends meet.
Of course, there is no question that better days will be ahead at some point. The U.S. economy is strong, and we will emerge all the stronger for it.
Even so, those without the benefit of continuing income from full-time employment or those with a shorter window before retirement may want to take a step back. It’s prudent to take stock of the situation, seeing what they can do to protect themselves. And that can helpful especially if something like this ever happens again.
How can this black-swan event affect seniors and baby boomers nearing retirement? In an April column of the Retirement Income Journal, a former International Monetary Fund official lays out some of the medium-term and long-term possibilities.

Unlike other types of vehicles, annuities are the only financial instrument capable of paying a guaranteed lifetime income. They are the only one on the planet. No individual investor can duplicate what insurance companies can offer you with paying you a guaranteed income stream.

Nor can any other asset class do what annuities do. They have contractual guarantees backing them.

Dollar-for-dollar capital reserve requirements, as well as mortality estimates built into every single payout by the insurance company, makes these income promises quite dependable. In this sense, annuities have a monopoly on lifetime income.

You can choose to receive guaranteed income for a certain timespan. Say you need guaranteed income for just 10 years. Then your guaranteed income can be structured to last for that long. Or you can receive guaranteed income for the rest of your life, regardless of how the markets perform.

With markets in turmoil right now, many retirement savers are looking for ways to protect their money now so they can retire later. And not for just any retirement. They want a comfortable retirement that they can enjoy on their own terms and where they stay retired.

What can you do now to preserve the money you have accumulated and grown for so many years? The answer will be different for every person. It depends largely on their situation, risk tolerance, need for liquidity, and goals.

But one proven solution is a fixed index annuity. Backed by the protection of sturdy, long-time insurance companies, fixed index annuities are a place where you can park your can't-afford-to-lose money and sit tight.

Many people buy annuities for protection. But what kinds of protection can they provide? The answer depends in large part on the kind of annuity you own.

At the very least, all annuities can protect you against the financial risk of running out of money in retirement. Annuities counter this hazard by paying you a guaranteed income. Your income can last for a certain timespan or for life. This protection is available with fixed-type and variable annuities alike.

However, fixed annuities also protect the contract owner against downfalls tied to market risk, long-term care costs, and financial risks that can derail your legacy wishes. Here's a rundown of what an annuity can protect you against in your retirement-saving and post-retirement years.

Recently, Congress passed and President Trump signed into law the "CARES Act." Among policymakers, the bill is known more formally as the Coronavirus Aid, Relief, and Economic Security Act.

Much of the law is aimed at providing economic relief for businesses, but some parts of the act changed IRA and retirement-plan provisions. The bottom-line of it all? Many of these retirement changes can directly affect your ability to access money and bolster your income.

These changes will have a large effect, regardless of whether you are retired or are still working toward your golden years. In a Forbes.com column, Bob Carlson, editor of Retirement Watch newsletter, wrote about some of the most important changes.

Here’s a look at some major changes that might be coming to your retirement, courtesy of the coronavirus economic relief legislation that became effective on March 27th.

In times of wild market swings and low-interest rates from Treasurys, CDs, and other fixed-interest assets, annuities can bring a sense of calm and predictability to a portfolio. Many people refer to annuities as "retirement annuities," because they are particularly well-designed for retirement goals.

Annuities are the only instrument capable of paying you a guaranteed income stream for as long as you live. No other instrument on the planet offers this.

You can think of this in terms of a monthly paycheck or money for life. You will receive a check in the mail from the life insurance company that you can count on, again and again, for the rest of your lifetime.

That is no matter how equity markets perform. Annuity income can therefore be seen as a kind of "private pension."

Speaking in an analogy, you already have your own annuity with Social Security payments. You paid into Social Security's coffers during your career. Then, when retired, you receive a monthly income that pays you like clockwork.

Annuities work in much the same way. They can be a great supplement to the assured income you will receive from your Social Security payouts.

Depending upon your overall goals, annuities can also help you reach your objectives with other contract features as well. Here's a look at why retirement annuities can bring predictability to your lifestyle and stability to your portfolio.

If you have any money in the market, chances are you have heard of recent slumps in U.S. market indexes.

From February 21st to February 28th, the Dow Jones Industrial Average index fell 12.4%. That drop was quickly followed by a couple of record setters in March. The worst drop in three decades came on March 13th.

The Dow fell 10%, its then-worst decline since the 1987 Black Monday market crash. Then, on March 16th, the market indexes had another record-setting drop. The Dow fell 12.9% and the S&P 500 declined 12% in one day, respectively.

On the whole, investor concerns over the novel coronavirus and the oil supply feud between Russia and Saudi Arabia have sent global financial markets into a tailspin. For those on the cusp of retirement, the timing couldn't be worse.

Of course, every market is different. As a result, no one can be 100% sure of what will happen next. Even so, what might retirement investors face in the near future?

The decline has actually taken us into bear territory, which is typically defined a market drop of 20% or greater.

But as Peter Oppenheimer, chief global equity strategist at Goldman Sachs, observes, there hasn't ever been a bear market spurned by a viral outbreak.

“How is politics going to affect my retirement?” It’s a question that is on many retirement savers’ minds, especially as the 2020 election draws closer.

Recently, Global Atlantic Financial Group put out a survey asking people about their thoughts on the presidential election – and what it might mean for market volatility.

Many retirement investors from across the country weighed in. They talked about their expectations for market performance, election effects on their retirement, and what actions they were taking to prepare for any “spillover” from the election.

Here’s a sum-up of what Americans are thinking about the 2020 election, their retirement, and any potential changes to their financial strategy.

People buy annuities for many reasons, from market protection to guaranteed income payouts. After all, an annuity is the only instrument capable of paying a guaranteed income for life. But who guarantees annuities? What sort of safeguards stand behind those guarantees?

The annuity guarantor is, of course, the life insurance company issuing the contract.

By law, life insurance companies must maintain very strict capital reserves for every dollar of fixed annuity premium. State regulators require annuity insurers to keep dollar-for-dollar reserves in coverage for every dollar of fixed annuity premium they hold.

Many life insurance companies hold reserves above this. For example, some insurers have $1.08 in reserve capital for every annuity premium dollar.

Hence, this is what financial pundits mean when they say that a life insurer's ability to make good on their annuity promises depend on that company's financial strength and claims-paying ability.

What about other safeguards if an insurance company has a liquidity problem? There are also other measures that state insurance regulators put in place as a financial safety net.

Let's get more into the details of how insurance companies' financial strength are monitored. We will also cover some of these other safety net features that help back up fixed annuity guarantees to policyholders.

Tune into a financial show on TV or the radio dial, and chances are you have heard it.

The retirement income shortfall among Americans has been a hot topic in the financial advisory community for a long time now. But, surprisingly, what hasn’t received as much attention is the issue of carrying debt into retirement.

It’s a serious matter. More retirees are carrying larger amounts of debt into their non-working years than ever before.. With its rapid pace of growth, this trend is threatening to further disrupt the retirement plans of many seniors.

According to blogger Chris Farrell, the median total consumer debt for retiree-led households (age 65+) was $31,300 in 2016.

That was 250% more than it was in 2001 ($12,250) and nearly 450% more than the level in 1989 ($7,250). Some 60% of senior households carried some of debt, up from 42% in 1992.

Other studies have similar findings. According to one study by researchers at the Ohio State University, among households ages 55-70, some 75% of households had some sort of debt load. That is up from 64% of households in 1989.

As Farrell mentioned on a podcast with NextAvenue: "Over the past ten years -- since the financial crisis -- one thing that is really striking is how much debt consumers have taken on, particularly in the past couple of years. And people over 60 are increasingly comfortable taking on debt."

Annuities have become increasingly popular in recent years. While due to many reasons, two big ones are that annuities pay guaranteed income and provide tax-advantaged growth for your money.

The biggest advantage of their guaranteed payouts? Your income stream doesn't change with political or economic conditions, such as a recession.

The technical definition of an economic recession is two successive quarters of negative economic growth. The National Bureau of Economic Research (NBER) is the body that determines when the U.S. economy is going through a recessionary period.

According to research by NBER and graph data from the Federal Reserve Bank of St. Louis, the United States has been through 17 recessions since 1920.

How is an annuity priced? And why should it matter to you? While you may be exploring an annuity for your retirement, many Americans count on fixed annuity contracts as a safeguard against today’s economic uncertainty.

In many ways, retirees and retirement savers have had a rough go in this ever-changing economic climate. Retired Americans have sought to find choices that pay sufficient regular income for their monthly household needs. Risk-averse savers also have been hit particularly hard, as interest rates still remain near historic lows.

Millions of people have found peace of mind by receiving a lifetime income stream from an annuity contract. This type of payout will guarantee someone a fixed sum of money on a regular basis for as long as he or she lives.

But how can you, the annuitant on the contract, know if you are getting a good deal on the annuity (a fair annuity price) when you buy one for your portfolio? There are several factors that enter into how a life insurance company will price its annuity payouts.

To help you receive the best “bang for your buck,” it’s good to understand how these factors can affect the pricing of annuities by insurance companies -- and the impact on the annuity payout you will receive.

Many working-age Americans have at least some idea of when they want to stop working and sail off into the sunset. But sometimes there can be a major gap between what we plan and what actually happens.
For many workers, one such gap is between the age at which they want to retire and the age at which you discover that you have to retire instead. A surprisingly large percentage of American workers are forced into early retirement for a variety of reasons. Those reasons include job termination, layoffs, personal health issues, or a need to care for elderly parents or other relatives.
Of course, early retirement can come with its own financial headaches. You might need to begin taking Social Security early for a reduced benefit. Or you might have to deal with not having enough savings to last for the rest of your life. Whatever the challenges, it's a period of major adjustment.
Early retirement means that you will have fewer years to save for retirement. You will also have a longer period of time over which you must stretch your money.
What if you plan to work until age 65 or 70? It's wise to create a financial projection of what your retirement will look like if you had to stop working at age 55 or 60.
And don't be surprised if you run into some sort of income shortfall. Not everyone is fully prepared to retire early when forced into retirement. So, to be ready for that possible outcome, you might have to make adjustments to your plan accordingly.

Retirement today isn't the same as your grandparents' or even your parents' retirement. It's a whole new ballgame. Many trends are changing the face and length of retirement as we know it.
Retirees today face the possibility of a much longer retirement lifespan than their predecessors. They also have several issues to contend with that, for the most part, their forebears didn't have as much pressure to address. What are those issues?
Rising health costs, changing definitions of a traditional retirement, increasing costs of living. And, in the present time, an uncertain global landscape and its economic effects. All of this can make retirement tricky to navigate, let alone to enjoy a financially comfortable lifestyle.
Here are a few retirement trends that are likely to change at some point during your post-career years -- and that might affect you in the process:

Annuities can provide retirement savers with many unique benefits: tax-deferred growth, guaranteed lifetime income, guaranteed interest rates, and protection from downside risk, to name a few.
For the most part, the IRS doesn’t have limits on how much money can be placed inside an annuity, giving people more opportunity to take advantage of the contractual guarantees. And if you want more growth potential for your money, fixed annuities and fixed index annuities can earn higher interest while protecting your principal.
However, one limitation that annuities have is their liquidity. Annuity owners give up having complete liquidity in exchange for these benefits, and if their money is in fixed-type annuity contracts, that is a very safe place with the dollar-for-dollar reserves that insurance companies must maintain.
So, are annuities a liquid asset? Yes, they offer some liquidity, but not as much liquidity as you might find in other types of assets in today’s markets. It’s a trade-off for those rock-solid, guaranteed benefits that they provide.
Even so, there are some provisions for liquidity in annuity contracts. You might access your money in a variety of ways: free withdrawals, cumulative free withdrawals, and waivers of surrender charges (where you get your money back in a qualifying situation) are a few.
Let’s talk about the liquidity of annuities in more detail.

One of the chief criticisms of annuities is their relative lack of liquidity. This is true in some respects. Annuity owners give up complete liquidity in exchange for other benefits, including insurer guarantees for lifetime income, guaranteed growth, or protection from downside risk.
Many annuities now come with guaranteed income riders that can be turned off and on while letting you still access at least some principal. And most contracts do offer something called "free withdrawals."

Not everyone thinks this way, but the idea of ‘living forever’ appeals to many people. Or, at least, the thought of living a longer, healthier life.
There can be many upsides to living longer. Think about how you could share more in the lives of loved ones from younger generations. You would have a front-row seat to see exciting developments in technology and medical services.
You might have the chance to witness new history-making events. At the very least, it would give you the opportunity to see the impact of your lifelong legacy.
Over the past century, life expectancy in the United States rose by over 30 years. It's no wonder why financial researchers say that people can spend as much as one-third of their lives in retirement nowadays.
Advances in healthcare, medicine, and technology have led to better management of childhood infectious diseases as well as improvements in healthcare for adults' quality of life. Because of this, people face the prospect of longer retirements and more years that they will have to cover financially than was so in the past.
It's clear that increasing life expectancy has and will continue to have big effects on retirement. Among other goals, the primary challenge is figuring out how much income you will need to sustain your preferred lifestyle over many years.

As another year passes by, more people join the ranks of retirees. Since 2011, roughly 10,000 baby boomers have turned 65 years old each day, according to Pew Research. It predicts that trend to go on until 2029.
From second-act careers to volunteering and entrepreneurship, baby boomers are already reshaping the mold of retirement. And they are bound to keep redefining it, as record-breaking millions are set to leave the workforce.
With a new era of retirement living on the horizon, it’s prudent to take note of our retirement income planning strategies.
Will they provide reliable income streams and financial security for what could well be a decades-long retirement? Do they give a long-term assurance of you being able to enjoy your desired lifestyle? Or when it comes to these goals, does your income strategy have more of a question mark hanging over it?
In their career years, many people work with a financial advisor to build their life savings and plan to continue so in retirement. One notable survey of 200 advisors by investment company Incapital shows how advisors are preparing today’s retirees for the economic uncertainties of tomorrow.
The survey's focus? What retirement assets these financial advisors were using to generate retirement income for their clients.

People are living longer than before, leading many to ask: “How long could my retirement really last?” In generations past, retirement represented a relatively short period of time in most peoples' lives. They would work until they were 60 or 65 and then live perhaps a few more years before passing away.
But this has become a thing of the past. Today, some retirees could live for as long as another 30 years after they finish with their careers. Many of them are now travelling around the world, starting new businesses, or doing charity work.
The answer to this question will depend upon many factors, such as your projected longevity, financial resources, and current health. If you come from a family of long-lived forebearers, then you may have a good chance of living that long yourself. If you smoke or drink heavily, then your lifespan may not last as long as it would if you quit doing those things.
Thanks to advances in medicine, technology, and wellness, people's lifespans are longer than before. The National Vital Statistics Report from the Department of Health and Human Services revealed that the average American's lifespan has increased by 30 years over the past century.

As a new year rolls in, one survey suggests that advisors are optimistic but cautious about what might lie ahead for their clients in an uncertain economy.
InvestmentNews has released the findings of another one of its comprehensive surveys of advisors each year. In November of 2019, the news outlet surveyed 353 advisors about their outlooks and their concerns for the upcoming year.
Most of their outlooks were chiefly optimistic, and in some cases, even moreso than last year's survey. They expect the economic expansion to continue and predict another bullish year for stocks. But they do have some reservations about the possible results of the 2020 election.
About 7 out of 10 advisors think the economy is doing well. Only 54% of advisors felt this way in InvestmentNews's advisor survey in 2019. Meanwhile, a hefty 80% of advisors thought so in the survey from 2018.

It's happened. After a nearly unanimous passage in the U.S. House of Representatives, the SECURE Act (Setting Up Every Community for Retirement Enhancement Act) finally made its way through Congress. The legislation was “attached” to a bipartisan spending bill in the Senate with the goal of avoiding another government shutdown.

The president signed the SECURE Act into law on December 20^th, 2019. With many provisions having gone into effect on January 1st, 2020, it will have big implications for retirement and taxes. As a result, retirees and working-age retirement savers can start seeing major changes as early as 2020.

All of that being said, the SECURE Act brings the most sweeping changes to the U.S. retirement system in a decade. Because of that, there is bound to be some confusion about what the act actually does and how it might affect people’s own retirement standard of living.

Here is a broad overview of some major changes to retirement, taxes, and financial planning that come with the SECURE Act now becoming law.

Calculating how much income you will need for retirement isn’t necessarily an easy task. Your health expenses will probably increase, but your mortgage payments may decrease or stop. Meanwhile, other expenses might continue to change over time.

Of course, you likely won’t have to deal with payroll taxes as much. Chances are you will also see expenses tied to employment, from transportation to a professional wardrobe, decline as well. But other costs may appear in retirement, from pursuing long-sought hobbies to traveling or spending more time with loved ones.

Although you may not even know where to start when trying to estimate how much retirement money you will need, there are a few rules of thumb that you can follow to help get you started.

Uncle Sam can be one of your key partners in your retirement saving. If you have money in a traditional IRA or an employer-sponsored retirement plan, then that money automatically receives tax-deferred status in the eyes of the IRS. Other accounts like SIMPLE IRAs and SEP-IRAs also benefit from this tax-favorable treatment.

Generally, your contributions to those accounts are tax-deductible. The money inside the account grows tax-deferred, or without taxes on the earnings over time, as long as withdrawals aren’t taken.

But you can’t enjoy this tax-deferred growth forever. Required minimum distributions are one way that Uncle Sam ultimately collects his tax dues.

Once you reach age 70.5, the IRS sets required minimum distributions (or RMDs) for you. You will be required to start pulling a certain amount of money out of your traditional IRAs and qualified plan balances every year. The same goes for other kinds of IRAs with pre-tax money status. And this money will be taxed at your top marginal tax bracket, regardless of how long it's been in the account.

There is no capital gains treatment available for traditional IRAs and qualified plans, save for one exception. The sale of company stock held inside a 401(k) plan can be spun off and sold separately under the Net Unrealized Appreciation (NUA) rule.

Retirement planning is, in many ways, a guessing game. You can’t be sure of exactly how long you will live. How much income you will need might not be clear. And you don’t know if you will need long-term care support.

Even so, prudence dictates that we have some roadmap for these unknowns. It’s better to plan for these contingencies. Otherwise, you could wind up in financial trouble at some point in your retirement years.

Here are five financial fails to avoid in retirement so you will be better prepared when you retire.

As the end of the year approaches, now is an excellent time for you to schedule a meeting with your financial advisor. An annual review of your financial situation is an ideal reason to come together.

Not only can you review the financial progress that you made during the year. Your annual review meeting also provides the opportunity to go over your investment portfolio, insurance coverage, and overall financial plan. It’s a crucial moment to see whether any changes are needed, especially if your circumstances have changed somehow.

Of course, money matters and retirement are a moving target. So, you can also set new goals and update your estate plan if necessary.

All of that being said, if you do have a meeting on the books, you might be unsure of the “ballpark” questions to ask your advisor during your financial review. Below are four questions to help guide your discussion and make the most of your annual review meeting time.

Ah, the holidays… an annual time of food, fellowship, and fun with family, friends, and loved ones. Everyone returns home and catches up on all of the family happenings over the past year.

But the holidays can also be stressful and fast-paced, as people have cookies to bake, presents to wrap, and shopping to do. Not only that, they may have various other year-end projects at home or at work. Those who have lost loved ones or who hurt in other ways might also find these times unbearable, since the holiday season tends to be an emotional period.

Even so, it’s still an ideal time for families to get together and discuss their financial concerns with their loved ones.

Why? Because people usually aren't as preoccupied by work and day-to-day matters at this time of year. The holiday festivities may be one of the few times when everyone is together. There are also many decisions that must be made before the year ends.

Several factors come into play when you plan for your retirement. Your age, longevity, and the returns that you will earn from your retirement portfolio are just a few. In some form or fashion, all of those can play into your target retirement age.

But one frequently overlooked factor is the day that you will stop working. You may think that you will keep working until you are 70. Nevertheless, this is often an overestimation of how long you will stay in the workforce.

The fact is that you will probably not continue to work for as long as you think you will. That might be due either to health factors or the need to care for parents (or maybe other elderly family members).

This factor can substantially impact your retirement plans by either forcing you to forego retirement goals such as traveling and hobbies or live a significantly diminished lifestyle.

As you gear up for retirement, you may have heard of “safe money solutions.” Are they right for you? It’s an important question, especially since retirement planning is more difficult than it's ever been in history.

Past generations could count on company pensions that would pay them every month without fail until they died. But the disappearance of these pensions, coupled with the increase in longevity for retirees, has left many people with more questions than answers.

While Social Security will cover at least some of their expenses, most retirees will have to rely on income from their own investments and savings to make up the difference.

However, what many call a bewildering amount of financial choices in today’s market can leave people feeling frustrated.

According to the Investment Company Institute, nearly 120,000 regulated investment funds are available to retirement savers today. And what about other options? There are more annuities than hedge funds available, which doesn’t even begin to cover the universe of countless other instruments that can be tapped for retirement goals.

All that being said, what if you are looking for some choices that help guard your money and maximize income for retirement? Safe money solutions might be worth a look. And what are they? Generally speaking, a safe money solution:

• Provides some protection for your principal.
• Might pay out retirement income with higher confidence than, say, an equity position might give.
• Offer some growth potential with a guaranteed interest rate or other interest-earning opportunities.

Fixed-type annuities, bonds, and Treasuries are among the asset types that can be called “safe money solutions.” But among all of these, annuities are the only instrument capable of paying out a guaranteed income stream for life.

As you gear up for crucial retirement decisions such as Social Security, you may have heard of “full retirement age.” The Social Security Administration refers to full retirement age as "normal" retirement age. This is the age at which you will receive 100% of your monthly retirement benefit.

But full retirement age isn’t the same for everyone. For those born before 1943, this is age 65. For those born after that year, full retirement age can range from 66 to 67 years old.

This matters for eligible recipients because choosing when they begin receiving benefits is one of the most important retirement decisions that they might make. Making the right choice can make a difference of tens, or even hundreds of thousands of dollars, in the lifetime benefits they are paid.

You can start taking Social Security benefits once you turn 62, but your benefit will be permanently reduced by 30% or more. You will have to wait until you reach your full retirement age to get your full benefit.

And if you delay collecting benefits until after your full retirement age? Then you can increase the amount you receive by about 8% per year until age 70. Waiting to take your benefits at 70 will increase your monthly benefit about one-third more than your regular full benefit.

On October 10, the Social Security Administration officially released the amount of their cost-of-living adjustment for 2020. Almost 70 million Americans will see their Social Security benefits rise by 1.6% next year.

While this raise is less than the 2.8% cost-of-living-adjustment for 2019, it’s still higher than the 1.4% average COLA that participants have received over the past decade. The Senior Citizens League was also spot on with its projection for Social Security next year.

Social Security, a Crucial Retirement Decision

Social Security is one of the best benefits that you can get for retirement. Your monthly payments are guaranteed by the full faith and credit of the U.S. government, which makes this program one of the safest sources of income on earth.

There is also a built-in cost-of-living-adjustment to offset inflation. However, it’s designed to only replace about 40% of pre-retirement income, according to the Social Security Administration. As a result, those who intend to depend solely on this income often find themselves caught financially between a rock and a hard place.

If you are trying to decide when you should start taking Social Security, there are several different factors to consider.

The high cost of healthcare looms as a major factor for retirees to deal with after they stop working. But a recent online survey revealed that things may actually be even worse than what retirees are predicting.

Sponsored by Nationwide Life Insurance Company, the survey was conducted from March through April of 2019. The 1,462 people who were polled were at least 50 years old. This group was a mix of pre-retirees, current retirees, and folks who had been retired for at least 10 years. An additional 516 caregivers were also polled.

The findings? Most of the retirees greatly underestimated their retirement healthcare costs. The majority predicted they would need to spend roughly $7,000 a year on healthcare in retirement. Nationwide estimated the real cost would be closer to $10,739 for the average retiree.

The insurer's health cost estimate was based on the Summary of National Health Expenditures, with reported spending data from the 1960s to 2017.

Once a corporate giant, General Electric Corporation has found itself in a downward spiral in recent years. The former staple of American business has been working to clear some substantial debt off its books.

One of the company’s latest big moves? To reduce debt by freezing its employee pension assets. This means that benefits will not continue to accrue for its employees, even though they continue to work there.

But while this is obviously better than pension termination, where the pension plan is simply dissolved, it marks the latest casualty in the pension landscape in corporate America.

The TSP Modernization Act has finally arrived. With it comes a host of new rules designed to give plan participants more freedom with taking distributions from their TSP accounts.

The new provisions have greatly expanded the withdrawal options that are available to TSP retirement savers under various circumstances. These provisions came into effect on September 15, 2019.

TSP investors haven’t wasted any time in taking advantage of these new rules. There about 5,000 distribution requests in the hopper at the moment.

It’s not clear whether the avalanche of new requests is a show of accumulated demand or just that participants are willing to explore the new rules. But the number of requests is likely to continue at this rate for the foreseeable future.

The act has given the Federal Retirement Thrift Investment Board until November of 2019 to make the necessary changes in order to facilitate the new rules.

While the exact details are still under wraps, Social Security recipients will be pleased to know that their benefits will be receiving a boost in 2020.

Every October, the Social Security Administration releases information regarding Cost-of-Living Adjustments to benefits. This year is no exception. On October 10th, the SSA will be releasing official details regarding the Cost-of-Living Adjustment that applies to 2020 Social Security payouts.

Expect an Social Security Benefits Boost of 1.6%

According to The Senior Citizen League, a nonpartisan group focused on senior issues, Social Security recipients will likely receive a 1.6% boost to their payouts, starting in 2020.

The league tracks data relating to how the SSA calculates its Cost-of-Living Adjustments. It bases their estimate on quarterly movements in the consumer price index for urban wage earners and clerical workers (CPI-W).

Mary Johnson, TSCL's Social Security policy analyst, mentions that this increase will be smaller than prior raises. She said that it “would raise an average retiree benefit by about $23.40 per month, a big drop from the $40.90 that people with that level of benefits received this year."

When it comes to taxes, you can be sure that Uncle Sam will want his share. Retirement tax planning can help you make the most of your money. Tax-wise strategies let you maximize your income and keep more of what you have accumulated over a lifetime of hard work.  

But while Uncle Sam’s tax collections are a certainty, what is less than clear for millions of retirees is their own tax bills. Many don’t know whether they are paying too much in taxes or not – and how, in turn, that affects their retirement income streams.

Fortunately, there are several ways that you can reduce your tax bill after you stop working through the proper use of annuities and IRAs.

The order in which you withdraw your assets can also substantially impact the amount of tax that you will have to pay. Studies have shown that a properly-structured withdrawal schedule can extend the life of an investment portfolio by as many as 6 years in some cases.

Nobel prize winner William Sharpe calls it the “nastiest, hardest problem in finance.” What is that? Decumulation, or the process of building a dependable lifelong income stream from your retirement savings.

It’s no wonder millions of Americans are asking if they will have enough money to retire comfortably. Between rising health costs, multiplying risks, and the real possibility of “lifelong” referring to what can be a very long time, there are multiple priorities to juggle as you build a personal retirement strategy.     

Many Americans worry about whether their life savings and income will last for the rest of their lives, as a recent survey found.

In the poll of 3,119 adults, aged 25-74, the majority of retired individuals (71%) felt confident that their savings and income would last. Meanwhile, just 42% of working-age Americans said they had that confidence.

The survey findings were published by the Alliance for Lifetime Income, a non-profit funded by life insurance carriers and asset managers to educate the public on annuities.

If you are gearing up for retirement, take heed. Here are eight common mistakes that people make when engaging a financial advisor. These blunders occur more than they should, but the good news is they are easily preventable.

Up until this point, you may have worked with a financial advisor in growing the value of your nest egg. With their help, you created a personal investment strategy and built a portfolio to meet your goals.

But with people spending as long as one-third of their lives in retirement, your next phase-of-life requires careful planning as your working years did. This calls for a financial professional who can help you navigate the unique retirement challenges facing you.

Those new trials include the questions of how to convert your portfolio assets into dependable streams of monthly income that last as long as you need them – and how to manage risks that come with decades-long retirement life.

Today, Americans bear more financial responsibility for their retirement than ever.

The days of receiving monthly pension checks are gradually fading. According to Willis Towers Watson, only 16% of Fortune 500 companies were offering pensions to new hires in 2017, down from 59% of firms in 1998.   

Defined-contribution plans like 401(k) accounts are taking their place. And this shift is huge. Now, people must count on them, IRA assets, and personal savings to create income streams that might need to last for a very long time.  

How long? Potentially decades. The Society of Actuaries estimates that among married couples who are 65, there is a 72% chance that one spouse will live to 85. Not just that, one of them has a 45% chance of reaching age 90.

In other words, someone may spend as much as one-third of their life in retirement. In the face of that, how do you ensure your nest egg lasts for the rest of your lifetime?

While the answer is different for everyone, a new study offers some fresh insights. The Georgetown University Center for Retirement Initiatives partnered with Willis Towers Watson to explore different ways to generate income in defined-contribution retirement plans.  

Their findings show how various lifetime income options, whether as a combination or as stand-alones, can help retirees better enjoy lifelong financial confidence.

Photo Credit: Reason.com and Soho Forum, Featured in Reason.com podcast, Source Link. Photo is strictly the intellectual property of its owner. All rights reserved.

Millions of retirees depend on Social Security benefits as a major income source. For many people, it's their primary income stream.

According to data from the Social Security Administration, and analysis by the Center on Budget and Policy Priorities, nearly two-thirds of elderly benefits recipients count on Social Security as their major cash income source.

But some news headlines in recent years have stirred public concerns about the program's future. Dour, and even alarmist, news coverage of reports by the program trustees led many onlookers to wonder about the program's solvency.

To help cut through lingering confusion, two economists participated in a public debate, hosted by the Soho Forum. Set up as an Oxford-style debate, the discussion tackled this resolution: "Given Social Security's nearly $3 trillion trust fund, the system cannot add to the federal deficit."

Editor's Note: This article presents some simple ways to strengthen your income confidence in retirement. As you read about how you can make your money last in retirement with different income strategy options at your disposal, check out this debate by two economists on the security of the $3 trillion Social Security trust fund. It's just another personal reminder of how our personal financial security is ultimately up to each of us.

With new swells of Americans turning 65 each day, it’s one of the most-pressing questions in financial planning: How can I make my money last in retirement?

Today’s retirees aren’t just sitting back. As they live longer, they are delving into new opportunities with full steam.

Second-act careers. Entrepreneurship. Volunteering for personal causes. Cross-country tours. Worldwide travel. All of this is breaking the boundaries and redefining how we think of aging.

But the increasing lifespans also bring new trials. Longevity risk and other risk hazards compound with additional years of retirement living.

One of the biggest challenges is creating a dependable stream of monthly income for cash-flow needs. And not just that, but a monthly income stream that you might need to count on for a very long time.

While a one-size-fits-all answer won’t work for everyone, new research tees up some fresh insights on how to make your money last as long as you might need it.

Three retirement experts, hailing from the Stanford Center on Longevity Studies and the Society of Actuaries, completed a study on retirement income strategies. Using a variety of forecasting techniques, they tested nearly 300 strategies in order to see which one would best allow retirement investors to generate income safely and efficiently.

Their findings were aimed at middle-income households – or among investors with some portfolio assets (but not over $1 million in asset values).

If you are approaching retirement, chances are you have been started exploring how you might enjoy a financially confident retired lifestyle.

This includes maximizing the value of your retirement portfolio – and creating dependable income streams that last as long as you need them to.

For retirement investors, one way to solve for this concern is drawing on a lifetime income stream from an annuity. But how appealing are annuities in the face of historically low interest rates? Especially ones such as those we have experienced for the last several years?

Since 2009, in the aftermath of the Great Recession, most developed countries have experienced a low-interest rate environment. Monetary authorities have sought to use low-interest rate schemas in order to spur economic growth and prevent deflation.

The U.S. saw rates cut to effectively 0% until 2016, when they began to inch higher. Still, today, the federal funds rate is only 2.5%, up just half-a-point from this time last year when it measured 2%.

Before you add an annuity to your income strategy, it’s prudent to understand what an annuity does and what it doesn’t do.

Essentially, annuities are insurance contracts. They are built to pay lifelong streams of fixed income, protect money from market losses, or offer tax-deferred money growth.

Indeed, billions of dollars sit in these contracts. A large part of that is due to their popularity for lifetime income, or for higher growth potential than with other low-risk interest-earning vehicles.

Nonetheless, there are still a number of myths and misconceptions about annuities. That might be attributable to a few factors, from annuities being fairly complex to misleading annuity marketing and sales tactics being touted.

This isn’t to say that annuities don’t have a place in a retirement portfolio.

Just like with any other financial vehicle, though, they must have a specified role. That can include solving for particular retirement risks, working in tandem with other parts of a portfolio to reach certain goals, or even simply providing peace of mind with predictable retirement income streams.

Let’s break down some annuity myths and misunderstandings, one-by-one, and learn more about them.

While retirement has many hard-to-predict moving parts, like what your spending might look like, perhaps one of the most difficult questions to answer is this: “How long will you live?”

Thanks to advances in healthcare and technology, people are living longer. According to the Social Security Administration, the statistical average for a 65-year-old man is to age 84. For a 65-year-old woman, it’s 87.

Economists call the possibility of spending decades in retirement a “longevity risk.” Still, keep in mind those numbers are just averages. What someone’s longevity looks like on a personal level will depend on their family history, health status, and lifestyle choices over the years, among other things.

For many people, the uncertainty adds up to financial concern. In one survey, almost two-thirds of surveyed Americans said they worried about running out of money in retirement more than death!

However, if you are to have a Retirement Plan that guides you across the Arc of Retirement, you will need some guestimate of how long you might live. That way you don’t underspend or overspend your financial resources.

Here are five steps to help keep longevity risk at bay and tame the uncertainty.

Sure, you can start your Social Security benefits at age 62. But is it better to claim early or delay benefits until a later date?

While a one-size-fits-all answer doesn’t work for everybody, a new study suggests that ill-timed Social Security strategies are costing Americans dearly.

United Income found that retirees might lose $3.4 trillion in potential income due to timing of when they enroll for their benefits. The research was a joint effort between the fintech company and former top policy officials from the Social Security Administration.

What about the income effect on retirees at a personal level?  On average, each retired household would miss out on $111,000 of lifetime benefits. And for current retirees, premature decisions could add up to collective losses of roughly $2.7 trillion.

That would average out to roughly $67,000 in lost income per household.

“Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man,” Ronald Reagan once famously said.

And the worst time to try to fight this formidable foe is when you are in retirement, living on a fixed income. Many people have some employment, or some involvement with entrepreneurship, for a stream of retirement income.

But chances are they don't offer wage increases, or other inflation-countering benefits that you might have had in your working years, to help you keep pace.

Annuities are one of the few ways to obtain retirement income that is paid out as long as you live, making them a popular component of many retirement plans.

Investors have been using fixed annuities and fixed index annuities to provide lifetime income. These guaranteed income streams cover monthly costs and help people maintain their standard of living.

But if the annuity payout is fixed at the outset of the contract, by design it can’t be increased to keep pace with inflation. Should inflation rise 10% over time, for example, the buying power of a $3,300 monthly annuity payout erodes to $2,970.

This threat has the potential to affect a retiree’s lifestyle and could even require making unwelcome cuts in spending.

So how can investors seeking the benefits of annuities manage this inherent “inflation risk” and offset its impact? These are just a few of the ways.

Having a financial plan is essential for a comfortable lifestyle, whether you are approaching retirement or are already retired. But what if you haven’t prepared yet for retirement?

Should you find yourself procrastinating and not developing a long-term Retirement Plan (“PLAN.xls”), take heed. This can get you into serious trouble over the long run, with your post-work lifestyle possibly taking a hit in one of two ways: by either overspending or underspending.

There is a weird psychology that can cause a retiree to drag their feet on developing a personal financial strategy. They might worry that, if they know too much about how their finances will play out over time, it will either scare them or at least disappoint them as financial reality sets in.

Think of it as a distorted version of the old saying, “What you don’t know can’t hurt you.” So, retirees spend away, figuring that they will worry about it later.

However, in the case of retirement, what you don’t know CAN hurt you. Especially when time isn't on your side, and big financial mistakes are much harder to recover from since you aren't working (or as least as much as you were earlier in your career) and the lifespan clock is ticking.

Whether dealing with overspending or underspending, the irony is that you will carry a heavy burden of worry in either case. But what you are really searching for in retirement is, above all, peace of mind.

Have annuities ever popped up on your retirement-planning radar? You might have come across some annuity contracts with a Market Value Adjustment feature. Several fixed index annuities and multi-year guarantee annuities (MYGAs) include this factor in their contracts.

A market value adjustment (MVA) simply refers to the ability of an insurance carrier to offer you higher rates by protecting itself against bond market declines. When an annuity has a market value adjustment in its contract, it’s called a market value adjusted annuity (or MVA annuity for short).

Normally the insurance company holds the interest-rate risk when you buy a fixed annuity. But an MVA annuity gives you the chance to earn a higher rate in exchange for sharing in some of that risk with your insurer.

After all, bond values are sensitive to interest rate movements. So one way to think of this is as a “safeguard” for the insurance carrier against bond market losses.  

If an MVA annuity happens to fall into your retirement purview, here’s a helpful look at what it might involve.

While many private-sector workers build their nest eggs through 401(k) plans, federal employees and members of the uniformed services have their own retirement savings and investment plan. This is called the Thrift Savings Plan (TSP).

With more than 5 million participants and close to $500 billion in assets, the TSP is recognized as the largest defined-contribution retirement plan in the world.

This fall, TSP plan participants will see significant changes to their withdrawal options.

Many participants have been asking for expanded options. But it took the TSP Modernization Act, which Congress passed and the president signed into law in November 2017, to make them a reality.

Starting November 15, 2019, after two years of planning, the Federal Retirement Thrift Investment Board (FRTIB), the agency that administers the TSP, will offer new options.

These new additions and changes are designed to give plan participants and plan retirees more choices for withdrawing their investments.

Annuities come in all shapes and sizes. And when you are considering one as part of your retirement strategy, sure, it’s important to determine whether an annuity is right for your financial situation.

But there are more annuities than hedge funds in today’s financial marketplace. That is a staggering number of options. If, relative to other solutions, an annuity does help you achieve your retirement goals, then choosing the right one is just as important as its role in your portfolio.

When people plan for their retirement, they usually have one chance to get it right. Your choices will determine whether you live well in later years – or will fall short and will have to deal with the results. This applies just as much to annuity purchase decisions as well as other financial choices for your future.

If you happen to be considering a fixed index annuity for your retirement, understanding how the annuity indexing works is a crucial component.

Your index annuity has many ways of being credited interest. And you might also have a wide menu of index options, from the plain-vanilla S&P 500 price index to newly-minted “volatility controlled” indices.  

First, let’s explore how annuity indexing works. This will cover only annuities of the fixed variety.

Then we will address the new wave of indexing options that include volatility controls, which are a debated topic in the industry.

For some time now, small business owners and their employees have had only a limited menu of effective workplace retirement-saving options.

High plan fees and other barriers have kept traditional retirement planning tools, such as 401(k)s, and income tools, such as annuities, beyond their reach.

A new bill, recently passed by the House of Representatives, aims to level the playing field for small businesses. It would also change some rules for required minimum distributions, or RMDs, which could help simplify retirement distribution planning.

The Setting Every Community Up for Retirement Enhancement Act (the “SECURE” Act) passed the House by a 417-3 vote in late May.

Now it’s on track to move forward to the Senate. With unprecedented bipartisan support in both houses, the bill is expected to have a good chance of sailing through.

If the president signed it into law – or if Congress overturned a presidential veto – the Act would represent the most substantial changes to the U.S. retirement landscape in a decade.

Making a plan to cover your long-term care needs in retirement is one of the most difficult issues you will face. No one knows what will be required in the future.

Some experts, such as Christine Benz with Morningstar, believe the probability can be quite high. In one of its bulletins (in which it also interviewed Benz), AARP estimates a 50 percent chance of someone needing some form of long-term care (LTC) at age 65 and beyond.

Of course, these statistical forecasts might not end up reflecting your personal situation. The truth? The answer may range anywhere from a price tag of zero to the need of skilled nursing care that costs hundreds of thousands of dollars over several years.

As fuzzy as that picture is, you can still plan effectively for the future potential costs of long-term care, not to mention other healthcare expenses.

Editor's Note: This article is Part 4 of a month-long series on financial illiteracy in America. April marks National Financial Literacy Month, and to help raise Americans' financial awareness, SafeMoney.com is teaming up with the Society for Financial Awareness (SOFA), a leading financial literacy non-profit, to spread the word. You can find Part 3, "Watch Out for These Financial Blunders," and can read here our dynamic interview with Jim Chilton, the CEO and founder of SOFA.

Have you ever seen a documentary on thrill-seekers heading to some far-flung destination?

Scaling Mount Everest. Base-jumping off Europe’s Troll Wall. Biking on the World’s Most Dangerous Road in Bolivia. Traversing the Alps.

Whether one of these treks or someplace else, chances are you will see that they have something in common. Rarely do the thrill-seekers go it alone.

Their expeditions often include some sort of guide. And not just any guide. It’s someone who knows the terrain, understands the challenges, and offers the experience to successfully navigate potential mishaps.

Although they don’t involve thrill-seeking, money matters can operate in the same fashion. Without guidance from an advisor, it’s easy to make choices that lead not to financial wellness but to fiscal misery.

From reading the first recap of the Top 10 Financial Crises in History (Crises 6 through 10), you may have noticed that certain patterns emerge.

Sometimes we have an overblown sense of optimism, even in the face of empirical evidence to the contrary. At times, it has led our country into a number of financial crises. And while these crises have proven to be more exception than norm, they are yet another reminder of how we just can’t put off personal financial planning.

Not only that, history repeating itself shows that every investor is responsible for protecting their own financial future. With the days of employer-backed pensions fading away, Americans are more responsible for their personal financial security than before.

Having all that in mind, here are five more historical market events which remind us that bad things happen to good investors.

Determining how much money you need in retirement is both a mathematical and a personal issue. Like a fingerprint, the answer is unique to you and your spouse.

That is why it's so important to discuss your 30-year retirement plan early – or in other words, definitely some time before you actually retire. And just not early, but often. This approach will help ensure you and your spouse are on the same page.

Here are a few guidelines you can use in your determination of how much money you need in retirement for a comfortable lifestyle.

If only retirement income planning were as easy as answering one question: "What is your number for lifetime retirement security?"

That would be nice if retirement boiled down to just one number. But this oversimplifies what it takes to enjoy a secure retirement because, in truth, it requires a customized income planning approach.

Why? Because determining how much money you need in retirement is just as much a personal question as it is a mathematical one.

Just think about your goals and what you might need financially to make them happen. Do you plan to travel? To begin a career 'second act' by getting involved with entrepreneurship or consulting? To donate time and resources to causes that are near and dear to you personally?

Bottom-line, everyone will have different income needs. So, here are five important tips to help guide you through your retirement income planning process. You can also further explore some topics by checking out the other SafeMoney articles linked to throughout this piece.

If you are among the rare few with a retirement pension, congratulations! You have a benefit that is becoming increasingly rare.

With the 401(k) plan becoming the workplace retirement plan of choice, people hold more responsibility for their financial futures than ever.

Knowing you have a pension gives you the comfort of knowing that, once you retire, you are scheduled to receive monthly income payouts for life. Your income payment will be based on your salary and your length of employment.

Just like with annuity payout options, the lifetime payout option you select with your pension plan will have a direct bearing on how much income you receive.

Recently, Robert Kiyosaki talked about a widespread problem in America: for millions of people, the never-ending struggle with money and financial matters. And why does this challenge continue?

Kiyosaki talks about how he believes the education system is partially responsible. People learn knowledge and skill sets that are conducive to future employment, but almost nothing about good money behaviors and practices. Watch the video below to see more.

Editor's Note: This is Part 1 of a series on the worst financial crisies in U.S. economic history. Stay tuned for Part 2 coming up in a short time!

When the economy is tooling along and we find ourselves facing only an occasional hiccup in our money matters that falls short of expectations, it’s easy to feel complacent about the future. Surely life tomorrow will be a lot like it was today.

Except, as anyone who owned a home, a retirement account, or an investment account in 2008 knows all too painfully, our situations can change in a ‘heartbeat.’ And, in turn, they can affect our future outlooks.

To make sure we are all diligent about protecting our financial futures so that we can achieve the retirement we envision, here are 10 valuable reminders.

These historical lessons reinforce the importance of having a financial plan – so you can trudge on ahead or reset your course as needed. They aren't necessarily typical of what might happen in our lifetimes, but they do show the value in being financially prepared.

As you think about the future, consider working with an experienced financial professional, who acts in your best interest, and who can help you make any such determinations. That includes the whens and ifs of any changes that might be right for you. And keep an eye out for part 2 of our series, coming next week.

Congratulations! You have accumulated a nice “nest egg” – or a large lump sum for your retirement. But, believe it or not, just having a hefty portfolio and other assets isn't enough to ensure your retirement security.

There is also the matter of making sure your money lasts for the rest of your lifetime. A retirement income plan will go a long way toward helping you enjoy a comfortable retirement lifestyle.

In other words, building up retirement capital and investing your way to a large portfolio size isn't enough. It's just as important to know what you will do with the money you have accumulated through the development of income and distribution strategies.

By Jim Chilton, CEO and Founder of the Society for Financial Awareness

Editor's Note: This article is Part 4 of a month-long series on financial illiteracy in America. April marks National Financial Literacy Month, and to help raise Americans' financial awareness, SafeMoney.com is teaming up with the Society for Financial Awareness (SOFA), a leading financial literacy non-profit, to spread the word. You can find Part 2, "Want a Comfortable Future Retirement? Start Planning Now," and can read here our dynamic interview with Jim, the CEO and founder of SOFA.

Most of us would agree, as we go through life, we make blunders, mistakes, misjudgments… In short, we all “screw up.” Nothing noteworthy here.

The issue though is, these blunders usually occur from our behavior – the way we are wired. So, when the topic of personal finance, the way we do money, gets discussed, many opinions from many personalities take center stage.

As we have done in the past, Jim Chilton, founder and CEO of SOFA – the Society for Financial Awareness – has been asked to weigh in with us on the very issue of financial blunders and how our behavior sets us up to allow these mistakes to occur.

Editor's Note: This article is Part 2 of a month-long series on financial illiteracy in America. April marks National Financial Literacy Month, and to help raise Americans' financial awareness, SafeMoney.com is teaming up with the Society for Financial Awareness (SOFA), a leading financial literacy non-profit, to spread the word. You can read here our dynamic interview with Jim Chilton, the CEO and founder of SOFA.

When venturing into the great unknown, you wouldn’t travel without a GPS or a map.

They are a “must-have” for reaching your destination. And for arriving on time, for that matter! How otherwise could you tell if you were going the right direction or if you were lost?

The same principle applies to our retirement. Whether you retire 10 years or 10 months from now, you need a financial plan.

In many ways, a plan is like a financial roadmap. It lays out clear directions for you to take and helps you keep on track.

Yet most people don’t have a roadmap for their future retirement. Just three percent of Americans have a written financial plan, according to Jim Chilton, founder and CEO of the Society for Financial Awareness.

“What can we do to not run out of money in retirement?” and “Will we have enough money to last as long as we are retired?”

Those are the two big questions which nearly all retirees have. For most of us, though, they are top concerns that what we all worry about as we approach retirement. Then we think about quite often as we move through our retirement years.

Good news, however. To help alleviate the worrying and wondering, the solution is -- quite simply -- to have a PLAN.

Imagine you are driving to work one day and daydreaming about all the things you will do when you retire. But when you walk into the office, your boss presents you with a pink slip.

Now what do you do?!

This is not a happy scenario, but it's one we all should be prepared for as we approach retirement. Life is messy and random at times. Your best way to deal with the unexpected is to always have a back-up plan.

It’s one of the things we like to think about the least: needing help caring for ourselves when we are older.

While living to a ripe old age sounds great—and statistics show that many of us might be headed in that direction—the idea of not being able to fully care for ourselves is so daunting that we put off planning for it, or perhaps never plan for it at all.

Yet it’s an issue that is much better dealt with now, when we are best equipped to explore our options.

Maybe it’s sticker shock that prevents some of us from taking action. The cost of long-term care, known as LTC, is well reported. Genworth, a provider in the long-term insurance space, has published its Cost of Care Survey for the last 15 years.

The most recent figures in Genworth's 2018 report highlighted these annual national median costs:

• Homemaker Services: $48,048
• Home Health Aide: $50,336
• Adult Day Health Care: $18,720
• Assisted Living Facility: $48,000
• Semi-Private Room in a Nursing Home: $89,297
• Private Room in a Nursing Home: $100,375

To see how the costs compare where you live, Genworth offers a handy tool that can even project these expenses into the future as you reach certain ages.

If you are an employee of the U.S. government, then you and millions of your colleagues have access to the largest life insurance program in the world: the Federal Employees’ Group Life Insurance Program (FEGLI). It's one of a number of employee benefits available to the federal civil service.

Created in 1954, FEGLI provides group term life insurance that may serve several purposes.

Federal employees depend on FEGLI for many reasons in the event of untimely death: income replacement, death benefit protection, coverage for debts or expenses that may overwhelm survivors, financial safeguards for young families, and other benefits.

FEGLI often features a lower requirement for participation compared to other life insurance policies. For private-sector group life insurance – or just personal life insurance coverage in general – people are often required to undergo a medical examination or to meet other eligibility criteria.

Most people consider investment returns as a benchmark for judging the performance of their portfolio. This may be especially true for retirees and pre-retirees who likely have been invested in the market for some time. That experience might have been through brokerage mutual fund investments, brokerage accounts, or even retirement savings plans such as 401(k)s or IRAs.

But the reality is that many financial concepts rely on average returns to forecast future portfolio activity. Yet compounding growth and compounding losses are the real-life factors that will potentially affect a portfolio’s value.

This is strongly exemplified in sequence of returns risk, a potential hazard for American retirees. And that doesn't apply to only retired households.

Sequence risk can also linger for soon-to-be-retirees, especially during the “retirement red zone,” that critical decade of five years before and five years after one retires.

Thanks to progress in healthcare and technology, you may expect to have a long retirement. But living to 100? While a lofty milestone, it’s not as out of reach as it may seem.

In 2014, U.S. government statisticians found that the number of people reaching age 100 had increased 40% from four years prior. And by 2050, the “100 and up” crowd is expected to grow to 3.68 million people worldwide.

Given the reality of lengthening lifespans, it’s no wonder why outliving retirement money remains a top concern. In a 2017 Allianz Life survey, almost two-thirds of surveyed Americans (63%) said they worried about running out of money in retirement more than death!

Financial planners and advisors call this chance of outliving your money a “longevity risk.” Building a well-defined retirement strategy will help you guard against this hazard, not to mention enjoy more financial peace of mind in your golden years.

A new year has dawned, and you can feel the anticipation in the air. People everywhere have scribbled down their New Year’s resolutions, as 2019 has swept in the allure of new beginnings.

A world of opportunity awaits!

Perhaps with a nod to another passing year, many of us will put eating healthier at the top of our list of resolutions. Hitting the gym more often (or even at all), being more productive with our time, and perfecting our work-life balance are perennial New Year’s Resolution favorites.

And for those in their 50s who have visions of their ideal retirement, the New Year is an ideal opportunity to take stock of what they want to achieve. It’s a time to evaluate where they are in terms of reaching that goal, and to reflect on whether they need to create or refine a retirement plan that will help them get there.

Especially for those who are planning on retiring within the next five years, here are three New Year’s Retirement Readiness Resolutions.

As 2019 begins, two new surveys suggest that both advisors and economists aren’t so optimistic about where the economy is headed.

This kind of insight from industry experts is useful, but especially to those who are approaching retirement. Knowing what pundits and advisors believe could lie ahead, and exploring what action can be taken in case of any untimely disruptions to their portfolios, is critical to those within five to 10 years of retirement.

So, what do advisors and economists see when they look ahead? They see the shakiness of 2018 leading to a potentially rocky 2019.

While a volatile stock market is often referred to as a roller coaster ride, the closing days of 2018 seemed to have been the next step up.

After a prolonged growth period, the market moved into a new record-setting path of volatility. And some financial pundits suggest that it may continue in the new year. Welcome to the new reality of 2019.

The week before Christmas, the Dow notched its worst weekly loss in a decade. This was followed by a Christmas Eve drop that was the worst on that date in the stock market’s history. These precipitous declines propelled the market to the edge of a bear market, which is considered a 20% decline from the market’s most recent high point.

Then, the Dow whiplashed to climb by 1,000 points. This was the highest one-day point gain ever. CNN.com called these events “a head-spinning, jaw-dropping 10 days in the markets.”

But with healthy employment figures and a surge of buoyant holiday shopping, how did things get here? And what could the new market volatility mean for those trying to plan for a successful retirement—and for those who already retired?

With age comes wisdom - and apparently the ability to better handle unexpected expenses, according to the Society of Actuaries (SOA).

In their recent study, the SOA analyzed financial risk management across generations. Chief among their findings? That "the ability to handle unforeseen expenses increases with age, peaking with Early Boomers and then declining for the Silent Generation." 

It's one of many findings according to the study, "Financial Risk Concerns and Management Across Generations." The Silent Generation refers to those born between 1925 and 1945.

The SOA based its finding on the fact that 6 in 10 Early Boomers say they could afford a $10,000 expense using their savings or emergency funds. Yet "only 46% of Millennials would use their savings, which is not surprising since they have lower assets and more competing financial priorities."

Those in the Silent Generation remain vulnerable. The SOA reports that half of them aren't able to use their savings for an unexpected $10,000 expense.

Whether you are considering purchasing an annuity or you already have one, there are some key mistakes to avoid in order to benefit from annuity ownership.

The pitfalls below have tripped up many annuity buyers. Our insider tips on knowing what to look out for can prevent you from experiencing the same fate. Use these tips to help you in simplifying your annuity buying decisions or in optimizing your annuity contract as part of your retirement strategy.

While Uncle Sam plays a part in your retirement, he isn’t the only tax man. All 50 states are also partners to some extent.

Many state governments depend on income taxes for public revenues, and in some, city governments take a piece of the income tax pie as well. And what about the states that don’t have an income tax? They rely on other revenues, like gas, property, and sales tax collections.

If you are among the growing numbers of Americans who wish to retire elsewhere than your current community, take note. Many variables play into people’s choice of retirement relocation: the cost of living, unemployment rate, work possibilities, social opportunities, and closeness to people and causes that you hold dear.

However, they aren’t the only factors, as taxes can take a bite out of retirement income. It’s important to see how your tax situation might affect your bottom-line in any places you may be considering. 

Every year, Kiplinger publishes an updated, annual guide to state taxes. Their findings show how state and local government taxes are “all over the map” – and how living in different states can be a difference of thousands of dollars in income, depending on your retirement tax situation.

Just as importantly, the guide includes an analysis of each state’s “tax friendliness” for retirees. Those judgments are based, in large part, on taxability of Social Security payments, exemptions for other retirement income, and property tax rates.    

Here’s a look at the top 10 most tax-friendly states for retirees in the U.S., as ranked by Kiplinger.

With the holidays upon us, many demands compete for our time. It can be hard to sit down and organize our financial lives as the year draws to a close. Indeed, it might appear easier to put off financial planning and review until the New Year.

That being said, there are still money moves you can think about doing before the year ends. After all, life doesn’t take a straight path. People’s needs, goals, and situations change.

Making these moves before year-end can help with managing money-related stress in the upcoming year. Not only that, it can help you get started on the right foot. And if by chance you could meet with a financial professional for your annual review, you could measure progress, see where to improve, and set new goals.

Here are some savvy money moves to consider making before the New Year rolls in, so you can improve your financial wellness, your peace of mind, and your bottom-line.

Woulda. Coulda. Shoulda.

That is how a surprising number of retirees feel about their tax planning. In a recent study by Nationwide Retirement Institute, staggering proportions of retired Americans wished they had done more to prepare for their sometimes-surprising tax bills.

Over the course of the "Retirement Income and Tax Planning Consumer Survey," researchers asked people in different life stages about their preparedness for paying taxes in retirement.

The survey was revealing. An estimated 60% of future retirees, 70% of recent retirees, and 75% of those retired for more than 10 years said they are only “somewhat knowledgeable" or "not at all knowledgeable" about tax planning in retirement.

That’s right. Three of every four people retired for at least a decade still admit to feeling less than certain about planning for taxes in retirement.

‘This is a very serious correction’

Good news, Social Security beneficiaries! Every year in mid-October, the Social Security Administration announces any cost-of-living adjustments to benefits – or “COLAs.” On October 12, the agency said that Social Security recipients would see a 2.8% COLA in 2019.

Until now, the 2018 cost-of-living adjustment had been the largest bump-up in benefits since 2012. What accounted for the heftier increase this year?

A rise in the cost of energy products, not to mention an increasing cost of shelter, were big inflationary contributors, according to experts. Both of those cost categories have heavy weightings within the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the Department of Labor index on which COLAs are based.   

For Social Security beneficiaries, the increased benefit payouts will start in January 2019. People receiving SSI benefits will see the increase on December 31, 2018.

As a small business owner or an entrepreneur, you are used to taking the lead. But there is one frontier you may still need to master… the future of your retirement. That is a matter of doing what you can to ensure all your hard work leads to your ideal retirement lifestyle.

While a 401(k) plan is the dominant retirement bedrock for employed Americans, small business owners are in a different boat. You are your own employer.

So whether you have zero or 100 employees, you must make the choice to act toward building a strong financial future for yourself. Depending on the workplace benefits of your organization, you may also impact those aiding you in your entrepreneurial dream.   

And Social Security benefits can help, but only to a point. A motivating factor for building up retirement savings is the fact that, as an entrepreneur, you bring home a certain level of income. Portfolio holdings, personal assets, and savings most likely will play into your needs as a high-income household, as Social Security can only go so far.    

Not only that, chances are you make more than the income limit placed by Social Security. For 2019, the maximum amount of taxable earnings is $132,900, up from $128,400 in 2018.

And what is another focal point for small business owners? An overreliance on their business as their retirement safety net. But time and again, historical data has shown this to be true: It’s risky to put all of your eggs – namely, your retirement and financial comfort – into one basket.

If you have contributed for a long time to a 401(k) plan, chances are you have built up considerable assets. You are to be commended for this effort. It takes discipline and focus to accumulate wealth over time.

Having reached this point, you may now want to explore options outside of your plan. If you are past your late 50s, you might have an opportunity with an in-service withdrawal. Many people with 401(k) accounts assume that their funds are locked tight until they retire.

What they don’t know is that they might be able to access their funds while still working at their employer. This mechanism is formally called an in-service withdrawal.

But what exactly is an 401(k) in-service withdrawal, under what conditions can you take one, and what consequences are there for doing so?

For skiing enthusiasts, the concept of ups-and-downs is quite exhilarating. Just the thought of cutting powder on tall, sloping moguls can make even the “hard cores” blush.

But as recent market volatility reminds us, the goodwill doesn’t apply to ups-and-downs in every situation. Sometimes it can bring just the opposite.

Earlier this month on Morningstar, Director of Personal Finance Christine Benz observed how equity market down-spurts can disrupt a retirement portfolio.

Portfolio losses might not matter as much as when people are younger, as they have time to recover – and to grow past the point when portfolio asset values dipped. In fact, Benz writes, for those with many years to retirement (or under age 50), "not taking full advantage of the historical outperformance of riskier asset classes is a bigger risk than being too conservative."

But as retirement draws near, some flight to safety may well be a prudent course of action. Benz explains: "At that life stage, you're much more vulnerable to what retirement planners call sequence of return risk. That means that if you encounter a calamitous equity market early on in retirement and need to spend from the declining equity portfolio, that much less of your investments will be left to recover when stocks finally do."

And what if a portfolio has gone into reverse mode? "Your only choice to mitigate sequence of return risk--assuming your stock portfolio is in the dumps and you don't have enough safe investments to spend from--will be to dramatically ratchet down your spending," Benz says. "Needless to say, that's not something most young retirees are in the mood to do."

Earlier this year, equity analysts started reaching for the Motrin again as market volatility came back to town. After a prolonged period of growth, U.S. stocks began charting a new path of ups and downs.

Scores of commentators observed the change in market winds. Even Jack Bogle, founder of Vanguard, said the newfound market swings were unlike anything he had ever seen in his 60-plus years of investing. "I have never seen a market this volatile to this extent in my career," he said in an appearance on the CNBC show "Power Lunch."

And now, this volatility trend seems to have continued. Last week, on October 10, the Dow Jones fell more than 800 points. It was the largest drop since February 2018. Meanwhile, the S&P 500 declined 3.3% and the Nasdaq fell 4%, according to CNBC reporter Fred Imbert.

Then on Wednesday, October 17, the market took a slight stumble as the Federal Reserve released the minutes from its September meeting. A month earlier, Fed board members approved a quarter-point hike to the central bank’s benchmark rate, setting a new rate range of 2% to 2.25%.

The minutes indicate that future rate hikes may be ahead. According to meeting records, Fed officials believe that "further gradual increases in the target range for the federal funds rate would be most likely consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2 percent over the medium term."

Photo Credit: Associated Press. All rights reserved, source link.

Nobel laureates are certainly top achievers. In 1988, Leon Lederman won a Nobel Prize for his work in physics. Apart from award-winning research into subatomic particles, he is famous for coining the infamous name of the Higgs bosin: the "God particle."

Lederman passed away in a nursing home in Idaho on October 4. He was 96, according to the Associated Press. The AP describes him as a “giant in his field who also had a passion for sharing science.”

While Lederman’s contributions to science speak volumes, another striking story of him emerges from a past headline by NBC News.

And what happened? In 2015, the physicist was forced to auction his Nobel medal so he and his family could cover healthcare expenses. The medal sold for $765,000. It was a winning bid of $633,335 plus a buyer’s premium that drove the medal to its $765k sell price.

It’s yet another example of how high-cost retiree healthcare needs can change the financial situation of any of us.

Rising interest rates and an easing regulatory environment are contributing to near-record levels of fixed annuity sales. It’s good news for people who might rely on these fixed contracts for guaranteed income or protection. A strong marketplace can lend to new innovations, contract benefits, and contract features.

In the second quarter of 2018, total fixed annuity sales reached $33.7 billion, an 18% increase over second quarter 2017 sales. That figure shattered the quarterly benchmark, according to the LIMRA Secure Retirement Institute (LIMRA), a financial industry research firm.

Year-to-date, total fixed annuity sales were $60.9 billion, 9% higher than the first half of 2017, LIMRA reported.

Why all the excitement and elevated interest in fixed annuities? Two possible reasons - rising interest rates and relaxing regulatory pressures on financial markets.

"These products offer a unique value for retirees and pre-retirees seeking protected accumulation and guaranteed lifetime income features," says Todd Giesing, LIMRA’s annuity research director, in an interview with InvestmentNews. "Clearly, with the Department of Labor’s (DOL) fiduciary rule vacated and the prospect of continued rising interest rates, demand for this product is high."

Do you know what the average retirement income is in the United States? A typical retiree household brings in $49,097 annually before taxes. The Bureau of Labor Statistics (BLS) defines retiree households as those led by someone who is 65 or older.

And what about their spending? On average, a retiree household spends roughly $49,542 per year, which is slightly more than the average retirement income mentioned earlier.

Meanwhile, the average annual pre-tax income for all U.S. households is $73,573. And as for household spending across all age groups, the BLS estimates average expenditures to be $60,060 annually.

If you have already created a confidence-boosting retirement plan, congratulations! You are on track to achieving the rewarding retirement of your dreams.

But what happens if you put this necessary task off? If you take a "someday" approach to stopping to assess your needs in retirement and exploring strategies and solutions that can help you achieve them?

It’s not hard to find out. You may even have watched people you know and care about struggle financially in their golden years. A time in their lives that was supposed to be free of financial pressures -- or at least relatively, so we think -- instead forces them to make unpleasant choices just to stay afloat.

Most often, poor financial decisions (or a lack of planning) — fueled by the emotional pressures of life changes or financial stressors — tip that first domino that can begin to topple a care-free retirement.

It takes discipline in matters of money and financial planning to ensure your money works for you, instead of the other way around.

Because you don’t want to find yourself going down the wrong path to retirement, consider these consequences of not taking action to create a plan that can provide you benefits such as reliable income for life.

As a postal or federal employee, you have high-quality federal benefits. In time, they will play directly into your retirement, whether you will be eligible to retire in the next 15 years or are a new career hire.

Among your many benefits are programs that directly affect your financial future. Tax-advantaged retirement savings plans, guaranteed-pension payouts, and cost-efficient life insurance coverage are just a few of those programs.

Your challenge is to ensure that you maximize what is available to you. Making smart choices early will help you reap rewards for the rest of your life. So, it’s important to weave your federal employee benefits into your complete financial picture to set yourself up for the most successful retirement possible.

To get there, you need to avoid the mistakes some federal employees make with their benefits and retirement planning. These slip-ups can cost you tens of thousands of dollars in lost benefits. And what's more, once these mistakes are made, they can't be reversed or changed.

Are you part of the majority of federal civilian employees in the Federal Employee Retirement System? Or maybe you are a member of the uniformed services. If so, you probably have access to the Thrift Savings Plan, one of the workplace benefits that people receive as United States government employees.

The Thrift Savings Plan (TSP) is a 401(k) like plan for federal workers. It allows you to contribute to your retirement fund and receive a matching contribution from your federal agency.

According to recent statistics, over 5 million people participate in the TSP, which has more than $500 billion in assets under management.

One common issue for many federal employees is they don’t understand their TSP accounts and what it can offer them. If you find it hard to navigate, no sweat. Here’s a quick rundown of some must-know facts about your Thrift Savings Plan account that can be of benefit.

Before you commit to an annuity as part of your retirement plan, it’s good to know the basics of this retirement tool. Every year, Americans put hundreds of millions of dollars into new annuity policies. Yet there still seems to be a measure of annuity misconceptions and confusion among consumers.

You may have seen that a quick internet search of the word "annuity" delivers a wildly diverse set of opinions! And every financial pundit has their own take on annuities. Some of the loudest voices on the internet even claim to be against them, all the while offering annuity or annuity-like solutions to their following.

To help you sort through the noise, we break down common annuity myths and supplement the conversation with some facts.

Watch Out for These Annuity Myths

Here are some common annuity misconceptions of which to be mindful:

The Great Recession that began in late 2007 was a painful period in many Americans' lives. Everyone who was invested in the market, people who were overextended in mortgages, and those who lost jobs as a result of a crippled economy, were among the millions affected.

Since then, many people have recovered from the financial setbacks. Nevertheless, a new study by the Federal Reserve Bank of San Francisco suggests that challenges linger. According to Fed researchers, the long-run effects of the financial crisis cost every American an estimated $70,000 in lifetime income.

The researchers point to a big decline in domestic output levels as a primary cause of those losses. Based on early-2000s Congressional Budget Office forecasts, our national gross domestic product remains well below what its 2007 trend implies we might have been at now. And it's said to be unlikely that the economy will ever make up that lost territory.

While that specter raises many questions, it brings up another important, practical query. How should people preparing for retirement overcome this gap?

Like other folks, you probably see waves of retirement advice from the papers, financial talkshows, online news sources, and other outlets. Much of that advice assumes that among couples, both spouses are approximately the same age. That often results in solutions designed to address the needs of couples entering their retirement years together.

But what about couples with sizable age differences? Their different retirement timelines are likely to present unique problems. When such is your situation, how can you plan for your retirement effectively?

If one spouse is eligible to retire 10 or more years ahead of the other, that spouse will be making choices that not only affect their own retirement. It impacts their partner's retirement, as well. Those decisions could have a dramatic impact on the younger spouse’s lifestyle now and during their own golden years.

Not only does their age disparity affect their retirement plan, it means that life events, both those foreseen (e.g., retirement or required minimum distributions) and unforeseen (e.g., the need to help care for aging parents), will be faced at different stages in their lives.