Posts Tagged ‘annuities’

A Breakdown of Retirement Terms and What They Mean

Monday, July 30th, 2018

Don’t let the retirement industry terms confuse you, or deter you from pursuing your own retirement account. Here are a handful of the must-know terms to help you get your toes into the pool.

Custodian

An IRA custodian is a financial institution like a bank, credit union or trust company that acts as a bank. IRA custodians are regulated by the IRS and rigorously aim to comply with laws and regulations to keep your IRA tax-deferred or tax-free. They hold your retirement account contributions, as they are the only entity that’s allowed to physically hold assets.

REITs

REITs stand for real estate investment trusts, they are an entity that owns income-producing real estate. Most REITs specialize in particular types of property, residential, industrial, commercial, and retail. Some REITs even own real estate-related debt, like mortgages.

Self-Directed IRA

This is an account type for retirement savers, they can be either Roth or Traditional. The difference between regular IRAs and a self-directed IRA is that with a self-directed IRA you’re allowed to invest in alternative assets like gold and silver, real estate, pretty much anything that is a tangible asset. Self-directed IRAs are definitely not for everyone since they require work on behalf of the account holder. 

Required Minimum Distributions

Just as they sound, an RMD is a retirement distribution that you’re required to take. The reason that you’d be required to take the money is that if you have a Traditional IRA, and you turned 70 ½, that’s when you’re required to start taking money. If you have a Roth IRA, there aren’t actually any required minimum distributions.

Annuities

An annuity is a type of insurance that you can buy alongside your 401K or IRA. The idea behind an annuity is that if you outlive the funds that you have in your retirement account, the since money in your annuity will then kick in as income. Annuities give retirement savers peace of mind and help those who outlive their retirement accounts.

Tapping into Multiple Retirement Income Avenues

Monday, February 19th, 2018

If you’re a lucky enough of a person to have a pension, a matching 401K, or any other type of retirement saving option, and you’re fully taking advantage of those benefits, then this article may not be for you. This is more geared towards the 70% of American’s who have either less than $1000 saved for retirement or nothing at all. The thing is, there is more than one way to save for retirement, you don’t have to fully depend on your employer.

Self-directed IRA

A self-directed individual retirement account is an account that you can open with the custodian of your choosing (so long as they offer this account type, some don’t for varying reasons). You contribute funds to your account either after-tax as a Roth IRA or before-tax, as a Traditional IRA. The reason investors like self-directed IRAs is that they’re self-directed, meaning you choose what your money is invested in. You can invest outside of the stock market and into real estate, precious metals, small businesses, farmland, the options are almost endless.

Rental income from SDIRA

Among the short list of assets you can invest in above, we’re going to focus on one, real estate. The reason for this is obvious, right? The money that can be earned on investment property is what makes it such a lucrative and sought-after asset type. Not only is there money to be made on buying and selling, but getting a steady income from tenants is what we’re all ultimately after. When you buy a property through your self-directed IRA, any and all costs associated with that property are paid for through your IRA. Any repairs, HOA fees, maintenance, it’s all paid for by the IRA.

Annuities

Annuities can be looked at as retirement insurance, because they’re essentially for uncertain times. To put it frankly, the longer you live, the more care you’ll need, and thus, the more strain on your finances. Even if you were diligent about saving for retirement all throughout your career, it sometimes might not be enough. A fixed annuity, which offers a lifetime income stream at a set rate of interest, is one way to manage that risk. You can even buy deferred annuities that don’t pay out until you reach a certain age. Once they kick in they offer bigger payouts than immediate-annuity products.