Retirement Strategies

When it comes to preparing for retirement, few people strategize and plan carefully enough to really be prepared for their retirement years. Countless others are caught off guard, not able to enjoy their retirement years as they imagined, due to lack of planning. Those unprepared commonly experience financial distress. Although it is never too late for retirement planning, there is a definite advantage to starting early.

What is the advantage of setting up a retirement strategy early in life? The answer is time – time, not money, is your greatest asset in long term investments. Even small amounts of money over long lengths of time have the potential to grow in value. Do not wait until tomorrow to think about preparing for retirement. The clock is ticking and time is on your side now. It is never too late for retirement planning. Start your plans today! We are here to help you achieve your financial goals. Contact Fitzwilliams Financial for an appointment today.

Ignorance Is Not Retirement Planning Bliss

From birth, into our toddler and teenage years, we just live life to its fullest with little financial worry. During those years, we are unaware of our future responsibilities and don’t fully understand what it takes to survive in life. Most of us had a family that raised us, or had someone in charge of our lives, making sure we had what we needed at all times.

Not until we neared adulthood, or we were pushed out early into the world on our own alone, abruptly, due to some life changing event, did we realize that we were now in charge of our financial destiny. Some of us only have our own lives to be concerned with, while, for others the lives of their children and maybe other family members are at stake. This turning point in maturity is when we realize our lives will be exactly what we make them – nothing more, and nothing less.

Some people realize this early in life. Other people realize these things much too late in life. Remember the saying that the early bird gets the worm? When it comes down to retirement, the early bird gets the nest egg!

Only The Early Bird Gets The Nest Egg

You have worked hard all your life, and you have always visualized a worry-free retirement. As a matter of fact, you are working very hard today, so you decided to take a short break to refresh. You begin to think about your job, your age, or maybe how many years you will have to work before you will reach retirement age. You often visualize, just as you are visualizing right now, what it would be like to be retired, worry-free.

Think of all those things you would be able to do in your retirement that you could not do in your earlier years. You can visualize your retirement dream down to every detail. You are on some remote, pristine beach, basking in the sun in your ever so comfortable beach chair. You reach over, occasionally, to pick up and sip upon the beverage of your choice. You know – the one with the little paper umbrella and the colorful straw? As your break ends, you snap back to the cold of reality.

The problem is, when you do snap back to reality, you realize that in your current financial situation, that worry-free retirement bliss will never happen. It could only ever be a dream. You wonder what can you do to get where you want to be financially. This is exactly what you should be doing. Figure out what you need to do now to have that luxury retirement you dream of and deserve.

The key to gaining the most advantage in your retirement is to be that early bird. Want to be that early bird? Contact Fitzwilliams Financial for a Free Financial Review and make sure you get your nest egg!

Tax-Free Income Strategies

A common retirement strategy may consist of a combination of tax-free retirement income and regularly taxed vehicles. The proper strategy for you depends on your life situation and with what level of risk you are comfortable. Can you really have a tax free income in retirement? Yes, of course you can! The bottom line is, the higher your tax rate, the more you could probably benefit from a tax free income strategy.

There are many ways to utilize tax-free income products in the financial market, each with its own unique features. When you think of a tax-free income vehicle, many think of a Roth IRA. Income from a Roth IRA is technically “tax-free” upon retirement. Meaning, instead of being taxed on future withdrawals, you are taxed on your deposits up front. This can benefit some financial portfolios.

Roth IRAs do have some constraints though, like a maximum allowable yearly contribution set by the IRS. If you exceed the maximum allowances, you will be subject to further tax consequences. Also, Roth IRAs are traditionally invested directly in the market and that means risk to your next egg. The constraints of a Roth IRA can make it much less attractive as an investment vehicle than other options.

Want A Tax-Free Retirement?

Annuities and certain types of life insurance allow you the ability to accumulate retirement funds without risk to principal and can capture the majority of market gains. If structured properly, you can also gain the advantage of tax free retirement income. For example, you can have an Index Universal Life (IUL) insurance policy with a flexible premium that allows you to overfund.

Overfunding sets up your excess deposits to earn interest, based on an index. The funds in your indexed universal life insurance policy will protect your family in ways a typical term life insurance option cannot. A IUL plan designed by Fitzwilliams Financial can allow you borrow against your cash value and not have to pay back the loan, as long as *terms and conditions are adhered.

With an IUL and the option to overfund you give your family extra protection in case anything happens to you. At Fitzwilliams Financial, we specialize in IUL tax-free income products. Contact us for an appointment to learn more about how you can retire with tax-free income!

*Borrowing against the contract: Loans are received income tax-free. Interest is due on the loan (but is paid by either cash, policy dividends, surrender of additions or by borrowing the interest). Repayment of the loan is due upon the death of the insured (thereby reducing the total death benefit paid to the beneficiary). A loan affects a dividend positively or negatively on the loaned portion of the policy. In addition, repayment is required when the policy is surrendered in total. At such surrender, tax may be due depending on the policy owner’s basis and total cash value. If the policy lapses with a loan, the outstanding loan amount is considered cash received and may be taxable depending on the taxpayer’s basis.

The Index Universal Life (IUL) Policy

The appeal of an indexed life insurance policy is commonly that your principal is protected. For many, this is a must in the mix of a properly strategized portfolio. Looking at the Index Universal Life (IUL) insurance policy more in depth, it offers the ability to earn interest that is linked to the movement of a selected stock market index.

So, hypothetically, let us say that for the next thirty years, your IUL averages 7.5% on your excess, after-tax money. What kind of gain would you get? Sounds quite appealing right? Now, to make this even more attractive, consider the fact that this Index Universal Life policy guarantees that if the selected index has a loss during your accumulation phase, you will not.

IULs have another attractive feature, the ability to take a *loan against your cash value. Taking a loan on your cash value can be tax free with the proper annual planning and strategy. Money contributed into the IUL is considered after tax funds, so it is considered tax-free when withdrawn. Think about the fact that the IUL is long term vehicle where you gain the advantage and power of compounding interest. With a Index Universal Life policy, you will never have a losing year due to market volatility! To learn more about the IUL, visit our Life Insurance page.

*Borrowing against the contract: Loans are received income tax-free. Interest is due on the loan (but is paid by either cash, policy dividends, surrender of additions or by borrowing the interest). Repayment of the loan is due upon the death of the insured (thereby reducing the total death benefit paid to the beneficiary). A loan affects a dividend positively or negatively on the loaned portion of the policy. In addition, repayment is required when the policy is surrendered in total. At such surrender, tax may be due depending on the policy owner’s basis and total cash value. If the policy lapses with a loan, the outstanding loan amount is considered cash received and may be taxable depending on the taxpayer’s basis.