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Annuity Investment: Why Women’s Retirement planning is Different

She works at your area’s grocery and drug stores, so you might run into her at the register. She may be in her 60s, 70s, or 80s, but she has no savings to retire on. It’s impossible to make ends meet between her savings and Social Security. This is a widespread issue. Women receive smaller Social Security and retirement benefits than men due to their lower average income. The National Institute on Retirement Security reports that women aged 65 and older have a median income 25% less than men of the same age. Women must ensure their savings will last for decades because they have longer life expectancies. Furthermore, only a minority of modern employers provide their workers with traditional pensions for life. The need to save for retirement is especially pressing for women, who often receive less pay than men. Women investors are typically more cautious than their male counterparts. However, unless they are part of a retirement account, the safest investments (Treasuries and CDs) have a low yield and are subject to taxation. It’s not uncommon for women to overlook fixed annuities, another low-risk savings vehicle. That’s too bad because fixed annuities tend to grow money faster than other seemingly secure investments. For a predetermined period, fixed-rate annuities provide the equivalent of a certificate of deposit (CD) in terms of interest. The issuing insurance company guarantees them, and state guaranty associations provide additional security. Different states have different minimum requirements for protection. Tax deferral and, in general, higher rates than CDs or Treasuries with a similar term are two of the main benefits that help women save money more quickly. With less of a burden from taxes, savings can accumulate more rapidly. Besides traditional retirement savings vehicles like IRAs and 401(k)s, fixed annuities can be an intelligent addition. You can convert your fixed annuity into a lifetime income stream, paid monthly for as long as you live, by annuitizing it during retirement. So, a woman can use it to start her retirement fund. Economists recommend lifetime annuities as a smart financial move for women. A variable annuity might be for you if you’re looking for an alternative. Deferred lifetime income annuities are an alternative to purchasing a fixed annuity and then annuitizing the proceeds later. Your funds are insured by the insurance firm you choose. In exchange, the insurance company will start paying you a fixed amount each year, forever. The larger the payments, the longer you can wait to take them. Instead, you can invest in an immediate lifetime income annuity if you need a steady stream of income right away. Economists widely recommend lifetime income annuities to hedge against the financial risk of living to old age, not just for women. Economist David F. Babbel of the University of Pennsylvania wrote in a 2008 paper on lifetime income for women that for most people, at current pricing, lifetime income annuities should comprise 40% to 80% of their retirement assets. According to Babbel, income annuities outperform fixed-income investments because each monthly payment includes interest on the deposit and a return of a portion of your principal. The interest portion of your $1,000 monthly payment may be $191, with the principal amount being $809. Since the latter involves returning your money from an insurer to you, it is not subject to taxation. Women who live a long time have much to gain from the insurance features of lifetime annuities. Payments will continue unabated even after the annuity owner has outlived her expected lifespan and all principal has been returned. In this scenario, she will continue to receive the $1,000 per month even if she lives to be 100 or older. However, the entire sum will be considered taxable income in this case. There is a price to pay for security, as with any insurance. Babbel found that lifetime annuities generate only modest profits for insurers due to low markups. Considering that women tend to live longer than men, the insurance premiums included in the annuity will naturally be higher for women. However, according to Babbel’s findings, women are better off than men. That’s because a lifetime annuity typically provides 42 additional monthly payments to women. Taking into account the timing of the payments and the interest earned, women pay less for similar annuities than men. No longer is this a concern when a man and a woman purchase an annuity on a joint-and-survivor basis, as the annuity’s value is calculated based on the life expectancy of the person who dies last. Comparing a deferred lifetime income annuity to purchasing a fixed annuity and then annuitizing it later There is no clear advantage to one approach over the other. The option to convert a fixed annuity into an income stream once you retire offers you more financial freedom. You can withdraw the funds before retirement if you need to, but doing so could result in a tax penalty if you’re under 59½. You can take the money out all at once or in smaller chunks if you don’t want to annuitize it. If you opt for a deferred lifetime income annuity, on the other hand, you will most likely no longer have access to your cash value. However, if you hand over your cash to an insurer, you’ll be eligible for significant benefits. By doing this, a woman can predict her future earnings with high accuracy. If interest rates fall, she may receive less money if she annuitizes a fixed annuity in the future. In addition, it’s better to make decisions now, when you know how much you’ll get, rather than later, when you might not be able to do what you want.
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Bio:
Mike was born in Chicago, Illinois on August 13, 1946. He was brought up in thesuburb of Skokie on Chicago’s northwest side and graduated from Niles Township (East ) high school In 1964. Two years later he joined the US Air Force in November of 1966. After 2 years of Intense training he volunteered for Viet Nam and was sent toBien Hoa Airbase, which was 25 miles from Saigon, the nation’s capital. He volunteered for a number of especially dangerous missions on his days off, such as flying as a door gunner on a US Army helicopter and as a technical assistant on a psychological operation on an Air Force O-1E observation aircraft. Capping off his impressive accomplishments was winning the coveted Base Airman of the Month for March 1969, a feat which was featured in the Pacific Stars And Stripes newspaper read by every service man stationed in the Pacific theater of operations. After hisViet Nam tour of duty he was stationed at Luke Air Force Base in Glendale, Arizonawhere he met and married his wife, Lequita.He graduated from Arizona State University in May, 1973, and after a 30-plus year career as a financial advisor he joined a number of service organizations including Easter Seals and Valley Forward, sponsor of EarthFest. He was also involved with the National Federation of Independent Business and became the longest-serving chairman of the Leadership Committee ever. He spoke before the ( AZ ) House Waysand Means & Senate Finance committees. He then joined Disabled American Veterans ( DAV ) in September of 2015. He rose quickly through the ranks and became Chapter 8 Commander in May of 2019 where he served with Distinction for 3years before being “ termed outâ€. The next year, as Vice Commander, he won the title of National Champion Recruiter!

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Michael Crowe

Mike was born in Chicago, Illinois on August 13, 1946. He was brought up in the suburb of Skokie on Chicago’s northwest side and graduated from Niles Township ( East ) high school In 1964. Two years later he joined the US Air Force in November of 1966. After 2 years of Intense training he volunteered for Viet Nam and was sent to Bien Hoa Airbase, which was 25 miles from Saigon, the nation’s capital. He volunteered for a number of especially dangerous missions on his days off, such as flying as a door gunner on a US Army helicopter and as a technical assistant on a psychological operation on an Air Force O-1E observation aircraft. Capping off his impressive accomplishments was winning the coveted Base Airman of the Month for March 1969, a feat which was featured in the Pacific Stars And Stripes newspaper read by every service man stationed in the Pacific theater of operations. After his Viet Nam tour of duty he was stationed at Luke Air Force Base in Glendale, Arizona where he met and married his wife, Lequita. He graduated from Arizona State University in May, 1973, and after a 30-plus year career as a financial advisor he joined a number of service organizations including Easter Seals and Valley Forward, sponsor of EarthFest. He was also involved with the National Federation of Independent Business and became the longest-serving chairman of the Leadership Committee ever. He spoke before the ( AZ ) House Ways and Means & Senate Finance committees. He then joined Disabled American Veterans ( DAV ) in September of 2015. He rose quickly through the ranks and became Chapter 8 Commander in May of 2019 where he served with Distinction for 3 years before being “ termed out”. The next year, as Vice Commander, he won the title of National Champion Recruiter!

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