Now the new stuff about LTCI that you may never have considered: 30 states have instituted a provision that will allow policyholders to keep a portion of all of their assets even though Medicare is paying part of that nursing home expense, assisted living or costs related to in-home care.

Thanks to the Deficit Reduction Act of 2005, this below-the-radar program was dreamed up by the feds and the participation states. In short, this program enables people to hold on to a portion of their hard-earned money.

To qualify you must already own a LTCI policy, as explained by Kelley Green in her Wall Street Journal article, “Why Long-Term-Care Insurance Is a Must,”

“In most states, it works like this: You buy, say, $250,000 in coverage. If you use it up, you can qualify for Medicaid while protecting up to $250,000 in assets.”

Furthermore, in some of the qualifying states, policyholders made need, as a pre-requisite, to buy what’s called an “inflation-protection rider.” Or, the other option is for them to purchase an additional amount of specified coverage.

No surprise, but it makes sense to buy your LTCI early on when you are healthy and premium rates are lower.

Contact us to get more information about planning for your retirement, including the importance of adding an annuity to your overall retirement portfolio.

Inherited from spouse. If a traditional IRA is inherited from a spouse, the surviving spouse generally has the following three choices:

1. Treat it as his or her own IRA by designating himself or herself as the account owner.
2. Treat it as his or her own by rolling it over into a traditional IRA, or to the extent it is taxable, into a:
   a. Qualified employer plan,
   b. Qualified employee annuity plan (section 403(a) plan),
   c. Tax-sheltered annuity plan (section 403(b) plan),
   d. Deferred compensation plan of a state or local government (section 457(b) plan), or
3. Treat himself or herself as the beneficiary rather than treating the IRA as his or her own.

If a surviving spouse receives a distribution from his or her deceased spouse’s IRA, it can be rolled over into an IRA of the surviving spouse within the 60-day time limit, as long as the distribution is not a required distribution, even if the surviving spouse is not the sole beneficiary of his or her deceased spouse’s IRA.

Inherited from someone other than spouse. If the inherited traditional IRA is from anyone other than a deceased spouse, the beneficiary cannot treat it as his or her own. This means that the beneficiary cannot make any contributions to the IRA or roll over any amounts into or out of the inherited IRA. However, the beneficiary can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary.

Like the original owner, the beneficiary generally will not owe tax on the assets in the IRA until he or she receives distributions from it.

Generally, the entire interest in a Roth IRA must be distributed by the end of the fifth calendar year after the year of the owner’s death unless the interest is payable to a designated beneficiary over the life or life expectancy of the designated beneficiary.

If paid as an annuity, the entire interest must be payable over a period not greater than the designated beneficiary’s life expectancy and distributions must begin before the end of the calendar year following the year of death. Distributions from another Roth IRA cannot be substituted for these distributions unless the other Roth IRA was inherited from the same decedent.

If the sole beneficiary is the spouse, he or she can either delay distributions until the decedent would have reached age 70½ or treat the Roth IRA as his or her own.

Have you heard of the 4% rule from a broker or financial advisor before?

For approximately two decades, retirees have often been advised that a 4 percent withdrawal rate from their savings would sustain them over the years – practically guaranteeing them that they would not run out of money in retirement. But that was then, and this is now.

Twenty years ago when this “4 Percent Rule” theory was created, yields from a portfolio consisting of 50 percent stocks and 50 percent bonds typically exceeded 4 percent – allowing retirees to receive an income, while at the same time continuing to grow their assets in the portfolio.

Yet, as most investors and financial advisors are aware, “Past returns do not guarantee future results.”

Today, it is considered quite risky for retirees to base their income on this outdated “4 Percent Rule.”

More recent research, taking into consideration important factors such as longer life expectancy, inflation, and more current market conditions, has determined that a portfolio divided 50/50 between stocks and bonds will actually yield closer to 2.8 percent and that following the 4 percent rule advice could essentially put many retirees at risk of outliving their savings.

Even assuming a portfolio that contains 60 percent bonds and 40 percent equities, new studies show that there is actually a 50+ percent chance that a retiree would run out of savings within approximately 20 years – especially if a low interest rate environment persists.

Download the “4% Retirement Rule is Dead” report NOW by clicking here.

Find out the Truth about the “4 Percent Rule“by downloading the video.

Disclaimer: Any and all material on this article is for informational and educational purposes only, and is not financial advice by a certified financial advisor or financial professional. Annuity Think Tank is not a licensed insurance entity, it does not receive any commissions or monetary gains from the sale of annuities, and it does not give financial advice, tax advice, or investment advice.

First off, who is Sagicor?

Per the Sagicor website: “Sagicor Life Insurance Company (“Sagicor”) is a full-service life insurance company that helps clients make wise financial decisions today, to ensure they’re protected tomorrow. We are licensed in 44 States plus the District of Columbia and rated “A-” (Excellent) by A.M. Best Company. With more than $870m in assets, Sagicor is ranked among the top 153 life companies in the U.S. * Sagicor is a wholly-owned subsidiary of Sagicor Financial Corporation, one of the oldest insurance groups in the Americas, with operations in 22 countries including the United States, United Kingdom and the Caribbean. Sagicor is committed to offering customers world-class service with integrity and value.”  You can read more about them here.

So how does their Indexed Annuity work?

Sagicor has a 9 year, single premium, indexed annuity with fantastic liquidity.  Here are the highlights to the product

• 9 year decreasing surrender
• 5% upfront, fully vested bonus (surrender charge is only 8%, so day one it is a net 3% surrender)
• 2% guarantee on 105% of the premium – a client could get all of their money back after surrender charges in 18 months
• Great liquidity – 10% free withdrawals per year after the first year. These withdrawals are cumulative so whatever you don’t use rolls over o the next year, i.e. if you do not take a free withdrawal your second year, you could take 20% in your third, 30% in your fourth, etc. (cap of 50%)
• Strong caps – uncapped strategy or annual cap at 4% (and that is guaranteed for the life of the contract) – very competitive by todays standards
• No Income rider available, although it does have Guaranteed Withdrawal Benefit after the 12th year

All in all, this is a very competitive, very liquid indexed annuity.  If you are looking for strong upside, liquidity and protection from market losses, this is a great product to turn to.

Fast forward when I leave the house. She is left to run and maintain the home on her own and as she got older, it became difficult for her to do.  She went around and scavenged the surrounding areas that she liked, and found a perfect brand new 1 story town home that fit her needs, and according to her “is right across the street from the nursing home, so when I can’t do it on my own anymore, you can just roll me right over there.” The point is you have to do what suits you best, it’s not always the big beautiful house.

More than 500,000 people travel from their home states each year to scout retirement homes.

If you are an empty nester, or have no children, you can consider downsizing your home and maybe renting.  When you rent, it can be cheaper in the short term because there is no down payment, the landlord pays for all the upkeep, the taxes, and some utilities.  Now having a paid off house is great, but do you want to do all the yard work and up keep, maintenance, or taxes etc..?  The averages costs of this per year is probably less than rent at $700 a month.

Employees who incest the full 10% of earnings to 401K’s instead of the average of 6.8% will come out better in the long run.  Those employees who saved an “extra” 3.2% per year of their income, who make an average of $75,000 a year over 30 years earning 6%, would have an extra $200,000 at age 60.

Some other tips may be to invest long term, keep your fees low, and look for guaranteed rates.

There are some serious doubts among baby boomers that their heirs can handle money properly.  Daily finance says : “Many wealthy Baby Boomers who started out with modest means want their children to have the same incentive to work hard and struggle for their financial prosperity, rather than having it handed to them. Moreover, a large fraction of Boomers believe their offspring don’t know how to handle money — an opinion which might lead them to conclude their children also lacked the wherewithal to handle a large inheritance.  Research bears out those concerns. Figures from The Williams Group estimate that barely a third of families are able to maintain control of their wealth through the second generation, and only one third of that third manage to keep third-generation control.”

Think about putting your monies into a trust if this is a concern for you.  We can use something like an annuity to pay it out slowly over time as to not overwhelm them at a young age.

When should I roll over?

If the distribution from the qualified plan or IRA is paid to you, you have 60 days from the date of receipt to roll it over to another qualified plan or IRA. The IRS may waive the 60-day rollover requirement in certain situations.

One-year waiting period for IRA rollovers: If you make a tax-free rollover of a distribution from an IRA, you generally cannot make another rollover from the same IRA within a one-year period. You also cannot make a rollover from the IRA to which the distribution was rolled over.

Will taxes be withheld from my distribution?

IRAs: IRA distributions paid to you are subject to 10% withholding unless you elect out of withholding or choose to have a different amount withheld. Withholding does not apply if the distribution is paid directly to another IRA trustee.

Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement account. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.

Which retirement accounts can accept rollovers?

You can roll your money into almost any type of retirement plan or IRA. See the Rollover Chart for options.

Why should I roll over?

When you roll over a retirement plan distribution, you generally don’t have to pay tax on it until you withdraw it from the new plan. By rolling over, you are saving for your future and your money continues to grow tax-free.

If you don’t roll over your distribution, you will pay tax on the amount received (other than qualified Roth distributions) and possibly an additional tax on early distributions.

Now for the consumers and financial advisors that have ever “googled” a word or phrase with the word annuity in it, you have probably seen many of the advertisements that pop up right above and beside the true organic content on the first page of the search engine.  From what we have heard from consumers, many of you don’t understand the difference between paid and organic search and how it all works and interacts with your search.  Well the Annuity Gator did a great job explaining exactly how these sites make money, the pros and the cons of each paid search annuity site, and more.

Check out his blog, “An Independent Review of Popular Annuity Websites” by clicking the picture below.