We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Blog + Articles

Categories

  • Industry Articles (13,274)
  • Industry Conferences (2)
  • Industry Job Openings (16)
  • Negative Media (128)
  • Positive Media (73)
  • Sheryl's Articles (509)
  • Sheryl's Blogs (149)
  • Wink's Articles (204)
  • Wink's Blogs (169)
  • Wink's Press Releases (80)
  • Blog Archives

  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • May 2008
  • February 2008
  • Making the nest egg last: best products for senior clients

    April 18, 2017 by Warren S. Hersch

    Entering retirement can be a particularly jarring experience for seniors, and not only because they’re leaving behind the familiar world of work. For the change also requires a shift in one’s financial orientation — from savings accumulation to decumulation.

    Above all, the transition brings into focus one overriding goal: how best to “pensionize” a nest egg so that your money outlasts you, and not the other way around.

    Among the more 78 million baby boomers in or near retirement, the oldest of whom are now over age 70, retirement income planning has thus become an urgent priority. That’s true, too, for the thousands of agents and advisors who serve these boomers — a demographic group now in possession of lion’s share of the nation’s wealth.

    “Americans age 55-plus own almost 70 percent of all investable assets  in the U.S.,” says Jafor Iqbal, an assistant vice president at LIMRA Secure Retirement Institute. “That’s a huge concentration of money. So naturally, advisors have changed their focus in recent years to incorporate retirement income planning in their practices.”

    In tandem with this shift, insurance and financial professionals are looking to a range of solutions that can best secure senior clients’ post-retirement objectives. Among the main aims are preservation of principal, guaranteed income for life and healthy returns on invested capital.

    There’s also this not-insignificant one: tax-favored treatment of retirement assets. This can have a potentially huge impact, not only on the quality of life in retirement, but also on money available to fund a retiree’s legacy planning objectives.

    A MULTI-PURPOSE PRODUCT

    One vehicle well suited to achieving these goals is cash value life insurance. Ed Slott, a CPA, author and expert on individual retirement accounts, advocates that individuals move assets held in an IRA to a permanent, paid-up life insurance policy. The sweet spot is after 59 ½, when IRS tax penalties on IRA withdrawals no longer apply.

    Why do this? Because unlike an IRA, funds in a cash value life policy can be accessed free of income tax (up to cost-basis through withdrawals; and thereafter as policy loans).

    The tax-favored treatment also lets policyholders avoid “stealth taxes” that kick in because of increase in taxable income. For example, an IRA distribution could boost tax on Social Security benefits or trigger a 3.8 surtax on net investment income from capital gains, investment income or dividends.

    Cash value life insurance is also exempt from required minimum distribution (RMD) rules governing IRAs. Seniors can thus let their policy’s cash value grow beyond age 70 ½ (the age at which IRA holders must begin taking income) on a tax-deferred basis.

    “People think of life insurance for the death benefit, but most people don’t know about the powerful lifetime retirement and tax benefits,” observes Slot. “Funds in a permanent life insurance policy can double as a retirement savings account, but without the worry about what future tax rates will be.”

    All well and good. But others are unconvinced that life insurance policy is the best place to park retirement assets. If, say, the senior client’s main objective is growth potential, then alternative vehicles may be a better bet, especially in a low interest rate environment, which can depress returns on interest-sensitive universal life policies.

    One option to consider: a reverse mortgage, which let homeowners borrow money against their home equity. When interest rates are low, the loan to repaid — structured so as not to exceed the value of the home, and which only becomes due at the borrower’s death or when the property is sold — will be less burdensome. Upshot: more cash on hand to fund retirement or estate planning objectives.

    Or so one would hope. Experts caution against rushing into a strategy for funding retirement through loans, whether via a reverse mortgage or cash value life policy. The right technique will ultimately hinge on a rigorous analysis of the options; anything short of that could put the retiree at financial risk.

    “You have to run the numbers to see which strategy makes most sense,” says Moshe Milevsky, an associate professor of finance at the Schulich School of Business at York University in Toronto. “The number one question to ask is, ‘What will be the interest rate at which I’m borrowing money?’ If the rate on a policy loan is high relative to a reverse mortgage, which can create a similar tax-free income stream, then the reverse mortgage may make more sense.”

    WHAT AM I EARNING?

    The prevailing interest rate also must be considered when investing in interest-sensitive fixed income vehicles that can provide a guaranteed retirement income stream. These include savings accounts, bonds, certificates of deposit, money market funds and fixed annuities. Of these, only the last can assure retirement income for life, a top priority of seniors, as recent research indicates.

    Click HERE to read the full story via ThinkAdvsior. 

    ……………………………………………………………………………

     

    At the carrier level, an evolution in compensation is already underway. Several companies— Great American, Midland National, Lincoln National and Sammons Retirement Solutions — have recently developed fee-based indexed annuities. Sheryl Moore, president and CEO of Moore Market Intelligence, expects more such products to hit the market, but she believes they’ll need time to gain traction. That’s because of the challenges so many producers face (not least a potentially significant loss of revenue) when making the transition from commissions to fees.

    “A lot of companies will launch fee-based indexed annuities,” she says. “But companies selling these fee-based products are not going to instantly see sales success. As to advisors already operating on a fee-basis, few of them sell fixed indexed annuities today.”

    The same cannot be said of fee-based VAs. A leader this space is Jefferson National, which the multiline insurer Nationwide acquired last September. Jefferson National’s VA platform, Monument Advisor, boasts nearly 400 mutual fund choices.

    ………………………………………………………………………………………………………..

    A leader in this space, Global Atlantic Financial Group, which markets combo annuity-LTC products through Forethought Life Insurance Co., has achieved success in annuity-LTC sales where other carriers struggled. The reason, notes Moore, is its broad distribution strategy: The company markets its hybrid product, Forecare, through a nationwide network of banks, broker/dealers, IMOs, independent agents and funeral homes.

    Linked benefit solutions have achieved greater success in the life insurance space, most notably with indexed UL products. Nationwide, Pacific Life, RiverSource Life, Transamerica, among other insurers, offer combo life-LTC solutions, including riders covering both long-term care and chronic illnesses.

    “Life insurance products are better positioned to carry LTC and chronic illness riders, particularly on indexed UL life products,” says Moore. “These riders have become a source of competitiveness for product manufacturers.”

    “About 70 percent of American seniors will need long-term care at some point in their life,” she adds. “That’s a staggering statistic.”

    Originally Posted at ThinkAdvisor on March 21, 2017 by Warren S. Hersch.

    Categories: Sheryl's Articles
    currency