Financial Goals

Developing a Plan

What should my long-term financial goals be?

The first step is to figure out a realistic goal of what you and your family want financially. Talk with your loved ones to ensure that everyone has the same goals in mind. Clearly not all families will have the same end goal - figure out what is important to you, whether it is early retirement, financial comfort, children's education, travel, taking care of elders, or your children.

What are a few rules or guidelines to having a comfortable retirement?

Generally people need around 80% of their pre-retirement income after they have retired for the first few years and then learn how to live on less. This will greatly depend on the expenses that you plan on having:

• Is the mortgage already paid off?
• Do you have car payments?
• Are you sending your children through school?

Another strategy worth following is to always have an emergency fund of at least 6 months of expenses. Considering your situation and the situations of the people that you depend on or depend on you, you can adjust the number of months accordingly, but 6 is a good ballpark number. This will also depend on how many bills you need to pay.

Monitoring Progress

You can start by examining your trading records and ensuring that all of the trades went through at the prices that you instructed and with the correct commissions. Make sure to keep a good paper trail of all the transactions that occur in your portfolio just in case you ever need to contest anything.

Keep tabs on how your assets are performing.

What types of annuity are available?

• Single-Premium Annuity. This is where the purchase is made all at once in a lump sum.
• Flexible-Premium Annuity. This annuity can be funded with a series of payments.
• Immediate Annuity. With this annuity, the payments begin back to the purchaser instantly.
• Deferred Annuity. Payments will be redistributed back to the purchaser many years later. This is usually used as a vehicle to let the money gestate tax deferred.

How and when do I collect my annuity?

There are a few choices that you have when choosing to collect your annuity. Some people opt for a lump sum, even though it negates one of the major features of the annuity: payments until death.

The amount of the monthly payments that you receive depends on:

• The amount of money in your annuity contract
• The life expectancy of the annuitant
• The size of the minimum required payments (if any)
• Whether the payments continue after death or not

There are various different settlement options. Be sure that you are absolutely sure when you choose, because the decision will be final when you make it.

• Fixed Amount. With a fixed amount option, you will choose a monthly amount that you will receive until your annuity runs out. There is a possibility that your money may run out before you pass on, and also the chance that you may die before your money runs out. In that case, your beneficiary will receive your payments.
• Fixed Period. The company will pay you for a fixed amount of time. If you are waiting for a retirement payment from another investment, it may be a good idea to get this fixed money until you start to receive payment from another investment. Again, if you are to pass before the money is fully paid, the remainder will go to your beneficiary.
• Lifetime Or Straight Life. This plan will continue to pay you money until you die. This is the safest option to ensure that you receive payment until the day you die. Conversely, if you die early, there will be no payments to the beneficiary.
• Life With Period Certain. With this plan you will receive payments until death - and for a period afterwards, your beneficiary will receive payments too. The longer the period, the lower the monthly payment.
• Installment. This guarantees that if you die before you have exhausted your funds, the rest will be distributed to the beneficiary.
• Joint And Survivor. In this option the payments are made to the joint annuitants. In the event of one's passing, the other will continue to receive a lesser amount.

How are the annuity payments taxed?

The tax rates will differ for qualified and non-qualified plans.

An annuity that is tax-qualified is one that funds a qualified retirement plan. When this qualified annuity is used it follows the same tax laws as these retirement vehicles, such as:

• Tax deferral during the gestation period
• The earnings will not be taxed until withdrawal

A non-qualified annuity is bought with after-tax dollars, but the benefit of tax deferred savings still applies.

What taxes will my beneficiaries have to pay if my annuity continues to pay them after my death?

Annuity payments are subject to the same taxes that would have been collected from you.