An annuity can be a useful tool for long-term care planning, but annuities are also complex financial products that are hard to understand. If purchasing an annuity, you need to consider your options carefully. An annuity is a contract with an insurance company under which the consumer pays the company a certain amount of money and the company sends the consumer a monthly check for the rest of his or her life, or for a certain term. Annuities come in many flavors. They can be deferred (begin paying out at a later date) or immediate (begin paying out right away). They can pay a fixed amount each month or pay out a variable amount based on how the money is invested. While a fixed immediate annuity can be a good Medicaid planning option for a married couple, other annuity products can be quite complex and confusing and are not right for everyone. If you have decided an annuity is the right choice for your long-term care or retirement plan, you need to shop around to find the right product. The following are some purchasing tips:Check the terms. Be sure to read the annuity contract carefully. Annuities often have surrender charges that penalize you for withdrawing your money too early. You need to understand for how long you wont be able to access your money and when payouts begin. There may also be other fees associated with the annuity as well as optional riders. Understanding the fees will allow you to shop around to find the best product. Choose your salesperson. Insurance companies often pay generous commissions to the brokers who sell their particular annuities, payments that many of the brokers don't disclose. They also generally don't disclose whether they are paid more or less by one insurance company than another or whether the annuity being sold is the best option for the consumer. Ask your broker questions to determine how they are paid. You may want to seek a second opinion to make sure your salesperson isn't steering you into a product that isn't right for you. Select a sound insurance company. Annuity payments are often supposed to last a lifetime, so you want an insurance company that will stick around. Make certain that the insurer is rated in the top two categories by one of the services that rates insurance companies, such as A.M. Best, Moody's, Standard & Poor's, or Weiss.
Many people plan to take an early retirement, so when that day arrives, theyre ready for it. But what if you were to face an unplanned retirement? Would you be prepared to deal with the financial issues?Its something worth thinking about, because any number of factors illness, a spouses illness, downsizing, other issues could lead to an abrupt departure from the workforce. But taking action while youre still working may help you make the transition easier on yourself.Your first move, of course, should be to at least consider the possibility of having to retire earlier than you planned. You can then move on to some concrete steps, possibly including the following. Build an emergency fund. Under any circumstances, its a good idea to build an emergency fund but its especially important if you want to prepare for an unforeseen retirement. Generally speaking, your emergency fund should contain three to six months worth of living expenses, with the money kept in a liquid, low-riskaccount. But if you suspect an earlier-than-anticipated retirement may be in your future, and you have some time to prepare for it, you should consider an emergency fund that contains a full years worth of expenses. Consider your portfolios asset allocation. If youre concerned about an unexpected retirement, you may want to consider the equities allocation in your portfolio. If you think you may need to tap into your portfolio sooner than you expected, you may not want to be over-exposed to investments most vulnerable to market volatility.However, these are the same investments that offer you the most growth potential which youll need to help stay ahead of inflation. So, look for an investment balance thats appropriate for your needs. As part of this positioning, you may want to shift some assets into income-producing vehicles, while alsoadding to the cash portion of your portfolio to boost your liquidity. Evaluate your Social Security options. An unplanned retirement may cause you to consider taking Social Security earlier than you had planned. You can start taking Social Security when youre 62, but your monthly benefits will be up to 30% lower than if you had waited until your full retirement age, which is likely between 66 and 67. Ifyou have sufficient income through other sources, you may be able to delay taking Social Security until your checks will be bigger but of course, if you need the money, waiting may not be an option. Address your health care needs. If you take an unplanned retirement, and you have employer-sponsored health insurance, youll have to look for alternatives. You might be able to get extended coverage from your employer, but this could be quite expensive. Of course, if youre already 65, you can get on Medicare, but if youre younger, you might be able to get coverage under your spouses plan. If thats not an option, you may want to explore one of the health care exchanges created by the Affordable Care Act. To learn more about these exchanges, visit healthcare.gov.Taking an unexpected retirement can certainly be challenging but the more prepared you are, the better your outcomes are likely to be.Chad Choate III, AAMSFinancial Advisor | Edward JonesBradenton's Riverwalk828 3rd Ave W Bradenton, FL 34205941-462-2445 email@example.com This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.Edward Jones, Member SIPC
In the past year, weve seen some big swings in the financial markets. This volatility may make you feel as if you have little control over your investment success. But the truth is, you do have more control than you might think as long as you dont let fear guide yourdecisions. Investment-related fear can manifestitself in a few different ways: Fear of loss Some investors may emphasize avoiding losses more than achieving gains. Consequently, they might build portfolios they consider very low in risk, possibly containing a high percentage of certificates of deposit (CDs) and U.S. Treasury securities. Yet, a highly conservative approach carries its own risk the risk of not achieving enough growth to stay ahead of inflation, much less meet long-term goals such as a comfortable retirement. To reach these goals, youll want to construct a diversified portfolio containing different types of assets and investments each of which may perform differently at different times. Your objective shouldnt be to avoid all risk which is impossible but to create an investment strategy that accommodates your personal risk toleranceand time horizon. Fear ofmissing out Youre probably familiar with the term herd mentality the idea that people will follow the lead of others for fear of missing out on something. This behavior is responsible for fads or the sudden emergence of hot products, and its also relevant to investing. In fact, herd mentality may contribute to sharp jumps in the financial markets as investors drive up prices by buying stocks to avoid being left behind. And the same may be true in reverse when the market starts dropping, skittish investors may accelerate the decline by selling stocks so they, too, can get out before its too late. Buying or selling investments should be considered as needed to help advance your long-term financial strategy not in response to what others are doing. Fear of the unknown Some investorsfall victim to familiarity bias the tendency to invest only in what they know, such as local or domestic companies. But this behavior can lead to under-diversified portfolios. If your portfolio is dominated by just a few investments, and these investments are fairly similar to each other, you could experience some losses when the inevitable market downturn occurs. To help reduce the impact of market volatility, its a good idea to spread your investment dollars across large and small companies in a range of industries and geographical regions. And thats just on the equities side its also wise to consider further diversifying your portfolio by owning bonds and government securities. (Keep in mind, though, that diversification cant guarantee profits or protect against all losses.) Fear ofadmitting failure Some individuals dont like to admit when theyve been wrong about something, and they may continue the same failed activities, hoping for eventual success. This behavior can be costly in the investment arena. Sometimes, a particular investment, or even an investment strategy, just doesnt work out, but an investor is determined to stick with it even if it ultimately means considerable financial loss. Dont let his happen to you if it becomes apparent you need to change your investment approach, move on to something better.Fear can holdus back in many walks of life but dont let it keep you from making appropriate investment moves. Chad Choate III, AAMSFinancial Advisor | Edward Jones828 3rd Ave WBradenton, FL 34205941-462-2445 Chad.Choate@edwardjones.com This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC