A Secretive Policy to Grow Rich after Retirement

Are you on verge of retirement? Or, you are planning to retire early? Have you ever realized that if you keep on withdrawing from 5 – 7 percent of your savings every month, then you may fell short of funds even before your retirement? Well, this concern may have compelled to raise your eyebrows, but remember to become wealthy at the time of your retirement, what matters the most is how wisely you have optimized your investment portfolio and to what extent benefits you have estimated out of your investments.

Are you worried of outliving your income? Relax, that won’t happen unless you opt for any investment scheme haphazardly and focusing only on short term gains! It’s about the financial security of your old age, so investment should be absolutely worthwhile. Have you ever thought of investing in an annuity?

Grow Rich after Retirement

Indeed, Annuity can truly be a smart investment plan, provided you are purchasing the annuity from an insurance company who has proven track record of many satisfied clients. It’s always wise to approach an annuity providing company itself rather than opting for a scheme through an agent.

You can invest in accordance with your financial plan and current savings. If you have saved quite a huge amount over a quite a long time, it’s the time to earn some real value out of it. So, you can invest lump sum and start receiving returns almost immediately! Or, if you want to invest to over a certain period of time and opt for a fixed scale of return. Well, let’s delve a bit deeper into the types of annuity and you yourself can choose the right one for you:

Variable Annuity:

It is a type of annuity contract in which you choose the investment scheme and earn based on the performance of your investment. Not satisfactory? Well, before planning to invest, be sure that the company is providing you the prospectus with clarified scenario of risk factors and potential growth opportunities of the scheme. If you yourself find it to be bit undecipherable, then please consult some of your known investment consultants or discuss with your colleagues who have already been benefited from that scheme. Well, know let’s look at the pros and cons of variable annuity:

Pros: One of the most advantageous aspects of variable annuity over mutual funds is the guaranteed death benefit.  Irrespective of the performance of subaccounts, death benefit ensures that annuity owners’ beneficiaries are no less than the initial investment. Some variable annuity offers minimum rate guarantee return even if the subaccount suffers loss for a year.

Cons: Before deciding to invest in a variable annuity, think of it as a long term investment. Opt for this scheme, when your retirement year is still ample time away.  It has limitation of withdrawal; majority of the companies offers one time withdrawal in every year. There is a surrender period of contract, which may approximately last for 15 years. If you decide to withdraw some amount within that period, then surrender charge is applicable. Variable annuities are tax deferred investments, so withdrawals are taxed as ordinary income (earnings of a salaried person). Any amount of withdrawal prior to the age of 59 is subjected to 10% tax penalty.

Immediate Annuity:

An annuity scheme which begins with a bulk investment and earning starts almost immediately. This is perhaps most suitable for retired individuals who are afraid of outliving their savings! This scheme of annuity ensures a guaranteed return within almost no time of investment. Well, that seems to be an advantageous aspect, right? Okay, and then let’s look at the pros and cons of this annuity scheme:

Pros: Your investment gets converted into a guaranteed streamline of income and you really don’t have to wait! If you have enough of savings with matured policies along with provident fund and gratuity, then invest a smart proportion of it into this scheme and never ever you have to worry about outliving your savings.

Cons: This investment scheme is irrevocable, once you have invested. So, if an annuitant needs a lump sum amount to deal with an emergency, he/she may run short of fund.

Fixed Annuity:

This is the best investment scheme for those who are just about to retire or have already retired. In lieu of a bulk capital, the insurance companies offer a guaranteed fixed rate of interest guarantying the principal investment.

Let’s focus on the key features of fixed annuity:

  • Guaranteed Minimum Rates: No sooner the initial guarantee period expires, the rate is calculated on a specific formula (depends on the company) or the amount which is earned in the insurer’s account.
  • Tax Deferred Growth: Tax deferred accumulation of earnings.
  • Withdrawal: 1 withdrawal every year up to 10 percent of total account value.
  • Guaranteed Income: Fixed annuities can be converted into immediate annuity at anytime to generate a guaranteed income for a specified time span or lifetime.
  • Safety of Principal: The capital invested is guaranteed by the life insurance company.

Fixed Indexed:

This scheme offers returns on investment based on specified equity based index. It also provides a specified minimum, which the value mentioned in the contract will not fall below, irrespective of index performance. It’s not a stock market investment and does not participate in any stock or equity investment.

Do you need an annuity? Ask yourself few questions

  • What’s the crisis that’s troubling you and what amount you need to breathe easy
  • Do any of the annuity actually provides a solution to what you need
  • Is there any alternative to annuity
  • Consider the capital differences, time span , and what-if scenarios seriously

Retirement is worth of cherishing after tedious years of hustle and bustle, woes and worries! Take the right stride at right time and be ensured of a rejuvenating retired life.

Alleviating the Burden of Tax Debt

tax debtWhen you have a tremendous amount of tax debt on your plate it can add to any stress you may already be facing in your life. Unlike other creditors it is impossible to ignore tax debt in the hope that it will go away. Most other creditors will eventually give up, turn your account over to a collection agency and depend on them to collect the money; the IRS does not work the same way and will never discontinue collection efforts. The only way you can stop the IRS from taking further collection action is to work out a payment arrangement with them instead of unrealistically thinking they will not catch up with you at some point in the future.

One of the most important things to do for your tax debt problem is choosing the best solution to eliminate the debt. While paying a few dollars a month may work if you don’t owe very much money, it will not work if you have a substantial debt—you may not even live long enough to ever pay all the taxes you owe after the IRS adds interest and penalties to your bill. Do not despair; there are several possible solutions for eliminating or reducing your tax debt.

  • Contact the IRS to work out an acceptable payment arrangement
  • Contract with a third party medication agency to help reduce your tax debt (especially important for those who owe back taxes)
  • Contact the IRS for instructions and necessary form for filing an Offer in Compromise if your financial circumstances do not leave room for paying the taxes you owe
  • Wait for the IRS to assign future refunds to past due taxes you owe. Keep in mind this method will not eliminate the assessment of penalties and interest.
  • Borrow the money from the bank and pay your tax debt in full. The problem with this method is while you will be free of your obligation to the IRS, you will pay a higher interest rate than you will by working out a payment arrangement with the IRS.

There are many people facing financial crisis in the current economy, so asking your employer to deduct extra taxes from an already meager paycheck may not be the best answer for the present time. As difficult as it may be to ask your employer to take additional taxes out of your paycheck, you have to remember your tax debt is not going to go away just because you don’t make payments. In fact, this will have quite the opposite affect since the IRS will continue to add penalties and interest to your unpaid debt.

If your financial situation is so dire that you cannot afford to pay your tax debt, you may be a candidate for an Offer in Compromise. An Offer in Compromise is basically a settlement to pay a portion of your past due taxes. Depending on your circumstances you may be able eliminate all of the penalties and interest and some of the principal balance on your pat due tax debt. It is essential to work with the IRS to reach a compromise rather than avoiding the issue and hoping it will eventually go away.