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Taxation of Annuity Income

If you purchased an annuity that provides income in retirement, the portion of the payment that represents your principal is tax-free; the rest is taxable. The insurance company that sold you the annuity is required to tell you what is taxable.  Different rules apply if you bought the annuity with pretax funds (such as from…

The Longevity Factor

 Roberta W. McCain, maverick mother of Sen. John McCain, dies at age 108! She took to the presidential campaign trail at 96 on behalf of her son, Sen. John McCain of Arizona. One of the founders of REI equipment coop lived to age 107. Are you considering the impact of living much longer than you…

Forget the 4% guideline in these low interst rate times

Based on past investment returns a 1994 study found one could expect their retirement assets to last 30 years if they took out no more than 4% each year, adjusted for inflation. If you aren’t familiar with the 4% guideline for withdrawing assets in retirement, search for 4% rule in this blog. The problem with…

Worried retirement savers and retirees should consider annuities

Expert: Worried retirement savers should buy annuities People planning to retire this year should buy an annuity to guarantee future income now because annuity payouts that have been falling because of declining interest rates could fall further, says retirement income expert Wade Pfau “The simple income annuity can fit in for anyone who’s panicking about…

Single Premium Immediate Annuity vs. "Safe Withdrawal" Strategy

“Economist and mathematician Michael Edesess compares a “safe withdrawal” strategy from a 60/40 stock-and-bond retirement portfolio with a single premium immediate annuity of the same value. He found the SPIA offers retirees a bigger monthly payout and decreases their chances of running out of money.” Author/researcher Michael Edesess explains:“A safe withdrawal rate is the percentage…

Income annuities increase income while reducing stress for retirees

“Incorporating an income annuity into a retirement portfolio increases income, cuts retirement stress and boosts retirees’ confidence, according to a study by researchers Michael Finke and Wade Pfau from The American College. Income annuities lower the risk of outliving savings in retirement without lowering overall income, compared with an investment-only approach, the study found.” Retirement…

Turning a nest egg into retirement income

There are plenty of strategies for how to turn your retirement accounts into a reliable income stream at retirement. Walter Updegrave is one of my favorite financial columnists due to the high quality of his research and writing. He answers this question in an article that is short enough to absorb but also includes links…