Getting the Most Out of Your Individual Retirement

Most people who are approaching retirement age are asking a similar question; what will it be like? Others assume that they’ll take a couple of months off and then determine what happens from there. Somewhere between the fear about filling your days and lethargy may be the perfect opportunity for your retirement. It’s important to think about the strategy and planning how you’ll spend the next few decades when you do walk away from work. 

You’ve probably made a tremendous number of life changes between the ages of 20 and 40. You got married, moved a few times and saw your children grow from babies to adults. The years between 60 and 80 will not be as different as you are thinking. You’ll need plans, goals and flexibility to adjust when your life circumstances change. Pursuing your passion, staying healthy, continuing to communicate, giving back and getting organized are some of the most common goals for people approaching retirement.

Choosing where to live and planning things out with their spouse or partner are strongly recommended so that you can ensure that everyone is on the same page. You may even be interested in figuring out how to adjust with your loss of work identity or how to prepare for your finances in retirement when you are no longer receiving a regular paycheck.

All of these goals can be accomplished by looking ahead to the future and thinking about how you envision your retirement and then planning in conjunction with an experienced estate planning attorney and a financial planner. Engaging with professionals in this way gives you an overview of the different opportunities available to you and the next steps that you need to take to prepare for a future in retirement.

News Shows That Americans Have Not Come Far Enough on Retirement Planning

retirement planning optionsAccording to a recent study conducted by the American College of Financial Services, three out of four adults reaching retirement age failed a quiz on how to make their nest eggs last throughout their retirement.

Older Americans or those between the ages of 60 and 75, also indicated a lack of understanding about critical financial topics like paying for long term care expenses, investment considerations and different strategies that could help to sustain income over the course of retirement.

This is a particularly problematic study finding, given that approximately 10,000 baby boomers will be reaching age 65 single day over the course of the next 12 years. More Americans are facing retirement, but are doing so without clear knowledge about how to make this money last and what they need to have set aside when they begin the retirement process.

Many Americans, however, might not even know that they are simply unprepared for retirement. 61% of the respondents reported having high levels of knowledge about their retirement income, but only 33% of them passed the corresponding quiz. The survey found that there is a major divide when it comes to particular demographics as well.

Only 17% of women were able to pass the quiz when compared with 35% of men. 40% of those individuals who had at least a college degree passed this study as well. This divide underscores that it is so important for everyone to approach comprehensive estate and retirement planning.

The Downside to Annuities from a Mississippi Trust Lawyer’s Perspective

When it comes to annuities, trust lawyers in Mississippi do at times recommend these financial products for their clients…and they may be a great choice for you.  This particular article is just to offer some additional food for thought on making decisions regarding whether or not annuities are wise additions to your overall estate plan.  (To fully understand what an annuity is, read Part 1 of this series, “What is An Annuity” here).

Many people love the idea of an annuity because it can provide a steady income during the retirement years.  Annuities can be especially helpful for those who are approaching retirement age and don’t already have a good 401(k) or IRA in place, for example.  On the other hand, there are some real costs associated with an annuity, and you’ll want to factor them in when making your decisions regarding this type of investment.

Annual Fees

The amount you pay in annual fees will depend on several factors, including the company you use and the type of annuity you purchase.  A variable annuity, for example, will be subject to higher annual fees than a fixed annuity.  It’s not unusual for annual fees to add up to 3% a year or even more.  This definitely needs to be taken into consideration when planning for what your eventual payout will be.  Losing a chunk of your money every year will affect the overall value of your annuity.  Be sure to have your trust lawyer in Mississippi compare annual rates for different annuities that you might be considering.

Surrender Charges

Having your annuity money sitting there can provide quite a temptation when you find yourself in need of cash.  You may still have access to the cash, but not for free.  If you want to pull money out early, you will likely face a pretty steep surrender charge, which is usually higher earlier on in your account’s history.  For example, you could be charged as much as 20% for taking money out in the first year, with the percentage dropping each year after that.  Surrender periods can range from 5 to 15 years.


Don’t forget that annuities are insurance products.  Even when working with a reputable Mississippi trust lawyer, you will need to purchase your annuity through some kind of insurance sales person.  This sales person or broker will be entitled to a commission for selling you the product.  This commission will vary based on many different factors, but it’s not unreasonable to expect to pay 10%.

Long-term Care

Annuities can be used for Veterans benefit or Medicaid planning purposes.  However, having the wrong kind of annuity can be an expensive nightmare in these same circumstances.  If you need to “un-do” the annuities to get into the right kind of annuity you need to consider not only the surrender charges, but also the income tax consequences.  If you are exploring planning to access long-term care benefits, be sure to have your trust lawyer in Mississippi review your current annuities and any annuities you are looking to purchase.

Again, an annuity might be a great option for your situation.  These are just some considerations to make.  For a fuller understanding, meet with your trust lawyer in Mississippi to review your needs and options.

Big Changes for Private Annuities

The article examines the IRS’ recent issuance of proposed regulations
cracking down on Private Annuity Trusts used for income tax avoidance.
The article looks at why PATs are still a viable tool in estate

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529 Plan Benefits Made Permanent by the Pension Protection Act

your client is a parent with future educational obligations for young
ones, or perhaps a loving aunt, uncle, grandparent, or stepparent, now
more than ever 529 plans are an attractive tool for the escalating
costs of education, as well as for income and estate planning purposes.
This is because one of the hidden gems of the new Pension Protection
Act of 2006 (signed into law on August 17, 2006) is a provision that
makes permanent the income tax-free growth of Section 529 plans used
for qualified higher education expenses. Prior to this new law, these
provisions would have expired December 31, 2010.

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