Putting retirement vehicles in perspective
A Roth plan can come in the form of an annuity or a security-based plan (stock, bond, money market). If the Roth is an annuity, it’s an insurance vehicle. Although many people quiver when insurance is discussed, it plays a major role in retirement planning.
On the receiving end, insurance is all about protection, allowing the insurance company to absorb the risk factors. In terms of retirement planning, insurance plays a role protecting income and assets from being depleted. Life insurance can provide a source of tax-free income, offsetting qualified income, as well as providing a death benefit. If designed with long-term care in mind, it can also provide elements used in long-term care plans.
Annuities protect income if designed to do so. An annuity with an “income stream for life” guarantees the income through annuitization (the method of income distribution) or income riders (features built into or added to an annuity). These features take the concern of running out of money off the table. Stabilizing your income is a vital part of retirement planning. An incomes stream for life does just that!
Long-term care insurance has evolved to accommodate today’s needs. Asset-based programs allow funds to grow while providing money to pay for services and protect assets that will return the unused portion to the heirs.
If designed and coordinated properly, these programs can work for you rather than against you.
By now, I’m sure you are wondering where to find information needed that pertains to your situation. I advise caution. Finding the professionals needed is not always an easy task. Take your time; there is no need to rush into the project unless you have something pressing.
Getting organized is always the first place to start. Even the best professionals cannot help you if they don’t know what they are working with. The better organized you are the faster the results.
Generally speaking, if you have a CPA or an attorney, he or she can help and direct you through the process. Both have fiduciary responsibility. When looking for an attorney or CPA, ask about the individual’s areas of expertise. If estate planning and Medicare planning aren’t strong parts of the practice, you may want to look somewhere else. This advice is also good when looking for an insurance or investment advisor. Having a separate investment advisor and insurance agent is beneficial, allowing each full focus in one area instead of two, creating a stronger aligned team of professionals. Most importantly, assemble your team in one meeting to brainstorm your situation. Each professional has his or her own vision of how your plan should work. All the plans presented may be very good. When you bring the professionals together, physically or virtually, “very good” becomes “excellent.”