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Utilizing a split annuity can help you strike a healthy balance between your planning for retirement and your estate

If you are getting close to retirement age or are already retired, one of the most demanding challenges you will face is striking a balance between the requirement to maintain your current standard of living and the desire to keep as much money for yourself and your family as you possibly can. This will be one of the most difficult issues you will face. This equilibrium can be difficult to achieve, especially when retirement can last for decades. The establishment of a current income source, in addition to the preservation of wealth for the future, is possible using partitioned annuities, which is one of the options that should be considered. The A to Z of Annuities An annuity is a type of tax-advantaged investment that is often established with an insurance provider or another supplier of financial products. In return for a one-time payment or yearly payments that people spend, the insurance company will make regular payments to you either for a predetermined number of years or for the rest of your life. For the sake of the “split-annuity” strategy, which will be discussed further down the page, we shall focus on “fixed” annuity. “Fixed” annuities often come with a predetermined rate of return. The terms “variable” and “equity-indexed” refer to two more types of annuities. Both types include a higher level of risk, but they also offer the opportunity for a greater return on investment. You have the option of taking immediate payouts or delaying them with an annuity. The payouts for an instant annuity begin as soon as the deal is executed, whereas the payments for a deferred annuity aren’t initiated until a certain point in the future, as their respective titles imply. Profits from an annuity are exempt from taxation during the period between when the annuity is purchased and when the money is paid out or redeemed. A part of each repayment is regarded as a return of principal, which is not subject to tax, while the remaining portion is liable to regular income tax (premiums). Deferred annuities have the potential to grow more quickly than comparable taxable accounts because of the capacity to accumulate earnings on a tax-deferred basis. This helps deferred annuities compensate for the often-low interest rates they offer. You have the option, if your circumstances change, to either take money out of the account or redistribute it so that it can be used for anything else. This is made possible by an annuity. Be aware, however, that you may be required to pay surrender or early withdrawal costs depending on the amount that you remove as well as the date of your withdrawal. These fees might add up to a significant amount. These charges may build up to a large sum. A scenario focused on a split annuity Although the term “split annuity” may give the impression that it refers to a single item, it is used to apply to two or more separate annuities that are often financed through a single investment. Purchasing an instant annuity with a part of the money allows you to implement a standard split-annuity plan. This type of annuity allows you to receive guaranteed payments for a predetermined period. The leftover money is put into a deferred annuity, which means that payments won’t start coming in until after the first annuity period has passed. When the term of your immediate annuity concludes, in a perfect world, the value of your delayed annuity will have accumulated sufficient returns by that time to bring it up to the same level as your initial investment. However, this is not the case. In other words, if the split annuity is constructed appropriately, you will be able to retain access to your capital while also benefiting from a continuous income flow for a certain number of years. This access to your capital will be possible because the split annuity will be structured correctly. After the conclusion of the current term, you will have the chance to revisit the decisions you made throughout this one. You might, for example, start drawing payments from the deferred annuity, withdraw some or all the cash value of the annuity, or reinvest the money in a split annuity with a different company or in a different investment fund.
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My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial [email protected] 914-302-2300

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Kevin Wirth

My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial planning. [email protected] 914-302-2300

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At Certified Safe Money, we empower you with valuable resources to make informed decisions for your retirement goals. We believe knowledge is the key to unlocking a secure future. Explore our current e-books and equip yourself with the insights you need to plan for the retirement you deserve.

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