Retirement: Enjoy the Fruits of Your Labor
After spending years working hard, raising a family, and building your nest egg, your
retirement should be one of the most rewarding chapters of your life. Now's the time
to make the most of your new beginning, to enjoy your independence. Spending time with
children and grandchildren, traveling, pursuing a hobby, embarking on a new vocation —
these are the priorities you'd like to concentrate on.
However, for too many people, the uncertainty of their retirement income clouds their
sunny picture of retirement. Sure, you've planned ahead and saved, but will your nest
egg be able to provide you with the lifestyle you deserve? Will it be enough to last a
lifetime? With inflation eating away at buying power, taxes eroding the interest earned on
savings, and the possibility of spending more than two decades in retirement, it's
clear that a plan is needed to help secure your retirement dreams.
The Issues That Threaten Your Nest Egg
Taxation
Taxes can really peck away at the nest egg you've spent a
lifetime building up. Surprisingly, up to 85% of your Social Security benefits may be
taxable. Even the income from tax-exempt municipal bonds and tax-exempt bond funds is
included in the calculation to determine how much of your Social Security benefits will be
taxed. Add your other sources of income from taxable pensions and IRA payments, interest
earned on CDs and savings accounts, and you can end up with quite a lot less after-tax
income than you had been expecting.
Inflation
With the specter of inflation always lurking, you'll want to
place your funds in products that offer the potential for growth. Over time, inflation
will make everything you purchase more expensive, so your investment earnings will have to
keep pace to maintain your current standard of living. Even moderate levels of inflation
can have a dramatic effect. For example, 5% inflation cuts your buying power in half in
just 14 years.
Outliving Your Income
It's wonderful that people are living longer
lives these days. Some individuals can now spend 20 or more years in retirement, so you
need to be sure that your financial resources can last as long as you do. Most likely,
your retirement income is coming from three main sources: Social Security, your pension,
and your personal savings. The average monthly Social Security check in 2002 was just $876, so making the most of your own investments is essential.
(Source: Social Security Administration.)
Annuities: Benefits That Can Last a Lifetime
Annuities have long been the classic investment for retirees seeking to secure a reliable supplemental income for their entire life, and there are a number of reasons why:
Lifetime Income
If outliving your savings is a concern, an annuity could be
the solution. You can arrange to receive a steady stream of periodic payments, for the
rest of your life.
Tax Deferred Growth
Annuities can offer tax relief. Perhaps the greatest
advantage of an annuity is that your money accumulates tax deferred — you won't pay
taxes on your money while it's growing, only as you withdraw it. Most people
don't think of Uncle Sam as a benevolent uncle, but through tax-deferred investments,
he has provided an attractive advantage. This benefit may allow your money to accumulate
faster than it would in a comparable, currently-taxable vehicle. However, withdrawals made
before age 59 1/2 may be subject to a 10% IRS penalty.
Competitive Interest Rates
Annuities can offer competitive interest rates,
as well as investment flexibility. With some annuities, you can "lock-in" a
guaranteed interest rate for a specified period of time. Others offer a variety of
variable investment options so that you can allocate your money according to your own
personal objectives. Here, investment returns and principal will fluctuate so that upon
redemption shares may be worth more or less than their original cost.
Guaranteed Death Benefit
If you were to die prematurely, would your loved
ones have enough money to continue in the lifestyle that they're accustomed to? Will
your heirs be able to meet estate and final expenses? Planning to provide for the needs of
family after your death is essential, especially if your pension option is "single
payer." Annuities offer the security of a guaranteed death benefit1, which passes to your named beneficiary(ies) free of the costs and delays of probate.2 With some annuities, if your spouse is the primary beneficiary, he or she has the option of assuming ownership of the annuity and continuing to accumulate money on a tax deferred basis.
(1 Backed by the claims-paying ability of the insurer;
2 Subject to state availability.)
What is an Annuity?
An annuity is a contract with an insurance company whereby you deposit a sum of money, and you then receive a series of payments at regular intervals. Annuities are not a "one size fits all" product. There are a wide array of annuities, each with its own particular features.
Fixed Deferred Annuities
With a deferred annuity, you pay one or more premiums to the insurance company, and then receive payments beginning at some specified date in the future. This arrangement is popular with people seeking to defer current income tax. You will not pay taxes on your money while it's growing, only when you withdraw it. You
can spread your payments over many years, even out your tax burden, and avoid throwing
yourself into a higher tax bracket or increasing taxation on your Social Security
benefits.
However, withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.
Variable Annuities
Given the advantages of investment diversification, variable annuities typically offer several variable investment divisions (equity, bonds, government securities, etc.), while allowing your earnings to accumulate tax-deferred. This vehicle may be appropriate for individuals seeking higher potential growth for their monies, while accepting greater risk exposure. Return depends upon the performance of the investment options and share price at redemption may be more or less than the original price.
These products are offered by a prospectus. Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. Both the product prospectus and the underlying fund prospectuses contain this and other information about the product and underlying investment options. Please read the prospectuses carefully before investing.
Call On Your New York Life Agent or NYLIFE Securities Registered Representative as a Resource
Through careful planning, you can take the necessary steps to help assure that your retirement years will be financially secure. Navigating through the maze of options to find the best path can be a daunting task. Don't hesitate to call on the help of experts. Your New York Life agent or NYLIFE Securities Registered Representative is a professional trained to analyze your retirement income needs. Working as a team with your legal and tax advisors, your agent or registered rep can address your concerns and offer guidance regarding how annuities, life insurance, and other financial products may be right for you. For more details, contact a local New York Life agent or NYLIFE Securities Registered Representative. A New York Life agent — professionally trained and experienced — can help you analyze your needs and recommend appropriate solution through insurance and financial products and concepts — at no charge to you. Click here to request a free, no obligation, consultation with a New York Life agent.
New York Life Insurance Company
New York Life Insurance and Annuity Corporation (A Delaware Corporation)
NYLIFE Securities Inc., Member FINRA/SIPC
51 Madison Avenue
New York, NY 10010
0026880 CV
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