Why You Should Prioritize Saving for Retirement Care

January 25, 2021 17:18 newlambertagency

As per a report from National Institute on Retirement Security, about two out of three 21- to 32-year-olds haven’t started retirement savings.

Why is that so?

For one thing, the approach and attitude towards retirement have completely changed. The young working generation doesn’t believe in waiting for decades to live the “good life” or put a pin on their dreams for a day that may or may not come.

There’s nothing wrong with this approach. But there is a basic miscalculation in decision-making with not starting as early as possible when it comes to planning for your financial future.

That’s because the earlier you start, the easier it is.

Although retirement care is the last thing in this generation’s mind, just taking an initiative could prove to be extremely beneficial in the long run.

Here’s why:

  • The longer money works, the better the potential returns.
  • Retirement savings offer a chance to reduce taxes.
  • A nest egg increases options beyond retirement.

Here’s how you can prepare for retirement care:

Increase your knowledge

Whether you’re planning to pay for retirement care with your personal savings or via government assistance, you must be aware of the potential costs and the various effective ways to pay for your retirement care. For instance, Medicare doesn’t pay for on-going long-term care, but Medicaid pays for some of the healthcare costs depending on your eligibility.

Develop a plan

The ideal thing to do for your retirement is to plan how much money you need to save as early as possible. You must have a realistic plan that’ll help you save money without taking anything away from your present living situation. Considering retirement options can be overwhelming so seeking help from a financial planner can help ease that burden.

Communicate your references

The smarter way to prepare for retirement care is before you or a loved one becomes ill, requiring urgent care. If you think you might become a caregiver in the future, you should start learning about subjects such as Medicare, living wills, and powers of attorney. It’s also best to communicate your preferences to your family members – about how you would like to receive care or what kind of retirement care would you prefer.

And saving early for retirement will not only help you with retirement savings but also developing an early habit of not spending 100% of your paycheck, you’ll be better positioned to save for other goals like:

  • Building your own business.
  • Buying your place.
  • Going on the trip of a lifetime.

The bottom line is the younger you start saving and investing, the less you have to work to have a financially secure future.

Annuities: Insurance for Retirement

August 19, 2020 12:36 newlambertagency

Do you have a retirement plan? If not, then maybe you should start planning. And if you’ve wondered about annuities, then you should continue reading and put an end to your queries.

You’ve probably heard about annuities before—but have you ever considered adding them to your retirement strategy? They remain often ignored and frequently neglected among investors, but Annuities may be the best retirement product that hardly anyone buys.

What are Annuities?

Simply put, an annuity is a contract between you and an insurance company. In return for the money you pay to buy the annuity (which is called a premium), the insurance company will give you a series of payments that are guaranteed to last for a time you select in advance. Thus it could be said that they’re retirement insurance.

An annuity could pay you for your entire life – even if you live to more than 100 years – for your spouse’s entire life, or for a set time that you select, depending upon the type of annuity. And what’s even more appealing is that you can withdraw funds from some types of annuities.

To know more about them, let’s look at the annuity types.

Types of Annuities

Immediate Annuities allow you to turn a lump sum of money into a stream of guaranteed payments that can last for your lifetime, or a set time, depending on your preferences.

Fixed Annuities guarantee your premium payment and guarantee a fixed annual rate of return for set periods until you’re ready to start getting payments.

Variable Annuities are long-term financial products designed for retirement planning that allows you to invest in the market. They provide you with growth potential when the market is up, but can also mean you can lose money when the market drops.

Deferred income annuities allow you to take money that you have today and turn it into a guaranteed stream of lifetime payments in the future.

Now, let’s compare annuities with life insurance or should we say, annuities vs. life insurance.

Annuities vs. Life Insurance

Annuities are generally offered by Life insurance companies and investment companies, Life insurance deals with mortality risk i.e. the risk of dying prematurely while Annuities, on the other hand, deal with longevity risk, or the risk of outliving one’s assets. If the annuity holders survive to outlive their initial investment, it makes Annuities a risk to the annuity issuer. That is why there’s concern over Annuity issuers hedging longevity risk by selling annuities to customers with a higher risk of premature death.

Even though annuities are known to be complex, they can be an extremely beneficial part of your retirement plan.

Tips to Approach Retirement Savings Plan for Women Entrepreneurs

July 13, 2020 10:07 newlambertagency

No matter what stage of self-employment you may be in, thinking about how to make your investments last in retirement should be a top priority.

Saving for retirement can be challenging for anyone, but especially for business owners who invest much of their own savings and earnings into their companies.

And if you’re a women business owner, having a retirement plan in place is even more critical as in general, women live longer than their male counterparts.

To set up a robust retirement plan, women business owners must consider the following:

Develop a plan for caregiving responsibilities

Because women are often the primary family caregivers for children and ageing parents, women business owners need to have a plan in place for how to manage and share these responsibilities. Building a support network is key.

Considering the financial ramifications of work absence is also advisable since less income means fewer retirement savings — and a prolonged period away from work could negatively impact the future success of the business.

Start investing early

In the initial phase of a start-up, companies are cash poor and hence business owners won’t have the required money for investing in their own retirement. And even as a business gets its legs and ramps up, entrepreneurs often focus on the growth of their business and end up reinvesting.

But at such a lean time, women entrepreneurs must consult a financial advisor who can make recommendations for their personal retirement savings — as well as for their business. If you start early, the stronger would be your retirement plan and your savings would be that much more alluring.

Invest cash distributions in retirement vehicles, not the business

When you start to receive a considerable cash distribution from your business, it would prove advantageous to invest in stocks, bonds and non-traditional investments so as to diversify away from the single enterprise.

Of course, it would not be prudent to invest business profits in these same investment vehicles. Businesses require a certain level of liquidity to meet their financial obligations and having funds tied up in investments like long-term bonds, for example, could prove to be problematic.

Reduce tax liabilities through HSAs

If you’re a female entrepreneur with the ability to pay for upfront medical expenses through a high deductible plan, the tax advantages of health savings accounts (HSAs) are many:

  1. a) if the contribution is made as a payroll deduction, no taxes are paid on the contribution,
  2. b) investment earnings in an HSA account are not taxed, and
  3. c) qualified health expense withdrawals from an HSA account are tax-free.

By adopting these strategies to balance retirement savings with business growth and set up a conducive ‘women retirement plan’, female entrepreneurs can look to their futures more confidently — which can only be good for business.