Annuity: Is it right for me?

The annuity does a couple of things. It can provide you with enough to cover your "needs" expenses, and then you can invest the rest in lower-cost investments to complement that for your "wants." But at least you know that your basic expenses are covered. If, between pension, Social Security, and some type of guaranteed paycheck, my needs are covered, then I can sleep at night, and if I don't get to take a vacation this year because the market was down, I can live with that. If I can't pay my property tax or buy food, that's something that becomes difficult. Sometimes in pursuit of someone's wants, they sacrifice securing their needs. This is where annuities can fit in.

For somebody who has a very low withdrawal rate and can assume the risk of the market or can hedge this in some other way, [an annuity is] not necessary. If your house got destroyed and you have enough resources to rebuild it without having a big impact, maybe you don't need homeowners insurance.

So, it's something that you have to look at: What's the probability of this happening? What's the downside if it happens? And do I have options to be able to absorb that? It's like any other insurance decision.

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Tampa  Florida Office: 813-964-7100
Buffalo New York Office: 716-565-1300

Independent Financial Advisors at Mintco Financial

Are Annuities right for you? When to buy an annuity? How to buy an annuity

 

Are annuities right for you?

While annuities have many attractive features, they’re not for everyone. If there’s no chance you’ll run out of money, annuities are probably the wrong choice. They make little sense if you have an ample employer pension, since you already have the assurance of an income for life. Nor are they attractive if you’re in poor health: the best payoff from an annuity comes from living much longer than average. And if you’re very wealthy, outlasting your money isn’t a concern either.  Warren Buffett and Bill Gates don’t need an annuity.

The other reason people avoid annuities is their finality: once you give your cash to the insurance company, you’re locked in for life. Conventional stock and bond investments, by contrast, provide growth potential and the flexibility to tap your nest egg for a lump sum if needed. And if leaving money to your heirs is a top priority, annuities preclude that option because the payouts end after your death (although you can purchase guarantee periods).

But annuities are not an all-or-nothing proposition. It’s best to think of them as one part of a larger retirement income plan: they can work uncommonly well in a portfolio alongside stocks and bonds. The goal is to figure out the right allocation to each of these assets, based on the trade-off between guaranteed income, access to a lump sum, and growth potential.

How much do you need?

If you rely solely on a portfolio of stocks and bonds for retirement income, you have to set a conservative withdrawal rate in case markets perform unusually poorly or you live exceptionally long (or both). A common rule of thumb if you retire at 65 is to plan on withdrawing 4% of your initial portfolio every year, plus inflation adjustments. But you should have a backup plan in case this withdrawal rate turns out to be unsustainable. Building annuities into your retirement strategy is one of the best backup plans, because they assure a relatively high level of withdrawals with no risk of depletion.
One popular strategy is to use annuities together with government pensions to meet all non-discretionary spending needs. “That provides peace of mind. You know the basics are covered no matter what happens. After purchasing annuities, you can afford to take more risks with the rest of your portfolio, which may actually increase the amount you leave your heirs if you live a long time and markets perform well.
To a large extent annuities should replace bonds in your portfolio, although there’s no perfect formula.
If you’re looking for the optimal trade-off between growth and reliable income for life, the best solution may be to transition out of fixed income entirely and end up with whatever combination of stocks and annuities suits you best.
However,  “practical issues” will keep most people from going that far. First, you should still keep some short-term investments for emergencies. 
You think of an annuity as a kind of “superbond” that produces more income more reliably over a lifetime than do conventional bonds. Insurance companies are able to do this because they pool longevity risks, so those who die younger subsidize the relatively few long-livers. “They’re superbonds in the sense they don’t have the maturity date, so they will continue to pay fixed amounts as long as necessary.”

When to buy an annuity

As with conventional bonds, payout rates for new annuity purchases are greatly affected by interest rates, which are now relatively low by historical standards. However, unlike bonds, annuities pay more if you wait until you’re older before purchasing them. Waiting a few years can pay off, because the benefit of pooling longevity risk is greater as you get older.
Many experts say the “sweet spot” for buying annuities these days is about age 70.

How to buy an annuity

Given the financial industry’s penchant for promoting products, it can be surprisingly hard to find someone to sell you annuities. For one thing, although annuities are really an investment product, they can only be sold by someone with an insurance license. So unless they are dual licensed, investment advisers may not be able to help you with annuities even if they want to. To work annuities into your portfolio, you should have an investment adviser with the right licenses, who is committed to using annuities in the appropriate circumstances. If your adviser can’t do that, consider switching. “It would certainly raise a red flag if my adviser said, ‘No, I don’t do those.’
It may take time and effort to find an annuity approach with which you can be comfortable, but the rewards can be enormous. “It’s a steady paycheque you cannot outlive,” 
 “Nobody is telling you to put all your assets in it. Nobody is telling you to do it all at once in an irreversible manner. It’s something you should be transitioning to slowly.”


If you have questions, need to buy an annuity or consult with a financial advisor about annuities call 813-964-7100 or visit online

www.MintcoFinancial.com


Mintco Financial Offices:

Florida -Tampa 813-964-7100

 New York - Buffalo 716-565-1300

Beyonce and Jay Z getting divorce? Advice for couples going through a divorce

Here some advice for those going through a divorce:

Leave your emotions at the door. Divorce court is not the place to go for therapy or revenge. Insisting that your spouse’s affair go on the record may give you the temporary satisfaction of smearing his or her public image and win you some sympathy with the neighbors. But  proving that your spouse cheated doesn’t entitle you to a bigger settlement.
You’ll get better results with claims of the “I gave up my career for you” variety, provided you can prove that the 12 years you spent keeping house actually helped your spouse finish grad school or climb the corporate ladder. But remember that divorce court is primarily about money, not emotions. Which leads us to our next point…

Do your paperwork. In divorce court, knowledge is power. If you don’t know how much your spouse makes or what properties she owns, you might wind up settling for less. So your first job should be to compile a complete picture of how much wealth your spouse possesses and owes and where she’s keeping it.
Even happily married couples should stay up to date on each other’s finances by insisting on a detailed rundown at least once a year. And,if you’re growing tired of your marriage or you sense that your spouse is, you should “start paying more attention and start keeping records.” Once divorce proceedings have started, you may not be able to lay hands on important financial documents, such as proof of stock ownership or recent statements of net worth, that you will need to plead your case.

Seek a pro’s opinion “Don’t just storm out the door and say, ‘I’m gonna see a lawyer.’ Go see a lawyer and then decide whether you want to storm out the door.
A good divorce lawyer will need only a 45-minute consultation to tell you how your case will probably turn out, including who will get custody of the kids, how the property will be split, and who will pay what. For example, it’s more than likely that if you walk out first, you’ll lose possession of the house.
  One example is a client who wanted to divorce his stay-at-home wife, who had been out of the workforce for a number of years raising their kids. The client was shocked to learn that his wife would be entitled to sizeable support payments, perhaps indefinitely. She would also get half of not just the family assets, but his personal stock portfolio and other assets as well.
The man decided to stick out his marriage for a while longer — but with an eye to leveling the financial playing field. He spent more time raising his children and encouraged his wife to go back to work. Meanwhile, he kept personal assets that would be considered exempt from property division in court (like inheritance money) out of the family pot. When he finally did file for divorce a few years later, the financial settlement was a lot less punishing to him.

Budget for the break-up It’s a good idea to decide early on how much you can afford to spend on your divorce. While your angry side may tell you to hire a hotshot lawyer whose motto is “nail the son-of-a-gun to the wall,” the reality may be that you can’t afford to keep paying your lawyer’s bills if your divorce drags on. Every motion, argument and phone call your lawyer makes on your behalf results in an invoice, and a litigated breakup will probably cost $40,000 to $100,000.
To save time and money, many affluent couples are choosing to have their divorces settled through arbitration. They agree to have a retired judge or retired lawyer hear their case and make a binding decision on who gets what. Depending on the size of the estate, arbitration costs about $15,000 — much less than a court divorce. It’s faster too. Instead of waiting for months to get a court date, several of the divorcing couples into arbitration have settled in just six weeks.
Whether you choose arbitration or litigation, investing in the services of a certified divorce financial analyst  can help trimyour legal bill. These professionals typically charge $150 to $250 an hour and are part of a small but growing specialty.

Plan your defense. So what happens if you fear that the person you’re about to marry may one day take you to the cleaners? Think prenup.
A prenup is a legal contract you sign before your marriage that lays out how the assets you own individually and together should be divvied up if you ever divorce. Once drawn up by a lawyer, a prenup acts “like an insurance policy “It’s best if never used, but it’s invaluable if you need it.”

Make sure you have a divorce financial advisor on your team so you fully understand the short- and long-term financial and tax implications of any decisions that are made during the divorce negotiation process.

www.MintcoFinancial.com

Financial Advisors:

Florida: 813-964-7100

New York : 716-565-1300

Read more here: http://www.miamiherald.com/2014/02/28/3965645/financial-advice-for-divorce-its.html#storylink=cpy

When it comes to happiness, less is more

When it comes to happiness, less is more

Simplifying your life may include many different factors. It may be de-cluttering your house or office. It may involve getting rid of some responsibilities that are causing you stress. It may require that you stop being a perfectionist. It might mean saying “no” when people ask you to do something you don’t want or need to do, or taking tasks off your to-do list.

In terms of your finances, simplification may include reducing the number of investment accounts you have and consolidating them to make managing your finances easier going forward. It may include setting up most of your bills so they can be paid online. It may also include setting up a system so you don’t have piles of mail (bills, receipts, insurance statements) that seem overwhelming.

When you simplify your life, you free up more time to do other things that you enjoy. Having more time is a valuable benefit. You may decide to devote the extra time to your family, to exercise, to downtime, to hobbies or even to explore a new career.

Another significant benefit of simplifying your life is a reduction in stress. Because we are so busy, our lives often feel out of control. Sometimes we feel like we are just working to keep “all of the balls in the air.” Simplifying our lives and a reduction in stress can improve our overall well being.

And finally, simplifying our lives can actually help bring peace of mind. De-cluttering is powerful stuff.

www.MintcoFinancial.com

Tampa Office: 813-964-7100

Do you want to feel more confident about the financial decisions you make? Would you rest easier knowing that you are doing everything you need to in order to achieve financial independence? 

Do you want to have more time and freedom for the things you enjoy? You can.

Whatever your current situation, financial concerns have an impact on your life and relationships. I can help you make the financial decisions that will make the most of what you have now and help you build a more secure, enjoyable future.

www.MintcoFinancial.com