​There was a time when retirement planning was a fairly simple process. Retirees could rely on guaranteed*, predictable income from Social Security and an employer pension. They simply had to decide when they wanted to retire and file for benefits.
 
Those days are long gone. While Social Security is still a reliable source of retirement income, it’s usually not sufficient to fully fund one’s retirement expenses. Pensions have been in decline for years, and few retirees can now count on a robust pension benefit. That means today’s retirees now shoulder much of the burden of funding their retirement with personal savings and investments.
 
Guaranteed* income can provide stability and certainty to your retirement. A guaranteed* income stream may help you budget more effectively and make more informed purchasing decisions. It also eliminates the risk of outliving your money.
 
An annuity can be an effective tool for creating guaranteed* retirement income. If you’re not familiar with annuities, you may be overwhelmed with the choices. Below are three of the primary ways to use an annuity to create guaranteed* income.
 
It’s difficult to project exactly which type of annuity will maximize income because a wide range of factors are involved. However, having a full understanding of your options will help you make a more informed decision about how to fund your retirement.

Single Premium Deferred Annuity (SPIA) 
A SPIA is a commonly used annuity that allows you to convert a portion of your assets into a guaranteed* income stream. You contribute a lump-sum premium into the annuity. The insurer then converts that premium into income, usually paid on a monthly basis. The income amount is based on a range of factors, including:
 

• Age
• Premium amount
• Survivor benefits
• Interest rates

 
Generally, the older you are when you open the annuity, the higher your income will be. This is because the insurer uses life expectancy and actuarial tables to determine the income amount. The older you are, the shorter your life expectancy, which means the insurer will have a shorter duration to make payments. That increases the payment amount.
 
A SPIA can be a highly effective way to create a guaranteed* income stream. However, it’s important to note that you lose access to the premium once it’s converted into income. There’s usually no liquidity with a SPIA. That’s why it’s always wise to keep a portion of your assets liquid and available in case of emergency.

Fixed Deferred Annuity 
A fixed deferred annuity can provide income, but it can also be used for risk-free growth. You contribute a lump-sum premium into the annuity policy, and the insurer pays you a fixed interest rate over a predetermined period of time. The interest compounds in the policy on a tax-deferred basis.
 
However, you can also choose to take the interest as an income payment. If you take the interest as a distribution, your premium won’t grow. Instead, the contract value will remain constant, and the interest will be paid directly to you.
 
At the end of the interest rate period, the rate may be changed. However, most policies have a guaranteed* minimum interest rate so you always know the least amount of interest you could receive. A fixed deferred annuity could be appropriate if you want the flexibility to turn income on and off, or if you want to maintain access to your original premium.

Variable Annuity With Guaranteed* Income Benefit 
Do you want the opportunity to increase your assets while generating guaranteed* income? If so, you may want to consider a variable annuity with something called a guaranteed* income benefit. A variable annuity allows you to invest your premium amount in the financial markets using sub accounts, which are similar to mutual funds.
 
Since your premiums are invested, there is risk exposure and your contract value could go down. However, you can add a guaranteed* income benefit feature to protect your retirement income. This feature allows you to withdraw up to a certain percentage every year, such as 5 percent. As long as your withdrawals never exceed that amount, the distribution is guaranteed* for life, even if your investments decline in value.

If your contract value increases, you may be able to lock in a higher withdrawal. All contracts and benefits vary, so it’s important to understand the specific rules and guidelines of your contract. If you’re looking for growth and income protection, however, a variable annuity with a guaranteed* income benefit could be right for you.
 
Ready to plan your retirement income strategy? Let’s talk about it. Contact us today at Emerald Blue Advisors. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
Investment advisory services are offered through Emerald Blue Advisors, Inc., a registered investment adviser offering advisory services in the State of California and other jurisdictions where registered or exempted. This communication is not to be directly or indirectly interpreted as a solicitation of investment advisory services to residents of another jurisdiction unless otherwise permitted.    Nothing in this document is intended as legal, accounting, or tax advice, and is for informational purposes only."
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18210 - 2018/10/31

​You use insurance to protect yourself from a wide range of financial risks. You have homeowner’s insurance to cover damage to your house and car insurance to protect you on the road. Health insurance helps you get the medical treatment you need. You may even have life insurance to protect your loved ones in the event you pass away.
 
But do you have insurance to cover financial threats related to disability? According to the Council for Disability Awareness, 25 percent of all adults will miss work because of disability at some point in their lives.1
 
Many people fail to plan for disability risk because they participate in an employer’s group disability plan. They may believe that the group coverage will minimize any financial challenges created by a disability. However, group coverage often isn’t enough to minimize every threat. In fact, you could face significant hurdles even if you have group disability insurance.
 
Below are some of the key differences between group disability insurance and an individual policy. If you don’t have group coverage, or feel yours is insufficient, you may want to talk to your financial professional about additional protection tools.

Cost
 
In most cases, group disability coverage will be less expensive than a comparable individual policy. This is true of most types of insurance. The risk is shared and distributed in a group policy, which minimizes the cost. Also, it’s possible that your employer may pay a portion of the premiums.

However, an individual policy may not be as costly as you think. You can often choose the coverage and benefits that are right for you and your budget. A financial professional can help you find the most cost-effective protection strategy.

Benefit Amount
 
Many group policies replace a percentage of your salary when you become disabled. That percentage is usually fixed as part of the group plan. It also may not be a significant amount. It’s not uncommon for group plans to replace only half or 60 percent of income.
 
With an individual policy, you may be able to receive a higher benefit amount. For instance, some may pay up to 80 percent or even 100 percent of your income as a benefit should you become disabled.

Portability
 
One of the biggest challenges with any employer-based insurance coverage is that the protection is tied to the job. If you leave your job, you lose the coverage. And there’s no guarantee* that your new employer will have a similar benefit. An individual policy stays with you as long as you pay the premiums, no matter where you work.

Taxation
 
Group disability premiums are often paid on a pretax basis. Either the employer pays them pretax or they’re deducted pretax from your earnings. If your premiums are paid pretax, then benefit payments are taxable as income.

Individual disability insurance premiums are often paid on an after-tax basis. That means the benefit payments aren’t taxable as income.

Disability Definition
 
Perhaps the biggest distinction between group policies and individual policies is the way disability is defined. Many group policies cover only total disability or have an “any occupation” disability definition. That means you’re defined as disabled only if you can’t work in any occupation.F
 
With an individual policy, you can choose an “own occupation” definition. That means you simply have to be too disabled to work in your job, not any potential job. This is helpful if you work in a highly skilled field. For instance, if you’re a surgeon and injure your hand, you may not be able to work in your field even if you could perform other jobs. In that example, you would still get your benefit from an individual policy, but you may not get it from a group policy.
 
Ready to protect yourself against disability? Let’s talk about it. Contact us at Emerald Blue Advisors. We can help you analyze your risk and develop a plan. Let’s connect soon and start the conversation.
 
1http://disabilitycanhappen.org/disability-statistic/
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Investment advisory services are offered through Emerald Blue Advisors, Inc., a registered investment adviser offering advisory services in the State of California and other jurisdictions where registered or exempted. This communication is not to be directly or indirectly interpreted as a solicitation of investment advisory services to residents of another jurisdiction unless otherwise permitted.    Nothing in this document is intended as legal, accounting, or tax advice, and is for informational purposes only."
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18185 - 2018/10/22