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The Complete Guide to Annuities

Fri, 11 Sep 2026 20:09:03 GMT

The Complete Guide to Annuities

If you’re approaching retirement, you may be asking a different question about your money than you did 10 or 20 years ago.

It may be less about, “How much more can I grow?” and more about, “How can I turn what I’ve worked hard to build into income I can depend on?”

That shift is one reason annuities often come up in retirement conversations.

An annuity is an insurance contract that can be designed to help accumulate money, create retirement income, or both. Depending on the type of annuity, it may offer features such as a stated interest rate, principal-protection features, interest-crediting potential linked to an external index, or income options that can continue for life.

But there is an important point to understand before going any further:

There is no single type of annuity, and an annuity is not automatically right for everyone.

Different contracts are built for different purposes. They can have different guarantees, income provisions, surrender periods, withdrawal rules, beneficiary provisions, costs, and limitations.

That’s why education should come before a product decision.

At Summerlin Benefits Consulting, we believe the first step is understanding what an annuity does, what it does not do, and what questions you should ask before deciding whether one deserves a place in your retirement income strategy.

What Is an Annuity?

An annuity is a contract between you and an insurance company.

Generally, you provide money to the insurer through a lump-sum premium or, depending on the contract, a series of payments. In return, the insurer provides benefits according to the terms of the contract.

Those benefits can vary significantly.

Some annuities are designed primarily to accumulate value for the future. Others are designed primarily to turn a lump sum into retirement income. Some can do both.

This distinction matters because simply asking, “Is an annuity good?” doesn’t tell you very much.

A better question is:

What job would I need an annuity to do?

For someone approaching retirement, that job might include creating more predictable income, adding greater stability to a portion of retirement assets, accumulating money for a later stage of retirement, or reducing exposure to certain ups and downs in the market.

The appropriate answer depends on the individual and on the actual contract.

How Does an Annuity Work?

It helps to think about annuities in terms of two possible stages: accumulation and income .

During an accumulation period, money can earn interest or receive interest credits according to the terms of the annuity contract.

At a later point, the owner may have several options depending on the contract. Those might include taking withdrawals, electing an available income benefit, annuitizing the contract, or taking another form of distribution permitted by the contract.

Not every annuity has a long accumulation period.

An immediate income annuity , for example, is generally purchased with a lump sum specifically to begin generating income soon after purchase.

This is why the word “annuity” by itself is not enough to understand what someone owns—or what they are considering buying.

You need to understand the type of annuity and its specific contract provisions.

What Are the Major Types of Annuities?

Annuities can be classified in several ways, but for someone trying to understand the retirement-income landscape, four categories are particularly useful to know.

Fixed Annuities and Multi-Year Guaranteed Annuities (MYGAs)

A fixed annuity is an insurance contract designed to provide a stated or declared interest rate according to the terms of the contract. For someone who values stability and predictability, the appeal is straightforward: the interest credited is not based on the day-to-day ups and downs of the stock market.

A Multi-Year Guaranteed Annuity, commonly called a MYGA, is a type of fixed annuity that provides a contractually stated interest rate for a specified period, such as a multi-year term.

Rather than thinking of fixed annuities and MYGAs as two completely separate categories, it can be more helpful to think of a MYGA as a specific type of fixed annuity designed to provide greater rate predictability for a defined period.

As with any annuity, it is important to understand the full contract, including the length of the guarantee period, available withdrawal provisions, surrender schedule, and what happens when the initial guarantee period ends.

Contract guarantees are subject to the terms of the annuity and the claims-paying ability of the issuing insurance company.

Fixed Index Annuities

A Fixed Index Annuity, or FIA, is also an insurance product.

Instead of directly participating in the stock market, an FIA uses the performance of an external market index as part of the method for determining potential interest credits.

Your money is not directly invested in the index.

That is an important distinction.

A Fixed Index Annuity (FIA) is designed to help protect your principal from market downturns while providing the opportunity to earn interest based in part on the performance of a market index, subject to the terms of the contract and the claims-paying ability of the issuing insurance company.

For many retirees, an FIA can be a way to move a portion of their retirement savings out of direct market risk while still maintaining growth potential.

The trade-off for this added protection is that interest credited may be limited by features such as caps, participation rates, spreads, and other crediting methods. In exchange, you gain a level of protection and predictability that money invested directly in the market does not provide.

Think of it as finding a balance between stability and growth potential—giving a portion of what you have worked hard to build greater protection from market ups and downs while still providing an opportunity for index-linked interest credits.

Because those mechanics deserve a fuller explanation, Summerlin Benefits Consulting’s separate Knowledge Center resource, What Is a Fixed Index Annuity and How Does It Work? , takes a deeper look at FIAs.

Immediate Income Annuities

An immediate income annuity is designed primarily to convert a lump sum into a stream of income that begins relatively soon after the contract is purchased.

Instead of focusing primarily on future accumulation, the focus is income.

Depending on the contract and payout option selected, payments may continue for a specified period, for the lifetime of one person, for the lives of two people, or according to another available payout structure.

The payout choice is important because it can affect both the amount of income received and what may remain for beneficiaries.

What About Variable Annuities?

Variable annuities are another category consumers may encounter when learning about annuities generally.

Unlike the fixed insurance products discussed above, variable annuities involve investment options whose values can rise or fall based on their performance. Variable annuities are securities as well as insurance contracts.

They are included here so you understand that the broader annuity category contains products with substantially different structures and risks.

Summerlin Benefits Consulting’s documented insurance-side annuity focus includes fixed annuities, Fixed Index Annuities, MYGAs, and immediate income annuities.

How Can Annuities Be Used for Accumulation?

For someone who is still several years from needing retirement income, a deferred annuity may provide an accumulation period before income begins.

How that accumulation occurs depends on the contract.

A MYGA may provide a stated interest rate for a defined multi-year period, while a Fixed Index Annuity may credit interest based in part on the performance of an external index, subject to the contract’s crediting method and limitations.

One reason some people consider these types of annuities as retirement approaches is that their priorities may be changing.

A Fixed Index Annuity may credit interest based in part on the performance of an external index, subject to the contract’s crediting method and limitations.

One reason some people consider these types of annuities as retirement approaches is that their priorities may be changing.

Someone who spent decades focused primarily on accumulation may begin placing greater importance on questions such as:

How much of my retirement money do I want exposed to market declines?
How much stability would help me feel more confident?
When will I need this money?
How much access will I need along the way?
How will I eventually turn retirement assets into income?

Those questions matter more than simply asking which product has the most attractive feature.

Ready to Talk About Your Retirement?

No pressure. No obligation. Just a conversation about your goals and concerns.

How Can an Annuity Create Retirement Income?

One of the best-known purposes of an annuity is creating income.

But there is more than one way that can happen.

Annuitization

Annuitization generally converts an annuity contract into a stream of payments under a selected payout option.

Depending on the option, payments may continue for life, for a specified period, or under another contractually available arrangement.

The tradeoff is important: after annuitization, access to the underlying contract value may become significantly restricted or unavailable. Beneficiary outcomes also depend on the payout option selected.

Immediate Income

An immediate income annuity is purchased specifically to begin producing income relatively soon.

For someone concerned about turning a portion of accumulated assets into predictable income, this may be one option worth understanding.

Income or Living-Benefit Features

Some deferred annuities may offer optional income or living-benefit features.

Depending on the contract, these features may allow withdrawals calculated under specified rules and may provide lifetime-income provisions.

They may also involve charges, limitations, waiting periods, or other conditions.

The important question is not merely:

“Does this annuity offer lifetime income?”

Instead, ask:

“How does the income feature work, what does it cost, what restrictions apply, and what happens to the rest of the contract?”

That is the difference between recognizing a feature and actually understanding it.

What Guarantees Can an Annuity Provide?

The word guarantee deserves careful attention.

Certain annuities can provide legitimate contractual guarantees. But you should always understand exactly what is being guaranteed.

Depending on the contract, a guarantee might apply to:

A stated interest rate for a particular period
A minimum contract value
Certain principal-protection features
An income payment
A lifetime-income provision when applicable conditions are met
A death-benefit provision

A guarantee on one feature does not mean every aspect of the annuity is guaranteed.

It also does not mean the contract is “risk-free.”

Insurance guarantees are subject to the terms of the contract and, where applicable, the claims-paying ability of the issuing insurance company.

A useful question whenever you hear the word “guaranteed” is:

What exactly is guaranteed—and what is not?

What Should You Be Comfortable with When Choosing an Annuity?

Certain annuities are designed to provide principal-protection features from losses caused by market declines, according to the terms of the contract. For someone approaching retirement, that added stability can be an important part of the conversation.

In exchange for that protection, it is important to be comfortable with the commitments that come with the contract.

Depending on the annuity, those considerations may include:

How long you plan to leave the money in the contract
How much access you may need along the way
The contract’s surrender period
Available free-withdrawal provisions
How interest will be credited
Any applicable rider or benefit charges
How inflation may affect your purchasing power over time
The financial strength and claims-paying ability of the issuing insurer

Understanding these details helps you see the full picture - both the stability and predictability the annuity is designed to provide and the commitments that come with those benefits.

Summerlin Benefits Consulting helps clients walk through these considerations in plain English so they can understand both the benefits and the commitments before making a decision.

What Is a Surrender Period?

A surrender period is the period of time during which withdrawals above the amount permitted by the contract may result in a surrender charge.

That does not necessarily mean your money is completely inaccessible.

Many annuity contracts include provisions allowing a certain amount to be withdrawn without a surrender charge, although the amount, timing, and conditions vary by contract.

The key is making sure the annuity and its access provisions match how you expect to use the money.

Summerlin Benefits Consulting reviews this with clients as part of the education process—looking at how long the money can reasonably remain committed, how much access may be important along the way, and what the specific contract allows.

The goal is to understand those provisions before making a decision so the contract can be considered in light of your retirement goals and expected need for access.

Are Annuities Tax-Deferred?

Many annuities offer tax-deferred accumulation, meaning applicable earnings generally are not taxed while they remain inside the contract.

But tax-deferred does not mean tax-free.

How an annuity distribution is taxed depends on factors including how the annuity was funded, whether it is held inside a qualified retirement arrangement, how distributions are taken, and the owner’s individual circumstances.

For example, federal rules generally treat a nonperiodic withdrawal from a nonqualified commercial annuity before the annuity starting date as coming from earnings first and then from the owner’s cost in the contract.

Different rules can apply to qualified retirement money and to periodic annuity payments.

The larger lesson is simple:

Do not make an annuity decision based on a broad tax slogan.

Understand how the particular contract will be funded and how you expect to use the money.

Summerlin Benefits Consulting provides general retirement and insurance education, not individualized tax advice. Current tax rules should be verified, and individual tax questions may need to be discussed with an appropriately qualified tax professional.

What Happens to an Annuity When You Die?

This is another area where the contract matters.

If the owner dies during the accumulation period, a deferred annuity may provide a death benefit or remaining contract value to the named beneficiary according to the contract terms.

If the annuity has already been converted into income payments, what happens next may depend on the payout option that was selected.

Some options may continue payments to a surviving spouse or another beneficiary.

Some may provide payments for a guaranteed period.

Other payout structures may stop at death.

The tax treatment of inherited annuity proceeds can also depend on the circumstances.

If leaving money to a spouse, children, or other beneficiaries matters to you, beneficiary provisions should be part of the annuity conversation from the beginning—not something discovered after an income option has already been selected.

What Are the Potential Benefits of an Annuity?

Annuities can provide features that may be valuable for certain retirement goals. Depending on the type and contract, those may include:

Greater predictability

Principal-protection features

Tax-deferred accumulation

Reduced exposure to certain market declines

A future retirement-income option

Lifetime-income possibilities

Beneficiary provisions

A way to give a portion of retirement assets a clearly defined job

For someone who has spent years watching retirement savings rise and fall with the market, greater predictability may provide an added sense of confidence as retirement approaches.

But that does not mean everyone should purchase an annuity.

The benefit only matters if it solves a problem you actually have.

What Are the “Catches” With an Annuity?

In Summerlin Benefits Consulting’s educational seminars, you may hear these described simply as the “catches.”

Every strategy has something you receive and something you agree to in return. With an annuity, greater stability, principal-protection features, or income options may come with considerations such as:

A longer-term time commitment
Surrender periods
Limits on how much can be withdrawn without a surrender charge
Limits on index-linked interest-crediting potential
Rider or benefit charges when applicable
Contract provisions that affect certain income choices

The word “catch” does not mean something is hidden or inherently negative. It is a reminder to understand the entire contract—not just its most appealing feature.

For example, an annuity designed to provide greater predictability may offer different growth potential than direct participation in the market. An income feature may provide greater confidence about future income while also carrying specific rules about how that benefit works.

Summerlin Benefits Consulting believes those details should be explained clearly upfront. When you understand what you are getting and what you are committing to, you are in a better position to decide whether the tradeoff feels comfortable for you.

Common Misconceptions About Annuities

How Do You Know Whether an Annuity Is Worth Considering?

This may be the most important question in the guide.

You do not start by asking which annuity to buy.

You start by understanding what you want your retirement money to accomplish.

Questions worth considering include:

When will I need income from this money?
How predictable do I want that income to be?
How much access to the money do I need?
How much exposure to market ups and downs am I comfortable with?
Is leaving money to beneficiaries important?
What other retirement-income sources will I have?
How long do I expect this money to remain committed?
What exactly does the contract guarantee?
What can change?
What happens if I need more money than expected?
What happens when I die?
Do I understand the contract well enough to explain it in my own words?

There is another question that is just as important:

What am I giving up in exchange for the benefits I want?

That is where a product feature becomes an informed retirement decision.

Education Before Decisions

Retirement can change the way you think about money.

During your working years, a market decline may have felt like something you had time to recover from. As retirement approaches, you may be looking at those same dollars differently because they may soon need to help pay the mortgage, groceries, healthcare, travel, or everyday living expenses.

It is understandable to want greater confidence about what comes next.

But confidence does not come from being told that one product solves every problem.

It comes from understanding your options.

At Summerlin Benefits Consulting, our approach is education first. That means helping you understand all the aspects - what an annuity can do, what it cannot do, and what questions deserve answers before discussing a particular solution.

No pressure. No need to make a decision before you understand what you are considering.

If you want to learn more about the types of annuities Summerlin Benefits Consulting works with, you can explore Summerlin’s annuity strategies .

And if you have reached the point where you want to discuss your own retirement income goals, concerns, timeline, and questions, you can request a complimentary retirement review.

The goal of that conversation is not to begin with a product.

It is to begin with understanding your options so you can move forward with greater confidence.

Meet Stacy Summerlin

29+ Years of Experience | Licensed in Florida & Georgia | Founder & President

For more than 29 years, Stacy Summerlin has helped individuals and families prepare for their financial needs with clarity, confidence, and peace of mind. As Founder and President of Summerlin Benefits Consulting, she specializes in helping pre-retirees and retirees protect what they've worked hard to build through education, personalized, safety-first approach to retirement.

Whether you're preparing to retire or already enjoying retirement, Stacy is committed to helping you understand your options and move forward with confidence.

Declining Retirement Confidence: What Can You Do to Gain Back Some Confidence?

Thu, 10 Sep 2026 16:43:54 GMT

Originally published: July 26, 2022

Updated: August 17, 2026

According to a recent publication by SHRM, there were several recent employee surveys conducted which show that retirement confidence is down, with fewer workplace savers seeing themselves on track to retire when they had originally planned.

In fact, workers' outlooks on retiring have seen a reversal from the last few years where confidence remained steady and even increased.

Most workplace savers now say they're unsure about the economic outlook, given an inflation rate that rose 9.1 percent year over year in June 2022 (SHRM). Adding to their uncertainty was a steep decline in stock market values that year, with the benchmark S&P 500 index plummeting nearly 20 percent from January through May 2022 before improving a bit to notch right at 18 percent as of the end of July 2022 (Forbes). These figures reflect economic conditions specific to 2022, when inflation and market volatility were especially pronounced.

Declining Retirement Confidence

Overall, 63 percent of savers feel they are on track for retirement, down from 68 percent a year ago, according to BlackRock's seventh annual Read on Retirement survey, conducted between March 25–April 30, 2022 ( BlackRock ).

See below for a side-by-side comparison of this 2022 survey figure against the newer 2026 edition identified during fact-checking:

Inflation is the main driver for the decline in confidence among more than 1,308 respondents who participate in their employer's 401(k) or 403(b) plans, with 87 percent of workplace savers reporting that they're concerned about inflation affecting their retirement.

It was also found in this survey, that older workers may have a more realistic view of retirement expectations. Nearly half of Baby Boomers said they'll need to save between $1 million and $3 million for a comfortable retirement, at least four times the amount that those from Generation Z anticipate needing.

Delayed Retirements

Meanwhile, almost half of those who planned to retire in 2022 are reconsidering or have put that plan on hold, according to a June 2022 survey of 1,000 U.S. consumers by software-maker Quicken Inc. ( PR Newswire ). And, workers ages 58 to 74 who were not planning on retiring in 2022 are now considering delaying retirement even further.

Among those who are considering delaying retirement, or "unretiring" and returning to the labor force, the changing economic climate is top of mind. Respondents cited the following factors as reasons they will need to continue working:

Even before 2022's economic challenges, however, retirement ages had been rising. As of 2024, the average retirement age for men in the U.S. was 64.6, roughly three years later than in the mid-1980s and early 1990s, according to an April 2025 report by the Center for Retirement Research at Boston College ( CRR Boston College ). The retirement age for women rose to 62.6 as of 2024, up dramatically from 55 in the 1960s. However, the same CRR Boston College research suggests the major drivers behind this multi-decade rise — including the shift away from traditional pensions — appear to have largely run their course, meaning further significant increases in the average retirement age may be unlikely going forward.

Major drivers for delaying retirement in recent decades, the researchers noted, include the shift from guaranteed defined benefit pensions to defined contribution 401(k)s and the decline of retiree health insurance, as well as extended life spans and the desire to remain active and engaged.

Protecting Your Retirement Savings

At Summerlin Benefits Consulting we know that today's more mature employees want help with saving for retirement and it's important that employers provide resources and tools to help these employees make informed decisions about their long-term savings.

For example, employees in their mid to late 50's should be allowed to do an In-Service Transfer from their 401(k) to a protected external environment, like a Fixed Index Annuity, which provides a minimum guaranteed contract value (subject to any applicable withdrawal charges). This will allow the employee to help protect a portion of the savings they've built over the years, potentially reducing their exposure to major market losses right before reaching retirement age, which could otherwise cause them to have to work longer than anticipated.

More mature investors, even when still employed, should shift their retirement savings focus to Safety First. Protecting the money you already have and pursuing a competitive rate of return over time while working to reduce the risk of future losses will help you be better prepared by the time you do retire.

Important Retirement Planning Information

Every retirement strategy is unique, and not all annuity products offer the same features, guarantees, or level of protection. References in this article apply only to the specific retirement solutions discussed and should not be interpreted as applying to all annuities. The right strategy depends on your individual goals, financial situation, and retirement objectives. This is something Summerlin Benefits Consulting can help you determine.

Frequently Asked Questions

Q1: Why has retirement confidence declined among workplace savers?

A1: Retirement confidence has declined mainly due to inflation and stock market volatility. A 2022 BlackRock survey found 63% of workplace savers felt on track to retire, down from 68% the year before, with 87% citing inflation as a top concern.

Q2: Why are more people delaying retirement right now?

A2: Many workers are delaying retirement because of rising costs from inflation (cited by 65% of respondents), stock market declines (45%), and higher interest rates (30%), per a 2022 Quicken survey. Average U.S. retirement ages have also risen over decades — 64.6 for men and 62.6 for women as of 2024.

Q3: How can workers in their mid-to-late 50s help protect retirement savings from market losses?

A3: Employees in their mid-to-late 50s can use an in-service transfer to move a portion of their 401(k) into a Fixed Index Annuity (FIA), which offers a minimum guaranteed contract value (subject to any applicable withdrawal charges) — helping protect savings from major market losses shortly before retirement.

Q4: What retirement savings approach should mature investors who are still working consider?

A4: Mature investors who are still working should shift focus to a Safety First approach — helping protect a portion of savings already built while pursuing a competitive rate of return and working to reduce the risk of future losses as retirement nears.

When should I take my Social Security Benefits? Well, the answer is different for everyone.

Thu, 10 Sep 2026 16:38:10 GMT

Originally published: June 22, 2022

Updated: August 17, 2026

After contributing to Social Security for all of your working life, you might think that you should claim your benefit at 62 to get as much money out of the system as possible. While it's true that you're eligible to claim your benefit at 62, doing so could actually mean that you're leaving money on the table.

Each year that you wait (up until age 70), your monthly benefit increases. So the longer you wait to take Social Security, the bigger your monthly check will be. And because you will lock in that higher benefit for the rest of your life, sometimes the payout can be more in your favor over time.

So, how do you decide when to take Social Security? Many of us want to wait for the higher benefit amounts, but we need a paycheck sooner, and so the decision can sometimes be difficult to make.

Here are a few examples of when it might make good sense to wait.

If You're Still Earning an Income

Though you can start claiming Social Security benefits as early as age 62, individuals born in 1960 or later do not reach full retirement age (FRA) until age 67, and taking benefits before that age will reduce your benefits as much as 30%. You can use this Social Security Administration chart to find your personal FRA and benefit reductions for you and your spouse.

Regardless, if you haven't reached your FRA and are still working, Social Security will dock your benefit if you earn more than $24,480 per year (2026 limit; updated from $18,960 in 2022 — source). This can be a big chunk out of your benefit, so if you're working, it may make sense to wait at least until your FRA to claim benefits.

If You Don't Need the Money Immediately

If you've saved for retirement, you may be able to live off of those savings while you continue to let your Social Security benefit grow. Once you reach your FRA, your benefit will grow by 8 percent each year up until age 70, which can make a big difference in the amount of money you receive each month, for the rest of your life. One way to accomplish this is with a Fixed Index Annuity that provides lifetime income payments. Receiving income payments from your annuity when you retire might enable you to wait and take Social Security a little later.

Let's say your FRA is age 67 and your monthly benefit is $1,000. If you claim Social Security at 62, you would receive $700 per month. But if you waited until you turned 70, your benefit would increase to $1,240. That means a difference of $6,480 per year for life. That increased Social Security benefit on top of your Fixed Index Annuity income payments might very well set you up with more substantial income for life than you had even anticipated.

If You're Healthy

Another reason to consider letting your Social Security benefit grow is if you think you might live a long time. When planning on living long, even if you are healthy, you have to plan for the fact that healthcare expenses are subject to inflation just like other cost-of-living requirements. A higher Social Security benefit combined with an option like a lifetime income annuity can often be a favorable combination to help you offset inflation in your retirement planning.

On the flip side, if you have a serious medical condition or have been told that you're at high risk for developing one, it may make more sense to take your Social Security benefits as soon as you're eligible. But with that in mind, you may also want to think about longevity in your spouse and his/her income needs throughout their lifetime, because claiming your benefit early could reduce your spouse's widow(er) benefit.

We often run into husbands who are trying to help take care of their wife after they have passed away. Frankly, this can be a concern for either spouse, but statistically women do tend to live longer than men. There's more info on this later in this article, but ultimately, yes, it would be good planning for the husband and/or wife to have a strategy in place that may help a surviving spouse avoid outliving your combined retirement savings.

A financial professional who specializes in retirement income strategies can help you determine what makes the most sense for your financial situation.

If You Have a Family History of Longevity

Knowing how old your biological parents and grandparents lived to be is another factor to consider. There are, of course, many environmental, lifestyle, and medical factors that could come into play; for example: did you know that women generally tend to live longer than men? Women who reach the typical retirement age of 65 are statistically likely to live for another nearly 21 years (20.66 years, per SSA's most recent Actuarial Life Table — source ), while 65-year-old men's average life expectancy is another about 18 years (18.12 years, same source). That means that without even considering family history, women need to prepare for higher income-benefit payouts over their lifetime.

Because family history and other factors like the example above can give you a sense of your potential life expectancy, you can use that information to help you decide whether to start claiming your Social Security benefits sooner rather than later.

Another factor to consider is that a long life also means the retiree is likely to face the expense of long-term care services. Whether it be in the form of home care, assisted living, or a nursing home, longevity requires more income later in life for many, and this has become an essential part of planning for your future.

Based on the CareScout/Genworth 2025 Cost of Care Survey, national median monthly costs for long-term care are shown below:

This can vary based on where you live and the care providers in your area, but these general guidelines illustrate how important it is to make a financial plan for your future.

Allowing your Social Security benefit to grow as long as possible and pairing it with another lifetime income arrangement, like a Fixed Index Annuity, may help you be better prepared to cover costs like this later in retirement.

At Summerlin Benefits Consulting , we help clients figure out things like how much income they will need, when to take Social Security benefits, how to complement those benefits with other lifetime income strategies, and much more.

Important Tax and Legal Information

This content is for informational purposes only and does not constitute tax or legal advice. Summerlin Benefits Consulting does not provide social security, specific advice related to taxes, or legal advice. Consult a tax/legal professional for guidance with your individual situation.

Important Retirement Planning Information

Frequently Asked Questions

Q: When should I start taking my Social Security benefits?

A: There's no single answer — it depends on your income, health, and savings. Waiting from age 62 to 70 increases your monthly benefit for life, but if you're still working or don't need the income yet, delaying may pay off more than claiming early.

Q: Does working while collecting Social Security reduce my benefit?

A: Yes, if you haven't reached full retirement age. In 2026, Social Security withholds one dollar for every two dollars earned above $24,480 per year ($65,160 in the year you reach full retirement age). After full retirement age, earnings no longer reduce your benefit.

Q: How much more will I get if I wait until age 70 to claim Social Security?

A: Delayed retirement credits increase your benefit by about 8% for each year you wait past full retirement age, up until 70. Waiting the full three years from full retirement age to 70 can raise your monthly check by roughly 24% — a difference that lasts for life.

Q: Does my health affect when I should claim Social Security?

A: Health matters. If you're healthy with a family history of longevity, waiting to claim can pay off since you'll collect the higher benefit over more years. If you have a serious health condition, claiming earlier may make more sense for your situation.

Q: Can a Fixed Index Annuity help me delay taking Social Security?

A: A Fixed Index Annuity that includes an income rider can provide income payments in retirement, which may make it easier to delay claiming Social Security so your benefit keeps growing until age 70. A financial professional can help you weigh the two together.

Older Workers Say Social Security Is Their Retirement Plan. Is That Enough?

Mon, 31 Aug 2026 18:21:21 GMT

For many Americans approaching retirement, the plan sounds surprisingly simple: “I’ll work as long as I can, and then I’ll live on Social Security.”

There’s nothing unusual about counting on Social Security. After years of paying into the system, it can provide an important foundation of monthly retirement income.

But there is an important distinction between receiving Social Security benefits and having a retirement income strategy.

Social Security was not designed to replace all of a worker’s pre-retirement income. That means people approaching retirement may want to look beyond the question of when to claim Social Security and consider a bigger question:

Will my expected income be enough to support the retirement I want?

Start With Your Monthly Income Needs

Retirement can feel complicated when the conversation begins with account balances, percentages and unfamiliar terminology.

A simpler place to begin is your monthly household budget.

Ask yourself:

How much income will we realistically need each month in retirement?

That number will be different for every household.

Some expenses may decrease after you retire. Others may remain relatively consistent, and certain expenses—such as healthcare, travel or helping family members—could increase.

A basic retirement income review might look something like this:

The purpose of an exercise like this isn’t to predict every dollar you’ll spend for the rest of your life.

It’s to make the retirement income conversation easier to understand.

In this example, the household knows approximately $3,700 of its $5,000 monthly income goal may already be accounted for.

Now the question becomes:

Where might the remaining $1,300 come from?

Social Security Is an Important Piece of the Picture

How much you receive from Social Security depends on factors including your earnings history and the age at which you begin receiving benefits.

For people born in 1960 or later, full retirement age is 67. Benefits can generally begin as early as age 62, but claiming before full retirement age results in a permanently reduced monthly benefit.

Waiting beyond full retirement age can increase the monthly benefit through delayed retirement credits, up to age 70.

That doesn’t mean everyone should claim early—or everyone should wait.

The right timing depends on individual circumstances.

Health, employment, household income, marital status, other retirement resources and personal priorities can all play a role.

That’s why understanding your options before making a claiming decision can be so valuable.

“I’ll Just Keep Working” Isn’t Always a Complete Strategy

For many older Americans, working longer is part of the retirement picture.

And there can be good reasons to continue working.

But there’s a meaningful difference between wanting to work longer and having to work longer because your retirement depends on the paycheck.

Plans can change.

A job may change. Family responsibilities may arise. Someone may simply reach a point when continuing to work no longer fits the retirement they envisioned.

That makes this an important question to consider:

If I stopped working earlier than expected, what would my retirement income look like?

You don’t need to assume something will go wrong.

You simply want to understand your options.

Working While Receiving Social Security Requires Some Understanding, Too

Some people choose to begin Social Security while continuing to work.

If you are younger than full retirement age, however, Social Security’s retirement earnings test may affect benefits when your earned income exceeds the applicable annual limit.

Once you reach full retirement age, that earnings limit no longer applies.

The rules can be confusing, which is another reason not to make a Social Security decision based solely on what a friend, coworker or family member decided to do.

Your situation is your own.

Look at Retirement as an Income Question

Many people approaching retirement have spent decades thinking about one number:

How much have I saved?

That’s certainly important.

But retirement introduces another question:

How will the resources I’ve accumulated support my monthly income needs?

Consider a hypothetical couple, Mike and Susan.

They estimate they’ll need approximately $6,000 per month to support their desired retirement lifestyle.

Their expected income looks like this:

Instead of simply asking, “Do we have enough saved?”, Mike and Susan can now ask:

“How do we want to address that $1,500 monthly difference?”

That’s a much more practical conversation.

Not Every Dollar Has the Same Job

One helpful way to think about retirement resources is to consider what you need different portions of your money to accomplish.

You may want money available for:

Regular monthly expenses
Unexpected expenses
Healthcare costs
Travel and hobbies
Family or legacy goals
Long-term income needs

Different strategies may serve different purposes.

For someone who places a high value on stability and predictable income, it may be appropriate to learn about insurance solutions designed with those objectives in mind.

One option that may come up in that conversation is a fixed index annuity.

Where Fixed Index Annuities May Fit

A fixed index annuity, or FIA, is an insurance product.

Depending on the contract, an FIA may offer principal protection features, while providing potential for indexed interest accumulation linked to an external market index without direct participation in that index.

Some contracts also offer lifetime income options when elected.

For the right person, these features may provide greater stability and predictability as part of a retirement income strategy.

But an FIA isn’t appropriate for everyone.

That’s why the conversation shouldn’t begin with:

“Do I need an annuity?”

A better starting point is:

“What do I need my retirement resources to accomplish?”

Once you understand that, you can explore the available options and determine which strategies deserve further consideration.

Who May Benefit From This Kind of Retirement Income Conversation?

A retirement income review may be especially helpful if you:

Are approaching or already entering retirement.
Expect Social Security to provide a significant portion of your monthly income.
Have retirement savings but aren’t sure how those savings translate into monthly income.
Prefer greater stability and predictability.
Want to reduce some exposure to the ups and downs in the market.
Are uncertain about when to begin Social Security.
Want to understand your options before making major retirement decisions.

The goal isn’t to make every retirement look the same.

It’s exactly the opposite.

Your retirement income strategy should reflect your needs, priorities and circumstances.

A Simple Place to Begin

If retirement is getting closer, you don’t have to figure everything out at once.

Start with a few straightforward questions:

After decades of working and saving, retirement shouldn’t have to feel like a guessing game.

Social Security may be an important part of your retirement income.

For some households, it may be a very significant part.

But relying on Social Security alone without understanding your expenses, other income sources and available retirement resources can leave unanswered questions.

Before making major decisions, take some time to understand:

What might Social Security provide?

What will your retirement lifestyle realistically require?

What other sources of income will you have?

Is there a difference between the two?

And what options are available to help address it?

At Summerlin Benefits Consulting, our Financial Professionals help people approaching retirement understand their options through clear retirement education, personalized guidance and a calm, safety-first approach.

The goal isn’t pressure.

It’s clarity.

Because when you understand your options, you can make retirement decisions with greater confidence and reassurance.

Want a Clearer Picture of Your Retirement Income?

If Social Security is expected to play an important role in your retirement, it may be helpful to look at how it fits with the rest of your income picture.

Schedule a conversation with Summerlin Benefits Consulting to explore your options and gain a clearer understanding of your retirement income needs.

This article is provided for educational purposes only and is not intended as tax, legal or investment advice. Social Security rules and individual circumstances vary. Annuity guarantees and principal protection features are subject to the terms of the contract and the claims-paying ability of the issuing insurance company. Fixed index annuities are insurance products and do not directly participate in a stock market index.

Important Tax and Legal Information

Important Retirement Planning Information

Frequently Asked Questions

Q: Is Social Security enough to live on in retirement?

A: Social Security alone often isn’t enough — it was not designed to replace all of a worker’s pre-retirement income. A retirement income review compares your monthly income needs against Social Security, other predictable income, and any resources still needed to close the gap.

Q: What is full retirement age for Social Security, and when can I start benefits?

A: For anyone born in 1960 or later, full retirement age is 67. Benefits can start as early as 62 at a permanently reduced amount, or increase through delayed retirement credits if you wait past full retirement age, up to age 70. (SSA, Retirement Benefits: https://www.ssa.gov/pubs/EN-05-10035.pdf )

Q: Can I keep working after I start collecting Social Security?

A: Yes. If you’re younger than full retirement age, Social Security’s retirement earnings test may reduce benefits once your earned income exceeds the annual limit. Once you reach full retirement age, that earnings limit no longer applies, and continued work no longer affects your benefit.

Q: What is a Fixed Index Annuity and how might it fit into a retirement income plan?

A: A Fixed Index Annuity (FIA) is an insurance product that, depending on the contract, may offer principal protection features — subject to the issuing insurer’s claims-paying ability — along with potential for indexed interest accumulation linked to a market index, plus optional lifetime income features.

Q: How do I figure out how much monthly retirement income I actually need?

A: Start with your monthly household budget, not your account balances. Estimate the income you’ll need each month, then subtract Social Security and other predictable income. What’s left is the gap your retirement income strategy needs to address.

Tax-Efficient Withdrawal Strategies in Retirement: How to Keep More of What You've Saved

Fri, 14 Aug 2026 14:34:42 GMT

Published: July 1, 2026

After years of working hard and saving for retirement, the focus naturally shifts from building wealth to making it last. One of the most overlooked parts of retirement planning isn't just how much you've saved—it's how you withdraw those savings.

A thoughtful, tax-efficient withdrawal strategy can help reduce unnecessary taxes, extend the life of your retirement assets, and give you greater confidence throughout retirement.

At Summerlin Benefits Consulting, we believe retirement planning isn't just about growing your savings—it's about helping you protect what you've worked so hard to build through thoughtful, personalized planning.

Why Withdrawal Order Matters

Many retirees assume they should simply withdraw money from whichever account is easiest to access. While that may seem straightforward, the order in which you take income from different accounts can significantly affect the taxes you pay over the course of retirement.

Most retirement savings fall into three categories:

Taxable accounts such as brokerage accounts or bank savings
Tax-deferred accounts like Traditional IRAs and 401(k)s
Tax-free accounts such as Roth IRAs

Each account is taxed differently. By coordinating withdrawals strategically, you may be able to reduce your lifetime tax burden rather than paying more than necessary in any given year.

Understanding the Three Types of Retirement Accounts

Taxable Accounts

These accounts have already been funded with after-tax dollars. While investment gains may create taxable income, withdrawals of your original contributions are generally not taxed again.

These accounts often provide flexibility during the early years of retirement.

Tax-Deferred Accounts

Traditional IRAs and most 401(k)s allow your investments to grow tax-deferred. However, every dollar withdrawn is generally treated as ordinary income.

Large withdrawals can potentially move you into a higher tax bracket and may also affect other areas of your financial picture.

Roth Accounts

Qualified Roth IRA withdrawals are generally tax-free. Because of this valuable tax treatment, many retirees choose to preserve Roth assets for later years or unexpected expenses.

Managing Your Tax Bracket Throughout Retirement

One important objective is avoiding unnecessary jumps into higher tax brackets.

Instead of taking large withdrawals in a single year, many retirees benefit from spreading taxable income over multiple years. This approach is often called tax bracket management.

The goal isn't necessarily to pay the least taxes this year—it's to potentially pay less over your entire retirement.

For example, during years before Required Minimum Distributions (RMDs) begin, some retirees intentionally withdraw moderate amounts from tax-deferred accounts while remaining within a favorable tax bracket. Doing so may reduce future required withdrawals that could otherwise generate larger tax bills.

Every situation is different, which is why personalized planning matters.

A Simple Example

Retiree A

Withdraws the entire amount from a Traditional IRA each year.

Result:

Higher taxable income
Greater lifetime tax exposure
Less flexibility later in retirement

Retiree B

Works with a retirement advisor to coordinate withdrawals from:

Taxable savings
Traditional IRA
Roth IRA

Result:

Better control over taxable income
Potentially lower lifetime taxes
Greater flexibility as tax laws and personal circumstances change

While both retirees receive the same income, the second strategy may allow them to keep more of what they've saved over time.

Case Study: Creating Flexibility Through Withdrawal Sequencing

Susan and Mark, both age 66, entered retirement with:

A Traditional IRA
A Roth IRA
A taxable investment account

Their initial thought was to spend down the IRA first.

Instead, after reviewing their retirement income strategy, they used a coordinated withdrawal approach that included all three account types.

This allowed them to:

Keep annual taxable income within a targeted tax bracket
Delay larger IRA withdrawals
Preserve Roth assets for future healthcare needs and legacy planning
Maintain greater flexibility if tax laws changed

While every retirement plan is unique, this example illustrates how withdrawal sequencing can support long-term retirement goals.

Why Personalized Planning Makes a Difference

Tax-efficient retirement planning isn't about finding a one-size-fits-all formula.

The right withdrawal strategy depends on many factors, including:

Your retirement income needs
Social Security timing
Pension income
Required Minimum Distributions
Current and future tax brackets
Healthcare costs
Legacy goals

Small adjustments made early in retirement can have meaningful long-term effects.

Retirement Is About More Than Saving—It's About Spending Wisely

Many people spend decades focusing on accumulating retirement savings but give little thought to the distribution phase.

Yet the way retirement income is structured may be just as important as the investments themselves.

Having a thoughtful withdrawal strategy can help you:

Reduce unnecessary taxes
Increase retirement income flexibility
Help your savings last longer
Feel more confident about your retirement plan

At Summerlin Benefits Consulting, we believe education comes before recommendations. We help individuals and families understand their retirement income options so they can make informed decisions with clarity and confidence.

Ready to Build a Tax-Efficient Retirement Income Strategy?

If you're approaching retirement or already retired, now is an excellent time to review how you'll generate income—not just where your money is invested.

At Summerlin Benefits Consulting, we take a personalized, safety-first approach to retirement planning, helping you create strategies designed to protect your savings while supporting your long-term goals.

Schedule a complimentary retirement income review today and discover how thoughtful tax planning may help you keep more of what you've worked so hard to build.

Note: This content is for informational purposes only and does not constitute tax or legal advice. Summerlin Benefits Consulting does not provide social security, specific advice related to taxes, or legal advice. Consult a tax/legal professional for guidance with your individual situation.

Frequently Asked Questions

Q: What is a tax-efficient retirement withdrawal strategy?

A: A tax-efficient withdrawal strategy is a plan for the order and timing of withdrawals from taxable, tax-deferred, and Roth accounts designed to reduce taxes paid over the course of retirement, not just in a single year. Coordinating withdrawals across account types can help preserve savings and provide more flexibility as circumstances change.

Q: In what order should I withdraw money from my retirement accounts?

A: Withdrawal order significantly affects lifetime taxes because taxable accounts, tax-deferred accounts, and Roth accounts are each taxed differently. Many retirees coordinate withdrawals across all three types rather than draining one first, which can help manage taxable income, avoid unnecessary bracket jumps, and preserve flexibility for later in retirement.

Q: What is tax bracket management in retirement?

A: Tax bracket management means spreading taxable withdrawals across multiple years instead of taking large distributions in a single year, with the goal of paying less tax over your entire retirement rather than the least tax in any one year. This often involves modest withdrawals from tax-deferred accounts before Required Minimum Distributions begin.

Q: Should I spend my Roth IRA or my Traditional IRA first in retirement?

A: Many retirees preserve Roth IRA assets for later in retirement rather than spending them first, since qualified Roth withdrawals are generally tax-free and provide a valuable buffer for unexpected expenses, healthcare costs, or legacy planning. Traditional IRA withdrawals are taxed as ordinary income, so the right sequence depends on your overall tax picture.

Q: Why does a personalized withdrawal strategy matter more than a one-size-fits-all approach?

A: A personalized withdrawal strategy matters because factors like Social Security timing, pension income, Required Minimum Distributions, current and future tax brackets, healthcare costs, and legacy goals all interact differently for each retiree. Small adjustments made early in retirement, tailored to your specific situation, can have meaningful long-term effects on lifetime taxes.

Understanding 2025–2026 IRA Contribution Limits: What Savers Need to Know

Thu, 13 Aug 2026 20:51:51 GMT

What's New for 2026: Traditional and Roth IRA Limits

Planning for retirement means making your savings work as hard as possible, and knowing the annual IRA contribution limits is a key part of that strategy. Each year, the IRS reviews and adjusts contribution limits to account for inflation and cost-of-living changes. For 2026, savers have even more room to grow their retirement accounts — and if you are 50 or older, the catch-up contribution rules have improved as well.

This guide covers the 2026 contribution limits for Traditional IRAs, Roth IRAs, and SEP-IRAs, along with catch-up rules, Roth income phase-out thresholds, and what these changes mean for your retirement planning strategy.

Under age 50 — You can contribute up to $7,500 to a Traditional IRA, a Roth IRA, or a combination of both.
Age 50 and older — You can contribute up to $8,600 — which includes a catch-up contribution of $1,100, up from $1,000 in 2025. This increase in the catch-up amount itself is new for 2026 and gives older savers an additional $100 of tax-advantaged space compared to last year.

These limits are up from $7,000 (under 50) and $8,000 (50 and older) in 2025, representing meaningful increases that reward consistent savers.

You have until the federal tax deadline — typically April 15 of the following year — to make contributions for the prior tax year. That means you have until approximately April 15, 2027 to make 2026 IRA contributions, giving you flexibility even while preparing your taxes.

Traditional IRA: Tax Deductibility Rules for 2026

Contributions to a Traditional IRA may be tax-deductible depending on your income and whether you (or your spouse) are covered by a workplace retirement plan such as a 401(k). If neither you nor your spouse has a workplace plan, your contributions are generally fully deductible regardless of income.

If you or your spouse are covered by a workplace plan, your ability to deduct Traditional IRA contributions phases out at higher income levels. For 2026:

Note: Traditional IRA deductibility phase-out figures above are based on 2026 IRS guidance. Consult IRS.gov or a tax professional to confirm the figures that apply to your situation.

Even if your income exceeds the deductibility threshold, you can still make non-deductible contributions to a Traditional IRA and benefit from tax-deferred growth. Some savers in this situation use a "backdoor Roth" strategy — consult a financial professional to determine whether this is right for you.

Roth IRA: 2026 Income Phase-Out Ranges

Roth IRA contributions are made with after-tax dollars, and qualified withdrawals in retirement are completely tax-free — making them a powerful tool for long-term tax planning. However, Roth IRA eligibility phases out at higher income levels. For 2026, the confirmed phase-out ranges are:

These are IRS-confirmed 2026 Roth IRA phase-out figures. If your income falls within the phase-out range, your maximum Roth contribution is gradually reduced. If your income exceeds the upper limit, you cannot make direct Roth IRA contributions — but a backdoor Roth strategy may still be available.

SEP-IRA: 2026 Limits for Self-Employed and Small Business Owners

A Simplified Employee Pension (SEP-IRA) is designed for self-employed individuals, freelancers, and small business owners. SEP-IRAs allow significantly higher contributions than Traditional or Roth IRAs, making them one of the most powerful retirement savings tools available to business owners and the self-employed.

For 2026, the SEP-IRA contribution limit is the lesser of 25% of compensation or $70,000 — up from $69,000 in 2025.

Note: If you have employees, you may be required to make proportional SEP-IRA contributions on their behalf. Consult a tax professional regarding employer contribution obligations.

Key Rules That Apply Across IRA Types

Combined limit for Traditional + Roth IRAs: The $7,500 (or $8,600 for 50+) annual limit applies across all your Traditional and Roth IRAs combined — not to each account separately. SEP-IRA contributions are tracked separately and do not count against this limit.
Earned income requirement: You can't contribute more than your earned income for the year. If you only earned $4,000, your maximum IRA contribution is $4,000 — regardless of the published limit.
Spousal IRA: If you are married and your spouse has little or no earned income, you may be able to contribute to a spousal IRA on their behalf — up to the same annual limit. This allows a couple to effectively double their IRA contributions even if only one spouse is working.
No age limit for contributions: As of the SECURE Act, there is no age cutoff for making Traditional IRA contributions. As long as you have earned income, you can contribute at any age.

Strategies to Make the Most of 2026 IRA Limits

Knowing the limits is the first step — building a consistent contribution habit is what makes the difference over time. Here are a few approaches worth considering:

Automate your contributions: Set up automatic monthly transfers to your IRA so you contribute consistently throughout the year rather than scrambling to deposit a lump sum before the tax deadline. Spreading contributions over 12 months also gives you the benefit of dollar-cost averaging.
Prioritize catch-up contributions if you are 50+: If you have not been maximizing contributions in earlier years, the 2026 catch-up limit of $1,100 (totaling $8,600 per year) is a meaningful opportunity to accelerate savings in the final years before retirement.
Coordinate your IRA strategy with your 401(k): IRA contribution limits are separate from 401(k) limits. Many savers max out their 401(k) first, then contribute to an IRA for additional tax-advantaged savings. Your advisor can help you determine the most tax-efficient sequence.
Consider a Roth conversion if you are in a lower income year: If your income temporarily dips — due to a career change, early retirement, or business loss — it may be an ideal time to convert Traditional IRA funds to a Roth IRA and lock in tax-free growth going forward. This strategy is highly individual and should be reviewed with a tax professional.

Why These Increases Matter for Your Retirement Plan

Rising contribution limits mean more opportunity to grow your retirement savings in a tax-advantaged account. For savers who can max out their contributions, even small annual increases compound significantly over time. Consider: if you are 50 years old and begin maxing out the 2026 limit of $8,600 per year, investing consistently through age 70 could result in substantial additional tax-advantaged savings — depending on your rate of return.

For high-income earners phased out of Roth IRA eligibility, a SEP-IRA or backdoor Roth strategy may open additional pathways. The right approach depends on your income, tax situation, and long-term goals — which is exactly why working with a knowledgeable advisor matters.

How Summerlin Benefits Consulting Can Help

Understanding the rules is one thing — building a strategy around them is another. At Summerlin Benefits Consulting , we help clients understand their options and create personalized plans designed to achieve their retirement goals. Whether you are just getting started with an IRA, looking to maximize catch-up contributions, or exploring SEP-IRA options as a business owner, we can help you make the most of every rule working in your favor.

Frequently Asked Questions

Q: What are the 2026 IRA contribution limits?

A: For 2026, the IRA contribution limit is $7,500 if you're under age 50. If you're 50 or older, you can contribute up to $8,600 — which includes a $1,100 catch-up contribution, up from $1,000 in 2025. These limits apply combined across all IRA accounts you own, including both Traditional and Roth IRAs.

Q: What is the Roth IRA income limit for 2026?

A: For 2026, Roth IRA contributions phase out between $153,000 and $168,000 for single filers, and between $242,000 and $252,000 for married couples filing jointly. Above the upper limit, direct Roth contributions are not allowed — though a backdoor Roth strategy may still be available. Consult a financial professional to explore your options.

Q: Can I contribute to both a Traditional and a Roth IRA in 2026?

A: Yes, but the $7,500 annual limit (or $8,600 if you're 50 or older) is a combined cap across all your IRAs — not per account. You can split contributions in any proportion between a Traditional and Roth IRA as long as the total stays within the limit.

Q: What is the 2026 SEP-IRA contribution limit?

A: For 2026, the SEP-IRA limit is the lesser of 25% of your compensation or $70,000 — up from $69,000 in 2025. SEP-IRAs are available to self-employed individuals and small business owners, allow far higher contributions than Traditional or Roth IRAs, and have no catch-up contribution option.

Q: What is the deadline to make IRA contributions for the 2026 tax year?

A: You have until the federal tax filing deadline — typically April 15, 2027 — to make IRA contributions that count toward the 2026 tax year. You do not need to contribute by December 31. This flexibility lets you contribute for the prior year even while preparing your tax return.

What You Need to Know About Gift Tax

Thu, 13 Aug 2026 18:43:15 GMT

Originally published: April 11, 2025

Updated: June 24, 2026

If you're feeling generous and planning to share your wealth with family or friends, you might be wondering whether the IRS is going to come knocking. The good news? Most people can give freely without owing a dime in gift taxes — but there are limits you should be aware of. Let's break down how the gift tax works and what the exclusion amounts are for 2026.

What is the Gift Tax?

The gift tax is a federal tax on the transfer of money or property when the recipient doesn't provide something of equal value in return. This could apply to giving cash, real estate, stock, or other assets.

There are two main limits that determine whether a gift may trigger IRS reporting or potential taxation:

The annual gift tax exclusion
The lifetime gift tax exemption

Understanding how these limits work can help you give generously—without any unpleasant tax surprises.

2026 Annual Gift Tax Exclusion

In 2026, you can give up to $19,000 per recipient without needing to report it to the IRS. If you're married, you and your spouse can each gift that amount to the same person, for a combined total of $38,000.

Key Notes:

The limit is per person, not per total gifts. You could give the annual exclusion amount to your child, to your grandchild, and to a friend—all in 2026—without filing a gift tax return.
If you want to combine your gift with your spouse's to give the double amount to one person, you can use a strategy called gift splitting. This requires filing IRS Form 709, even if no tax is owed.

Gifts to your spouse (if a U.S. citizen) are unlimited and generally don't require a gift tax return.

What If You Go Over the Limit?

Giving more than the annual exclusion amount to one person in 2026 doesn't mean you'll owe taxes—but it does mean you'll need to file Form 709 to report the gift. The amount that exceeds the annual limit simply counts against your lifetime exemption.

2026 Lifetime Gift Tax Exemption

The lifetime gift tax exemption allows you to give away a significant amount over your lifetime—beyond the annual limits—without paying gift tax.

In 2026, that limit is $15,000,000 per person.

For married couples, it's $30,000,000.

Let's say you give your adult child $50,000 in 2026. The first $19,000 is covered by the annual exclusion. The remaining $31,000 reduces your lifetime exemption—but no tax is due at the time.

Pro Tip: The IRS uses this same lifetime exemption for estate tax. Any amount you use for gifts during life reduces the amount that's shielded from estate tax when you pass away.

2026 Exemption Update

Good news for anyone planning large gifts or estate transfers: the steep cut to the lifetime exemption that was once expected for 2026 did not happen. Under the Tax Cuts and Jobs Act (TCJA), the doubled exemption introduced in 2018 was scheduled to expire after 2025, which would have lowered the exemption to roughly half its 2025 level.

Instead, Congress passed the One, Big, Beautiful Bill (OBBB), signed into law on July 4, 2025. The OBBB raised the basic exclusion amount to $15 million per person ($30 million for married couples) for 2026 — and made that higher amount permanent, with no scheduled sunset. The exemption will continue to be adjusted for inflation in future years.

For anyone who held off on major gifting or estate planning moves while waiting to see how this would shake out, the higher exemption is now locked in, providing more certainty for long-term planning.

Gifting and Fixed Indexed Annuities (FIAs)

At Summerlin Benefits Consulting , we specialize in what we call “safe money strategies”, one of which is Fixed Indexed Annuities (FIAs). Many of our clients own one or more fixed index annuities, so we will dive a little deeper into how gift tax rules may impact those with annuities.

Gifting Funds Into an Annuity

If you give someone money to fund an annuity—whether it's a parent helping a child get started or a child helping a parent or grandparent with their retirement strategy—it counts as a financial gift. If the amount exceeds the annual exclusion, you'll need to file Form 709 and apply the excess to your lifetime exemption.

Receiving Gifted Funds for an Annuity

If you receive a gift to help fund your own annuity, the gift tax rules apply to the giver, not you. However, you may still want to document the gift in case it raises questions later, especially for larger contributions. Receiving gifted funds to begin your annuity allows the gifter to help you establish a lifetime income stream for retirement, that will grow safely and securely for your future.

We help our clients understand the best way to structure these kinds of gifts—whether that's contributing over time to stay under annual limits or using lifetime exemption strategically.

Gift Tax Triggers to Watch For in 2026

Even with the generous 2026 limits, here are a few scenarios that can unexpectedly trigger a gift tax filing requirement:

Funding a 529 college savings plan with more than the annual exclusion amount in a single year
Gifting large amounts for weddings, vacations, or home purchases
Buying a car or luxury item for someone without compensation
Paying medical bills or tuition on someone's behalf—but not doing it directly to the provider
Forgiving a personal loan or giving an interest-free loan
Adding someone as a joint owner on your bank account

Is the Gift Tax Deductible?

No—gifts to family and friends aren't tax-deductible. Only donations to qualified nonprofits may be deducted from your income taxes.

Final Thoughts

While most people won't ever owe gift tax, many will trigger filing requirements—especially as they share their wealth through larger gifts or estate planning moves. When combined with strategies like annuities or trust planning, gifting can become a powerful tool.

At Summerlin Benefits Consulting, we provide expert guidance to help you protect your retirement income, preserve your wealth, and pass it on wisely. We feel that it's important to be well informed along every step of your retirement planning journey. If you have questions about your current strategies, or would like a no-obligation financial review with one of our licensed professionals, please reach out today.

Summerlin Benefits Consulting is a financial and insurance services firm and does not provide tax, legal, or accounting advice. The information provided is for general informational purposes only and should not be construed as tax advice. We strongly recommend consulting with a qualified tax professional or advisor to assess your individual situation and ensure compliance with applicable tax laws.

Frequently Asked Questions

Q: How much can I gift tax-free?

A: The annual gift tax exclusion lets you give up to $19,000 per person in 2026 without filing a gift tax return — married couples can combine for $38,000 per recipient. Amounts above the annual limit count against your lifetime exemption of $15 million in 2026. Most people will never owe actual gift tax.

Q: Do I owe gift tax if I give my child a large amount of money?

A: Most people don’t owe gift tax, even on large gifts. Amounts within the annual exclusion ($19,000 per person in 2026) require no reporting at all. Larger gifts simply reduce your lifetime exemption ($15 million in 2026) — tax is only due if you exceed that lifetime total. Filing Form 709 may be required, but that doesn’t mean you owe tax.

Q: Can I gift money to help someone buy an annuity without paying gift tax?

A: Yes — gifting funds to help someone purchase an annuity follows standard gift tax rules. Amounts within the annual exclusion ($19,000 per person in 2026) require no reporting. Larger contributions apply toward your lifetime exemption. Structuring gifts over multiple years to stay under annual limits is a common strategy — and can help a loved one establish guaranteed retirement income.

Tax Laws Changed in 2026 — Here’s What Retirees Need to Know

Thu, 13 Aug 2026 18:37:04 GMT

Originally published: April 24, 2024

Updated: June 25, 2026

The Tax Cuts and Jobs Act of 2017 (TCJA) made sweeping changes to U.S. tax law, and several of its provisions were originally scheduled to expire on January 1, 2026, unless Congress acted to extend them. Congress did act: the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, made most of those TCJA provisions permanent. For today’s retirees, that means the income tax brackets, the larger standard deduction, and several other provisions you’ve grown used to since 2018 are here to stay — but that doesn’t mean your tax picture in retirement is set on autopilot.

Tax rates remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with income brackets continuing to adjust for inflation each year. For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. The estate and gift tax exemption, which had been projected to be cut nearly in half, was instead raised and made permanent at $15 million per individual (effectively $30 million for married couples) for 2026, with continued inflation indexing going forward.

Even with rates holding steady, many retirees still see their tax bill climb in retirement — and that has little to do with tax law and a lot to do with how retirement income works.

First, a retiree is likely to experience a loss in deductions due to less or no contributions to retirement accounts, no work or childcare expenses, and oftentimes no mortgage payment. Furthermore, many retirees have the bulk of their savings in a pre-tax environment, such as an IRA or 401(k), so when they start pulling income from these accounts, more taxes are due. This is often a factor to consider when turning age 73, the age a retiree must begin taking Required Minimum Distributions (RMDs) from their retirement accounts. Even if they don’t need the income, they’re required to take a taxable withdrawal, which can increase taxable income and sometimes bump them into a higher tax bracket.

Another problem some retirees unfortunately face is that when one spouse passes away, the tax disparities become even greater. Although household income will be the same or less without the second spouse, the surviving spouse is often taxed more as a single filer than the couple would have been under married-filing-jointly status.

Because the brackets for single filers are narrower than for joint filers, a surviving spouse can find themselves pushed into a higher bracket with no other change in their financial picture — a gap that’s just as real now that rates are permanent as it would have been if rates had risen.

At Summerlin Benefits Consulting, we’ve got a great option that can help you save on taxes, keeping more of that money in your pocket. The financial vehicle we’re referring to here is called Fixed Indexed Universal Life (FIUL).

FIUL policies are funded with an initial payment, or several smaller payments over the first few years of the policy. From there, your cash deposits into your FIUL policy grow tax-free and earn a reasonable rate of return over time. You’ll see higher earnings in market up-years but won’t lose value in down-years — your money is protected. You’ll also have access to penalty-free withdrawals from your cash value after the first year of the policy, should you need it.

Additionally, you’d want a FIUL policy that offers “living” benefits as well as a death benefit. FIUL can not only provide you with tax-free income in retirement but can also help pay for long-term care, tax-free, as well. Most people age 65 and older will have at least one long-term care event during their retirement years, and that’s usually when the cost of living can sky-rocket for a retiree.

The next step to finding out whether you’d qualify for a FIUL policy is to work with a licensed professional. Even though tax rates didn’t rise as originally projected, RMDs, Medicare IRMAA surcharges, and the taxation of Social Security benefits are all still very real factors in retirement. Now remains a smart time to look at transitioning some of your pre-tax retirement savings into a tax-free environment.

Frequently Asked Questions

Q: How did the TCJA changes affect my retirement taxes in 2026?

A: They didn’t change the way many people expected. In July 2025, Congress passed the One Big Beautiful Bill Act, which made the TCJA’s lower tax rates (10% to 37%) and larger standard deduction permanent instead of letting them expire. The estate and gift tax exemption was also raised, to $15 million per individual for 2026, rather than being cut in half. That said, retirement income from sources like IRA and 401(k) withdrawals, RMDs, and Social Security can still increase your tax bill regardless of where the brackets sit.

Q: How can a Fixed Indexed Universal Life (FIUL) policy help reduce my retirement tax burden?

A: FIUL cash value grows tax-free and can be accessed as tax-free income in retirement through policy loans and withdrawals — unlike traditional IRA or 401(k) withdrawals, which are taxable. FIUL can also provide tax-free long-term care benefits through its living benefit riders, protecting you from large taxable withdrawals at the exact moment care costs spike. This makes FIUL a powerful tax-diversification tool alongside pre-tax retirement accounts.

Q: What is an RMD and how can it increase my taxes in retirement?

A: A Required Minimum Distribution (RMD) is a mandatory annual withdrawal from your traditional IRA or 401(k) beginning at age 73 under current law. Even if you don’t need the income, you must take the withdrawal — and pay ordinary income tax on it. For retirees with large pre-tax balances, RMDs can push taxable income into a higher bracket, increase Medicare IRMAA surcharges, and even make more Social Security benefits taxable. Strategies like Roth conversions or FIUL can help manage this exposure.

3 Ways You Can Profit from Stock Market Turmoil

Thu, 13 Aug 2026 16:39:54 GMT

Originally published: June 27, 2022

Updated: August 13, 2026

Every challenge is an opportunity. The significant volatility in financial markets so far this year is no exception. Here are three things that every middle-class American can do with their 401(k), IRA or other retirement plans, right now, to take advantage of what's going on.

1. Move Some of Your Money Into a Fixed Index Annuity

Retirement accounts, such as 401k's, IRA's, 403B's, and Thrift Savings Plans (TSP) are all taking a hit this year due to market volatility. As of mid-June 2022, major stock indexes like the S&P 500 have fallen over 20%, while other asset classes such as international developed markets and U.S. small-cap stocks saw declines as well.

When this does happen, and individuals start looking for safer strategies in their portfolio, there is a trend of consumers moving money into bonds. We have, of course, seen this occurring steadily during Q1 and Q2 2022. Unfortunately, due to changes in the Federal Reserve that are also occurring this year to offset inflation, the bond market experienced a significant decline in price, with longer-term Treasury bonds seeing even steeper losses. This means, bonds are not a safer approach and can actually open you up to a more immediate risk in some cases.

There is one “safe” approach for consumers who want to continue to grow their money when the US stock market is doing well but who do not want to keep losing during a Bear Market, like we are experiencing today. That approach is called a Fixed Index Annuity.

Not only can you roll over your employer sponsored retirement account and/or your individual retirement account into a Fixed Index Annuity, but you can often receive a policy bonus up front when you do so. Here's what that would look like:

A qualified, trustee-to-trustee transfer of funds can generally avoid triggering current taxation, though this depends on your account type and how the transfer is structured — a tax professional can confirm your specific situation.
Your bonus is credited day one to help offset losses experienced year to date in your previous account.
Your principal and the bonus will be immediately protected from market declines, subject to the terms of the contract and the claims-paying ability of the issuing insurance company.
Your principal and the bonus may earn compounded interest year over year, with the potential to grow at a competitive rate over time, depending on index performance and contract terms.

Because Fixed Index Annuities grow based upon a specific market index, like the S&P 500 for example, when that index is doing well you may earn interest based on that index's performance, subject to the contract's cap, participation rate, or spread. And, in years where that particular index is not doing well, your values are protected by the insurance company, subject to the terms of the contract and the claims-paying ability of the issuer. These accounts are specifically designed to help consumers protect the savings they have during down markets while still offering interest growth potential over time.

2. Rebalance Your “At Risk” Investments

Moving some of your portfolio into a conservative money strategy like a Fixed Index Annuity would be step one to achieving diversification in your portfolio, but the next question would be- what to do with the funds that you choose to continue to keep in an at-risk financial environment. Rebalancing market-exposed investments — like stocks, bonds, and mutual funds — is available through Summerlin Benefits Consulting's affiliated advisory firm, SBC Wealth Management.

There's some good news hidden in a broad-based selloff: pretty much everything has gone down. So, if you came into the 2022 calendar year owning, say, too much in large company U.S. stocks, and too little in smaller company stocks, foreign stocks, real-estate investment trusts, etc. this could be a good opportunity for a do-over. Rebalancing assets now could be conducted at little to no cost, since pretty much everything (except commodities and energy stocks) is down.

It's not perfect of course, because things have fallen different amounts and will likely continue to lose value for a while longer. But, in today's economy, transitioning to a more conservative approach and taking advantage of lower costs along the way can often make good sense.

3. Create Legacy Funds for Your Children or Grandchildren

One simple way to take advantage of this market downturn is to use the timing to set up that legacy fund that you've been wanting to establish for your children or grandchildren.

Opening a new savings or investment account for minor children in 2022 and depositing as little as $5,000 or even $1,000 on their behalf into some low-cost index funds could be a good way to leave a little bit of money behind for your loved ones that is pretty well positioned for positive growth from here on out. The long-term returns from the stock market averaged about a 5.5% compounding interest over the last 20 years, as have accounts like Fixed Index Annuities which tend to average somewhere between 3-6% compounded interest over time. Based on those numbers, a $5,000 gift today could be worth as much as $14,588 in 20 years' time.

Again, every challenge is an opportunity to reevaluate your strategies and take action towards positive change.

At Summerlin Benefits Consulting , we help clients follow a simple 3-tiered approach in deciding their course of action during times like this. Always ask yourself if the strategy you are taking is: (1) Good for Me Now. (2) Good For Me Later. (3) Good For My Family When I'm Gone.

Important Tax and Legal Information

Important Retirement Planning Information

Frequently Asked Questions

Q: What is a Fixed Index Annuity, and how can it help protect my retirement savings during a market downturn?

A: A Fixed Index Annuity (FIA) is an insurance contract that credits interest based on a market index, such as the S&P 500, while protecting principal from market declines, subject to the contract's terms and the claims-paying ability of the issuing insurance company.

Q: Can I roll over my 401(k), IRA, or TSP into a Fixed Index Annuity without paying taxes?

A: A qualified, trustee-to-trustee transfer from a 401(k), IRA, 403(b), or Thrift Savings Plan into a Fixed Index Annuity can generally avoid triggering current taxation, though this depends on your account type and how the transfer is structured — a tax professional can confirm your specific situation.

Q: Who helps rebalance my investment portfolio after a stock market selloff?

A: Rebalancing market-exposed investments — like stocks, bonds, and mutual funds — is available through Summerlin Benefits Consulting's affiliated advisory firm, SBC Wealth Management. A broad selloff can make rebalancing more cost-efficient, since most asset classes have declined together, lowering the cost of adjusting your allocations.

Q: How much could a $5,000 gift to my grandchildren grow over 20 years?

A: At roughly 5.5% average annual compounding growth — near the long-term historical average for the stock market — a $5,000 gift could grow to approximately $14,588 over 20 years. Actual growth depends on market performance and fees, and isn't guaranteed.

Q: What's the difference between moving money into bonds versus a Fixed Index Annuity during a market downturn?

A: Bonds can lose value when interest rates rise — the bond market saw steep, widely reported declines in 2022 — while a Fixed Index Annuity is designed to protect principal from market declines and credit interest linked to an index's performance, subject to the contract's terms and the insurer's claims-paying ability.

Women and Retirement: What’s The Tea?

Thu, 13 Aug 2026 16:32:41 GMT

Originally published: May 17, 2022

Updated: August 13, 2026

Women often experience some very specific retirement risks that could jeopardize their lifetime income. It's time to spill the tea, on what today's woman is facing in retirement and how best to plan for it.

When it comes to retirement, the strategy of saving early and saving often is good general advice for everyone. But that doesn't mean the ins and outs of retirement will look the same for all. Personal circumstances and financial influencers can define your specific needs for the future. Women in particular face some challenges that can leave them at a disadvantage to men in retirement. For example, women's average retirement income is about 80 percent of what men receive, according to the National Institute on Retirement Security (nirsonline.org/research/stillshortchanged). The good news is that knowing of challenges like this in advance will allow you to create a retirement income plan that caters to your future.

Here are the top five factors that women need to consider when planning for retirement.

1. Women Live Longer

Women who reach the typical retirement age of 65 are statistically prone to living for another 20.8 years or more, while 65-year-old men's average life expectancy is to live another 18.4 years (source: CDC, 2024 data, cdc.gov/nchs/products/databriefs/db548.htm ). That means women need to save more over their lifetime to ensure they don't outlive their retirement savings.

The current average spending among households of age 65 or older is about $61,432 per year (source: U.S. Bureau of Labor Statistics, 2024 Consumer Expenditure Survey, bls.gov/news.release/pdf/cesan.pdf ). Of course, how much you spend each year in retirement will depend on your personal lifestyle. Regardless, when planning for retirement female retirees in general may need to live off your savings longer than men will. It's important for you to have a strategy for making your income go further in life. Thinking about ways to maximize your retirement income — including a plan for when to start taking Social Security is key.

For people born in 1960 or later the full retirement age is now age 67 instead of age 65, and if you can wait until age 67 to begin taking Social Security payments, that is one way to help increase your retirement paychecks. You're eligible to claim your benefits as early as 62, but claiming Social Security prior to age 67 will reduce your benefits by as much as 30 percent. Many struggle with this decision however, because sometimes those paychecks are just simply “needed” sooner rather than later.

With Social Security being only one piece of the puzzle, knowing exactly how much you'll need to save, what retirement income options are available to you, and how to draw from multiple income sources in a tax-efficient way are all important parts of your retirement plan.

2. Women Are More Likely To Have Gaps In Their Retirement-Saving Years

Contributing to the wage gap is the fact that women are still largely in charge of caregiving, and thus more likely to experience interruptions in their careers to raise children or care for other family members. In fact, one in three moms in a 2021 McKinsey & Company study considered scaling back at work or quitting their jobs entirely during the pandemic, largely due to childcare responsibilities (source: leanin.org/women-in-the-workplace/2021 ).

The problem is that time out of the workforce also means putting a pin in your retirement contributions — something that can cause female retirees to run out of money well before their end of life. For women who are married, a spousal IRA may allow you and your spouse to keep up on retirement contributions while you take time off. But for single women or women who were homemakers, a better option might be an Immediate Income Annuity. This can enable you to take an asset you have already saved over the years, help protect a portion of it, and purpose it into the role of providing you with monthly retirement paychecks for as long as you live.

3. Women Have Higher Healthcare Costs

Healthcare expenses are subject to inflation just like other cost of living requirements. And unfortunately, cost of care does tend to be higher for people in retirement, regardless of gender. But because of their longer lifespans, women can expect to pay $200,000 more than men in health insurance premiums alone, according to an estimate by Health View Services (source: hvsfinancial.com/2020/09/29/womens-health-care-costs-in-retirement-projected-to-be-200000-more-than-mens ).

Additionally, retirees often face the expense of long term care needs. Based on the Federal Long Term Care Insurance Program's cost of care tool, current data shows In Home Care for just 6 hours each day averages $5,940 per month, Assisted Living averages $5,430 per month, and Nursing Home averages $9,240 per month (source: ltcfeds.gov/tools/cost-of-care , FLTCIP 2024 Cost of Care Survey). Now this can vary based on where you live and specific providers in your area but these general guidelines definitely illustrate how important it is for women, who are living longer, to make a plan for a lifetime income arrangement that can help cover costs like this no matter how long you live.

4. A 'Gray Divorce' Impacts Women More

The divorce rate among Americans who are 50 and over nearly tripled between 1990 and 2008, and has since leveled off (source: Pew Research Center, Oct. 2025, pewresearch.org/short-reads/2025/10/16/8-facts-about-divorce-in-the-united-states/ ). And research has shown that getting divorced later in life is financially harder on women than men. A 2021 Bowling Green State University study (Lin & Brown, published in The Journals of Gerontology: Series B; academic.oup.com/psychsocgerontology/article/76/10/2073/5903434 ) estimates that women see a 45 percent decrease in their standard of living following a gray divorce, versus 21 percent for men.

The lower lifetime earnings of women compared with men and taking time out of the workforce to provide childcare are some of the reasons behind the gap. And unfortunately, wives who have largely left financial decision-making to their husbands can be especially vulnerable. If you're going through a divorce it would be a good idea to recalibrate your retirement plans with a professional and figure out what retirement income options you have.

This is an area where a Fixed Index Annuity (FIA) and/or Immediate Income Annuity can sometimes help, but another example would be to take advantage of the Social Security Administration's ex-spouse benefits if eligible. Did you know that if you were married for at least 10 years and your ex-spouse is eligible to begin collecting Social Security, you might be able to collect benefits on their record? You could be entitled to an amount that's equal to half of their benefit if you meet other criteria and haven't remarried.

5. Diversify, Diversify, Diversify

Because women are likely to outlive their husbands, proper estate planning is key to ensuring their finances will be protected following the death of a spouse.

A full estate plan includes not only creating a will or trust, but also includes naming powers of attorney and updating beneficiaries on life insurance policies (source: northwesternmutual.com/life-and-money/the-different-types-of-life-insurance-explained), retirement accounts and other financial accounts. Keeping this information up to date is key because beneficiaries named in a policy override those named in a will. For instance, if a husband names an ex-spouse as a beneficiary on a life insurance policy but names his current wife in a will, the proceeds will go to the ex-spouse.

It's important to work with estate planning, tax and financial professionals when setting up an estate plan so they can help you and your spouse figure out how to best protect your assets and pass them on with tax efficiency in mind.

Summerlin Benefits Consulting helps all of our clients avoid retirement risks that could affect their future income plans. In today's world however, as our female clients experience unique financial influences on your future, we want you to know that we are here for you.

Frequently Asked Questions

Q: What unique retirement risks do women face compared to men?

A: Women face longer life expectancy, more career gaps from caregiving, higher lifetime healthcare costs, and steeper financial setbacks from late-life divorce than men do. Women's average retirement income is about 80% of men's (National Institute on Retirement Security: nirsonline.org/research/stillshortchanged ), making a retirement income plan tailored to these risks especially important.

Q: How much longer do women typically live in retirement than men, and why does that matter for planning?

A: Women who reach 65 can expect to live about 20.8 more years on average, versus 18.4 more years for men (CDC, 2024 data: cdc.gov/nchs/products/databriefs/db548.htm ). That extra longevity means women often need retirement income to stretch further, making a lifetime income strategy especially important.

Q: How should women plan differently for retirement than men?

A: Women should plan for a longer retirement, potential income gaps from caregiving breaks, and higher healthcare costs by saving early, timing Social Security carefully, and considering options such as an Immediate Income Annuity, designed to help provide income for as long as you live.

Q: What is a “gray divorce,” and how does it affect women financially?

A: A gray divorce is a divorce after age 50. Research from Bowling Green State University found women's household income drops by about 45% after a gray divorce, compared to 21% for men (Lin & Brown, 2021: academic.oup.com/psychsocgerontology/article/76/10/2073/5903434 ), making a post-divorce income review essential.

Q: Can a divorced woman collect Social Security based on her ex-spouse's earnings record?

A: Yes — if you were married at least 10 years, are currently unmarried, and your ex-spouse qualifies for Social Security, you may be able to collect up to half of their benefit amount. Collecting on an ex-spouse's record doesn't reduce what they receive.

How FIUL Can Help You Save on Taxes in Retirement

Thu, 13 Aug 2026 15:49:49 GMT

Originally published: April 24, 2026

Updated: June 24, 2026

If you’re planning for retirement, you’ve probably heard about 401(k)s, Roth IRAs, and traditional savings accounts. But there’s a powerful strategy that often flies under the radar: Fixed Indexed Universal Life insurance (FIUL). When structured correctly, an FIUL can offer a three-part tax advantage that’s hard to find anywhere else, and it could make a meaningful difference in how much of your money you actually keep.

What Makes FIUL Different?

FIUL is a type of permanent life insurance that builds cash value over time. That cash value is linked to a market index (like the S&P 500), which means your savings have the potential to grow, but with a floor that protects you from market losses. On top of that, a properly structured FIUL comes with three distinct tax benefits that work together.

The Triple Tax Advantage

Tax-Deferred Growth — Your cash value grows inside the policy without triggering annual taxes. No tax bill each year; your money compounds without the drag.

Tax-Free Retirement Income — You can access your cash value in retirement through policy loans. Because it’s a loan, not a withdrawal, it’s generally not treated as taxable income.

Tax-Free Death Benefit — When you pass away, your beneficiaries receive the death benefit income-tax-free. Unlike inherited 401(k) balances, there’s no ordinary income tax owed.

Tax-Deferred Growth: Let Your Money Work Harder

Inside an FIUL, your cash value earns index-linked credits without generating a taxable event each year. That means no annual capital gains tax, no income tax on interest, nothing.

The growth remains in the policy and keeps compounding. Over a 20–30 year accumulation period, that tax deferral creates a real, measurable difference. Every dollar that would have gone to taxes instead stays invested and keeps growing on your behalf.

Tax-Free Income in Retirement: The Policy Loan Strategy

Here’s where FIUL really shines as a retirement planning tool. Rather than making withdrawals from your cash value (which could be taxable), you can borrow against it. A policy loan isn’t considered a distribution by the IRS, so there’s no taxable event and no required repayment schedule.

Traditional retirement accounts like a 401(k) require you to pay ordinary income tax on every dollar you withdraw. With a properly structured FIUL, your retirement income can come out tax-free, which is especially valuable if you expect to be in a higher tax bracket later in life.

The key phrase is “properly structured.” If a policy is overfunded past a certain IRS threshold — known as the Modified Endowment Contract (MEC) rule, or the “7-pay test” — it loses this tax-free loan treatment. This is why working with an experienced advisor matters. Getting the structure right from day one is what makes the strategy work.

Is FIUL Right for You?

An FIUL tends to be a strong fit for people who have already taken advantage of their 401(k) employer match and want additional tax-advantaged savings. It’s especially useful for those who expect tax rates to rise in the future, or who want a retirement income stream that won’t push them into a higher bracket. It’s a long-term strategy, typically most effective over 20 or more years of consistent funding, but as part of a well-rounded retirement plan, it can fill gaps that other accounts simply can’t.

A properly structured FIUL lets your money grow tax-deferred, gives you tax-free income in retirement through policy loans, and passes a tax-free death benefit to your loved ones. That’s a combination you won’t find in a 401(k) alone.

Ready to see how an FIUL fits your retirement plan?

Learn more by joining us at one of our upcoming dinner seminars! Contact us today for our seminar schedule, or to schedule a complimentary consultation with our team at Summerlin Benefits Consulting. We're here to help you protect your money and protect your future!

Frequently Asked Questions

Q: How does FIUL save on taxes in retirement?

A: Fixed Indexed Universal Life insurance (FIUL) offers a three-part tax advantage: cash value grows tax-deferred with no annual tax bill, retirement income is accessed through policy loans that are generally not treated as taxable income, and beneficiaries receive the death benefit income-tax-free. No other single financial product combines all three of these features.

Q: Is retirement income from an FIUL really tax-free?

A: With a properly structured FIUL, you access cash value through policy loans rather than withdrawals. The IRS does not treat a policy loan as a distribution, so it generally does not count as taxable income. Unlike 401(k) withdrawals — taxed as ordinary income — FIUL policy loan income can come to you tax-free in retirement.

Q: Who is FIUL best suited for in retirement planning?

A: FIUL works best for people who have already taken advantage of their 401(k) employer match and want additional tax-advantaged savings. It’s especially valuable for those who expect to be in a higher tax bracket in retirement, or who want a retirement income stream that won’t increase their taxable income or Medicare premium surcharges.

Q: What does “properly structured” mean for an FIUL policy?

A: A properly structured FIUL is funded within IRS limits — known as the Modified Endowment Contract (MEC) rule, or the “7-pay test” — so it retains its tax-free policy loan treatment. Overfunding a policy past this threshold eliminates this benefit permanently. Setting the structure correctly from day one is essential, which is why working with a licensed, experienced advisor matters before funding begins.

401K and IRA Contribution Limits for 2026

Thu, 13 Aug 2026 15:28:42 GMT

Originally published: February 2, 2023

Updated: June 24, 2026

It may be time to up your 401(k) contributions. Each year the IRS reviews contribution limits and adjusts them for inflation.

Cost of living adjustments have brought the 2026 limit to $24,500 (up from $23,500 in 2025) for individual contributions to retirement accounts including 401(k)s, 403(b)s, most 457 plans and Thrift Savings Plans.

Individuals 50 and older can contribute an additional $8,000, bringing the total to $32,500.

New in 2025–2026: “Super Catch-Up” Contributions for Ages 60–63

Thanks to SECURE Act 2.0, workers aged 60–63 are eligible for a higher “super catch-up” contribution limit beginning in 2025. For 2026, those ages 60–63 can contribute up to $11,250 in catch-up contributions, bringing their total 401(k) contribution limit to $35,750. This is a significant planning opportunity for workers in their early 60s looking to accelerate retirement savings in the final years before retirement.

IRA Contribution Limits

Taxpayers who contribute to individual retirement accounts (IRAs) can put away up to $7,500, plus $1,100 in catch-up contributions for those 50 and older.

Roth IRA Income Limits for 2026

Income limits for Roth IRA contributions have been updated. The income phase-out range for Roth IRAs is:

Single filers: $153,000–$168,000
Married filing jointly: $242,000–$252,000
Married filing separately: phase-out range remains at $0 to $10,000

SIMPLE IRA Contribution Limits

Individuals can contribute up to $17,000 to SIMPLE accounts (savings incentive match plan for employees). Ages 60–63 super catch-up also applies to SIMPLE IRAs, with a higher limit of $5,250.

How Summerlin Benefits Consulting Can Help

If you’d like to discuss how Summerlin Benefits Consulting can assist you with new options designed for safety, to help you secure your principal and future contributions into your retirement plans, feel free to reach out for a no obligation meeting .

Frequently Asked Questions

Q: What are the 2026 401(k) and IRA contribution limits?

A: For 2026, the 401(k) employee contribution limit is $24,500, with a catch-up of $8,000 for those 50+ (total $32,500). Workers ages 60–63 qualify for a higher “super catch-up” of $11,250, bringing their total to $35,750. The IRA limit is $7,500, with a $1,100 additional catch-up for those 50 and older.

Q: What is the new super catch-up contribution for people ages 60–63?

A: SECURE Act 2.0 created a “super catch-up” contribution for workers ages 60–63, effective 2025. Instead of the standard $8,000 catch-up for 2026, eligible workers in this age range can contribute up to $11,250 in additional 401(k) contributions — giving them a total limit significantly higher than other age groups. It’s one of the most significant retirement savings opportunities in decades.

Q: Can I contribute to both a 401(k) and an IRA in the same year?

A: Yes — you can contribute to both a 401(k) and an IRA in the same year, as long as you meet income requirements. The limits are separate: you can max out your 401(k) ($24,500) and still contribute to a traditional or Roth IRA ($7,500), subject to Roth IRA income phase-out rules. Contributing to both is one of the best ways to maximize tax-advantaged savings.

401(k) Rollover Options When You Leave a Job

Thu, 13 Aug 2026 15:23:28 GMT

Originally published: October 27, 2023

Updated: June 24, 2026

It is quite common for people to make contributions into an employer-sponsored 401(k) retirement plan. If the employee stays with that employer for their entire career, the 401(k) will continue to grow and will be waiting for them when they retire. But we know that many people will have more than one job during their working years — and that these 401(k) accounts are often left behind after a job change. For this reason, this type of account is often called a "Stray 401(k)."

Essentially, these Stray 401(k)s are left in the control of the ex-employer. Regardless of the circumstances surrounding the job change, it is a good idea for the employee to take back control of their 401(k). So, what are your options?

Your 4 Options When You Leave a Job with a 401(k)

When you separate from an employer — whether through a job change, layoff, or retirement — you generally have four choices for what to do with your 401(k). Each option has different tax consequences, levels of flexibility, and long-term implications for your retirement savings.

Tax Implications: What You Need to Know Before You Decide

Taxes are one of the most important factors in choosing what to do with an old 401(k). The right move can preserve your entire balance. The wrong move — specifically cashing out — can cost you 30% to 40% or more of the account's value before you ever see the money.

The bottom line on taxes: a direct rollover to an IRA or new 401(k) is almost always the cleanest path. It preserves your full balance, defers taxes until retirement, and gives you time to make a thoughtful decision about where to invest.

How to Roll Over Your 401(k)

If you are still working, you can move your 401(k) into the financial institution used by your new employer, as long as they offer a 401(k). The new 401(k) plan administrator can help you with this process. But what if your new employer does not offer a 401(k), or you are now retired?

In that case, the best option is typically to roll over the retirement funds into a self-directed IRA. This is simply a plan that an employer does not oversee — you choose how your retirement funds are invested. There are no tax penalties incurred during a direct rollover, and it is a great opportunity to diversify your funds and select options that protect your nest egg from a volatile stock market.

2026 401(k) Contribution Limits

If you are still contributing to a 401(k), it helps to know the current limits. For 2026, employees can contribute up to $24,500 per year to a 401(k). If you are age 50 or older, you may make an additional catch-up contribution of $8,000 — bringing your total to $32,500. Workers ages 60 through 63 qualify for a higher "super catch-up" contribution of $11,250 under SECURE Act 2.0 rules, for a total annual contribution of $35,750.

What If I Have an IRA I Want to Move?

We have talked about 401(k) plans, but what if you have an IRA that you would simply like to move from one custodian to another? This would be called a qualified transfer, as opposed to a rollover. The transfer is initiated by the company where you are moving your IRA. It involves the completion and submission of a transfer form by the new custodian, followed by the physical transfer of funds. No tax penalties are incurred during a qualified transfer.

Why Choose a Fixed Index Annuity for Your Rollover or IRA Transfer?

Now that we have covered rollovers and transfers, the next question is where to move your retirement funds. Remember how we mentioned protecting your nest egg from a volatile stock market? Let's revisit that topic.

It is important to determine the level of risk you would like to carry in your retirement portfolio. If you are young — in your 20s or 30s — you may be open to carrying more risk, as you have plenty of time to recover from market losses. However, if you are of a more mature age, time may not be so much on your side. We at Summerlin Benefits Consulting like to use the Rule of 110 when determining an appropriate level of risk for each individual. Simply subtract your age from 110, and the resulting number is a good rule of thumb for the percentage of risk you can maintain in your portfolio. With Americans living longer than ever, the updated Rule of 110 accounts for the greater number of years your money may need to last.

If protecting your retirement nest egg from market declines is a primary goal, a Fixed Index Annuity (FIA) may help you do that. FIAs are offered by insurance companies. The annuity grows based on a particular market index but is backed by the insurance company so that you never lose money during market downturns. FIAs are a strong option for rollovers and qualified transfers because, in addition to safety, they offer a reasonable rate of return over time for the purpose of generating retirement income later in life. Some FIAs even include long-term care benefits should you need them.

Decision Framework: Which Option Is Right for You?

Not sure which path to take? Use this step-by-step framework to identify the option that fits your situation:

Step 1: Do you have an urgent financial need that requires cash right now? If yes, understand the full tax cost first (see Tax Implications above). Cashing out a $50,000 401(k) before age 59½ could cost $15,000–$20,000 in taxes and penalties. Explore all alternatives — including a personal loan — before making this choice.

Step 2: Are you starting a new job with a 401(k) plan? If yes, rolling into your new employer's plan is a simple, tax-free option. Review the new plan's investment options and fees first — not all employer plans are created equal.

Step 3: Do you want more control over your investment choices? If yes, a self-directed IRA rollover gives you access to a much wider range of investment vehicles, including Fixed Index Annuities, that are typically not available inside employer-sponsored plans.

Step 4: Are you approaching retirement and concerned about market risk? If yes, a rollover into a Fixed Index Annuity within a self-directed IRA may be the safest path. Your principal is protected from market losses while still earning a reasonable rate of return.

Step 5: Are you age 55 or older and recently separated from your employer? If yes, the Rule of 55 may allow penalty-free distributions from that specific employer's 401(k). This applies only to the plan where you separated — not IRAs. Consult a tax professional before taking distributions.

When in doubt, a direct rollover to a self-directed IRA is the most flexible, tax-efficient default choice. It preserves all your options, costs nothing in taxes, and gives you time to evaluate where to invest next.

Our team at Summerlin Benefits Consulting is well versed in rollovers, transfers, and safe money vehicles such as Fixed Index Annuities. If you would like assistance with a 401(k) or IRA account, or simply have questions, please reach out to schedule a no-obligation meeting with us today. We can help you take back control of your retirement savings — and put every dollar to work for your future.

*Last Updated: June 2026

Frequently Asked Questions

Q: What should I do with my 401(k) from an old job?

A: You have four main options: cash it out (usually not recommended due to taxes and penalties), leave it with your former employer, roll it into your new employer's 401(k), or roll it into a self-directed IRA. A direct IRA rollover is the most flexible choice — it triggers no tax penalty, preserves your full balance, and gives you access to a broader range of investments, including Fixed Index Annuities.

Q: What is the difference between a 401(k) rollover and an IRA transfer?

A: A rollover moves funds from a 401(k) or similar employer plan into an IRA. A transfer moves funds from one IRA custodian directly to another. Both are tax-free events when done correctly as direct transfers — meaning the funds go institution to institution and never pass through your hands. The receiving institution typically handles all the paperwork.

Q: What are the tax consequences of cashing out a 401(k) early?

A: If you withdraw from a 401(k) before age 59½, you will owe ordinary income tax on the full amount plus a 10% early withdrawal penalty. On a $100,000 account, that could mean $30,000–$40,000 in total taxes and penalties — leaving you with only $60,000–$70,000. A direct rollover to an IRA avoids all of this.

Q: Why would I roll my 401(k) into a Fixed Index Annuity?

A: Rolling a 401(k) into a Fixed Index Annuity (FIA) can make sense if protecting your principal from market losses is a priority. An FIA links growth to a market index like the S&P 500, so you benefit from market gains — but your principal and prior gains are protected during downturns. Some FIAs also include long-term care benefits. For workers nearing retirement who want a safe money strategy, an FIA rollover is worth discussing with a licensed advisor.

Q: What are the 2026 401(k) contribution limits?

A: For 2026, employees can contribute up to $24,500 per year to a 401(k). If you are 50 or older, the catch-up contribution brings your total to $32,500. Workers ages 60–63 qualify for a SECURE Act 2.0 super catch-up, allowing total contributions of up to $35,750. These limits apply to employee contributions only — employer matching is separate. Verify current figures at IRS.gov before contributing.

RMD Rules for 2026: What Every Retiree Needs to Know

Thu, 13 Aug 2026 14:45:58 GMT

Originally published: December 13, 2023

Updated: June 24, 2026

What Are RMDs and Why Do They Matter in 2026?

If you have a traditional 401(k), IRA, SEP-IRA, or similar tax-deferred retirement account, the IRS requires you to start withdrawing a minimum amount each year once you reach a certain age. These withdrawals are called Required Minimum Distributions (RMDs), and failing to take them — or taking less than required — triggers a significant tax penalty.

The rules governing RMDs have changed substantially in recent years. The original SECURE Act of 2019 raised the starting age from 70½ to 72. Then, in December 2022, Congress passed SECURE Act 2.0 (the Securing a Strong Retirement Act), which extended the age further and adjusted several other important provisions.

This guide explains the current RMD rules in plain language — including who must take RMDs, when they start, how to calculate them, what happens if you miss one, and a powerful tax strategy called a Qualified Charitable Distribution (QCD) that can help you satisfy your RMD without paying income tax on it.

RMD Age Rules in 2026: What SECURE Act 2.0 Changed

The RMD starting age has moved three times in recent years:

In plain terms: if you were born between 1951 and 1959, your RMDs start at age 73. If you were born in 1960 or later, your RMDs will not begin until age 75, starting in 2033.

Important first-year grace period: You must generally take your first RMD by December 31 of the year you turn 73. However, for your very first RMD only, the IRS allows a one-time delay — you may take it as late as April 1 of the following year. Be aware: if you use this extension, you will be required to take two RMDs in the same calendar year (one for each year), which could push you into a higher tax bracket.

How to Calculate Your RMD

Your RMD is not a fixed dollar amount — it changes each year based on your account balance and your age. The formula is straightforward:

RMD = Account Balance (as of December 31 of the prior year) ÷ Life Expectancy Factor

The life expectancy factor comes from the IRS Uniform Lifetime Table, which was updated in 2022 and provides slightly lower RMD amounts than the previous table. Here are some common examples:

If you have multiple retirement accounts (e.g., two traditional IRAs and a 401(k)), each account is calculated separately. For IRAs, you may aggregate the total and take the full RMD from one or more IRA accounts. 401(k) RMDs must generally be taken from each 401(k) separately.

Example: John turns 74 in 2026. His traditional IRA was worth $420,000 on December 31, 2025. The life expectancy factor at 74 is 25.5. His 2026 RMD is $420,000 ÷ 25.5 = $16,471. John must withdraw at least this amount from his IRA by December 31, 2026.

Penalties for Missing an RMD

Before SECURE Act 2.0, missing an RMD — or withdrawing less than the required amount — triggered a steep 50% excise tax on the shortfall. SECURE Act 2.0 reduced this substantially:

25% excise tax on the missed RMD amount (effective 2023 — reduced from 50%)
10% excise tax if the RMD error is corrected within the IRS correction window and the proper procedures are followed

You can request a waiver from the IRS if the RMD error was a reasonable mistake and you took corrective steps, though the IRS retains discretion over whether to grant the waiver. The lower penalty rate makes it easier to correct honest mistakes while still motivating compliance.

Reminder: RMDs from inherited/beneficiary IRAs have their own rules and deadlines. See the section on surviving spouses and beneficiaries below.

QCD Strategy: Satisfy Your RMD Without Paying Income Tax

One of the most powerful — and underused — strategies for retirees taking RMDs is the Qualified Charitable Distribution (QCD) , also known as a charitable IRA rollover. A QCD allows eligible IRA owners to donate money directly from their IRA to a qualified charity — and have that amount count toward their RMD for the year, without the distribution being included in their taxable income.

Key QCD rules for 2026:

Who qualifies: IRA owners and beneficiaries aged 70½ or older (note: you do not need to have started RMDs yet — the QCD age threshold of 70½ is lower than the RMD starting age of 73).
Annual limit: $111,000 per person per year (indexed for inflation). Married couples filing jointly can each make a QCD up to $111,000, for a combined total of up to $222,000.
What counts: The QCD amount counts toward your RMD for the year. If your RMD is $18,000 and you donate $10,000 via QCD, you only need to withdraw an additional $8,000 as a taxable distribution.
Tax benefit: The donated amount is excluded from your adjusted gross income (AGI) entirely — unlike a regular charitable deduction, which requires you to itemize. Reducing AGI can also help you avoid triggering higher Medicare IRMAA surcharges or making more of your Social Security income taxable.
Eligible accounts: Traditional IRAs and inherited IRAs. QCDs cannot be made from 401(k)s, 403(b)s, or SEP/SIMPLE IRAs while you are still contributing.
Eligible charities: The donation must go directly from the IRA custodian to a 501(c)(3) qualified charity. Donor-advised funds, private foundations, and supporting organizations do not qualify.

Example: Mary, age 76, has a traditional IRA RMD of $22,000 for 2026. She instructs her IRA custodian to send $22,000 directly to her church. The entire $22,000 QCD satisfies her RMD — and none of it appears as income on her tax return. Had she taken the distribution normally and then donated it, she would have owed income tax on the $22,000.

A QCD is especially effective if you:

Take the standard deduction and cannot benefit from itemizing charitable gifts
Want to reduce your AGI to lower Medicare IRMAA premiums
Are charitably inclined and do not need the full RMD for living expenses
Want to reduce the size of your IRA to minimize future RMDs for heirs

Surviving Spouse RMD Rules Under SECURE Act 2.0

SECURE Act 2.0 made an important change to how surviving spouses handle RMDs from an inherited retirement account.

Under the old rules, if your spouse passed away before starting RMDs, you would automatically become the “participant” in the RMD calculation — allowing you to delay distributions until you reached RMD age. Under SECURE Act 2.0, effective January 1, 2024, a surviving spouse must actively elect to be treated as the participant — it is no longer automatic.

If the surviving spouse elects participant status, they can delay RMDs until they themselves reach RMD age (73 or 75, depending on birth year). This is especially beneficial for a surviving spouse who is significantly younger than the deceased spouse.

Additionally, SECURE Act 2.0 changed which IRS table is used to calculate a surviving spouse's RMDs. The Uniform Lifetime Table — which factors in a younger spouse's life expectancy — now applies, resulting in lower RMD amounts over a longer distribution period compared to the Single Lifetime Table used previously.

SECURE Act 2.0 and Annuities in Retirement Accounts

SECURE Act 2.0 also addressed a long-standing concern about incorporating annuities — particularly those with period-certain guarantees and guaranteed annual increases — into qualified retirement plans like 401(k)s and IRAs.

Previously, the RMD rules made it technically difficult to hold certain types of annuity contracts inside a qualified account. The new rules provide clearer guidance that makes it easier for retirement plans to offer guaranteed lifetime income options, including annuities with increasing income streams.

For retirees concerned about outliving their savings, this change is meaningful: it supports the creation of a predictable, guaranteed income stream inside a qualified plan — while still satisfying RMD requirements. Fixed Index Annuities (FIAs) , in particular, can offer growth linked to a market index without downside risk, and many include an optional income rider that provides guaranteed lifetime income.

Special Needs Trusts and RMD Distribution Periods

SECURE Act 2.0 also modified the RMD rules for certain special needs trusts — allowing distributions to be spread over the lifetime of a disabled or chronically ill beneficiary, rather than being compressed into the 10-year window that now applies to most non-spouse beneficiaries.

This change can be especially beneficial for families planning to leave a portion of their qualified retirement account to a disabled loved one. By stretching distributions over the beneficiary's lifetime, the trust can provide ongoing financial support without forcing large, taxable payouts in a short period.

Note: A special needs trust must be properly structured and drafted by a qualified attorney who specializes in this area. It is important to have the trust established and reviewed well before it is needed.

2026 RMD Key Takeaways

RMD age is 73 in 2026 (for those born 1951–1959); rises to 75 in 2033 for those born 1960 or later.
First RMD grace period: You may delay your very first RMD to April 1 of the following year — but this means two RMDs in one year.
Penalty for missing: 25% excise tax on the shortfall; reduced to 10% if corrected promptly.
QCD limit: $111,000 per person per year directly from an IRA to a qualified charity — counts toward your RMD and is excluded from taxable income.
Surviving spouses: Must now actively elect to be treated as the participant to delay RMDs. Uniform Lifetime Table now applies for lower annual distributions.
Annuities in plans: SECURE Act 2.0 makes it easier to hold certain annuities in qualified plans, supporting guaranteed lifetime income options.

RMD rules are layered and can interact with other aspects of your retirement income plan — including Social Security, Medicare premiums, and estate planning. At Summerlin Benefits Consulting , we specialize in helping retirees navigate retirement income protection, understand their options, and develop a strategy that keeps more of their money in their hands. Contact us today for a no-obligation review.

Frequently Asked Questions

Q: What are the RMD rules in 2026?

A: In 2026, RMDs must begin at age 73 for anyone born between 1951 and 1959. The RMD age rises to 75 starting in 2033 for those born in 1960 or later. You must withdraw the IRS-calculated minimum from your traditional 401(k) or IRA by December 31 each year — or face a 25% excise tax on the missed amount, reduced from 50% by SECURE Act 2.0.

Q: How do I calculate my RMD?

A: Divide your retirement account's December 31 prior-year balance by your IRS life expectancy factor from the Uniform Lifetime Table. At age 73, the factor is 26.5 — so a $500,000 balance produces an RMD of ~$18,868. IRA RMDs can be combined and taken from any IRA; 401(k) RMDs must be taken from each account separately.

Q: What is a QCD and how does it reduce RMD taxes?

A: A Qualified Charitable Distribution (QCD) lets IRA owners age 70½ and older donate up to $111,000 directly from their IRA to a qualified charity. The donated amount satisfies your RMD for the year but is excluded from taxable income entirely — reducing your AGI, potentially lowering Medicare IRMAA surcharges, and cutting your tax bill without requiring you to itemize deductions.

Q: What is the penalty for missing an RMD?

A: Missing an RMD triggers a 25% excise tax on the shortfall — reduced from 50% by SECURE Act 2.0. If you catch and correct the mistake promptly following IRS guidelines, the penalty drops further to 10%. Your first RMD has a one-time grace period: you can delay it until April 1 of the year after you turn 73, though this creates two taxable RMDs in one calendar year.

What you need to know about the SECURE Act 2.0

Thu, 13 Aug 2026 01:35:38 GMT

Originally published: January 10, 2023

Updated: June 25, 2026

Even if you've covered all of the retirement planning bases – such as income generation, taxes, and inflation – there are still items to consider that could impact your future financial security. One such thing is new legislation.

For instance, the SECURE Act (Setting Every Community Up for Retirement Enhancement) of 2019 enhanced various rules around retirement saving, such as eliminating the age limit on traditional IRA contributions and raising the required minimum distribution (RMD) age. Congress has since passed the SECURE Act 2.0, also referred to as the Securing a Strong Retirement Act.

This has also prompted changes in RMDs, as well as penalties for not taking such withdrawals. Other SECURE Act 2.0 provisions center around early withdrawals from retirement plans and catch-up contributions.

What Were the Provisions of the Original SECURE Act (2019)?

The original SECURE Act did a number of things to help Americans retire more comfortably:

Allowing certain part-time employees to participate in employer-sponsored retirement plans.
Pushing back the age for required minimum distributions (RMDs) from age 70½ to 72.
Giving the thumbs up for 401(k) plans to offer annuities — helping retirees from outliving their income.

Eliminating the Stretch IRA, now requiring most beneficiaries to use all inherited IRA funds within 10 years of the original owner’s death.

What Does SECURE Act 2.0 Add?

SECURE Act 2.0 expands upon the original act with several significant provisions:

Enhanced catch-up contributions for ages 60–63: This provision took effect January 1, 2025. For 2025, eligible savers in this age group can contribute up to $11,250 to their 401(k) or similar employer-sponsored plan — the greater of $10,000 or 150% of the regular catch-up amount ($7,500 × 150% = $11,250).
Emergency withdrawals: Effective 2024, participants may withdraw up to $1,000 per year from employer-sponsored plans for unforeseeable personal or family emergency expenses, with limits on repayment and frequency.
RMD age increases: The required minimum distribution age increased to 73 effective January 1, 2023, and will increase again to 75 effective January 1, 2033.
RMD elimination for Roth employer plan accounts: SECURE 2.0 eliminated required minimum distributions for Roth accounts held in employer-sponsored retirement plans, such as Roth 401(k)s, effective 2024.
Student loan matching: Effective 2024, employers may offer matching retirement contributions to employees making qualified student loan payments — helping workers save for retirement while paying down debt.
National lost and found registry: SECURE 2.0 directed the Department of Labor to create the Retirement Savings Lost and Found database, a searchable tool to help workers and retirees track down missing retirement benefits. The database launched in December 2024 (lostandfound.dol.gov).

While there are some enticing updates in this act, for those who are already retired it may not necessarily provide much direct help. For more mature investors still building their retirement plans, it is very important to not only be aware of new legislation but to properly plan for longer life expectancy and guaranteed retirement income.

Conclusion

SECURE Act 2.0 is one of the broadest pieces of retirement plan legislation in decades. It impacts virtually all types of retirement plans and reflects Congress’ desire to increase retirement coverage and access, protect retirement plan assets, and simplify plan administration. The various provisions have different effective dates — some now in effect, others still upcoming.

Summerlin Benefits Consulting helps our clients navigate the rules and requirements of their retirement plans and works with you to ensure you have a good solid strategy in place.

Frequently Asked Questions

Q: What is the SECURE Act 2.0 and how does it affect my retirement?

A: The SECURE Act 2.0, signed into law in late 2022, is a major expansion of U.S. retirement legislation. Key changes include raising the RMD age to 73 (and 75 by 2033), enhanced catch-up contributions for ages 60–63, emergency withdrawal provisions, and student loan matching in employer plans.

Q: What is the new required minimum distribution (RMD) age under SECURE Act 2.0?

A: Under SECURE Act 2.0, the RMD age increased to 73 effective January 1, 2023. It will increase again to 75 effective January 1, 2033. This gives retirees more time to let tax-deferred savings grow before withdrawals are required.

Q: What are the new catch-up contribution limits for people ages 60 to 63?

A: Starting in 2025, individuals ages 60–63 can make enhanced catch-up contributions to their 401(k) or similar plan — the greater of $10,000 or 150% of the standard catch-up amount. For 2025, that works out to $11,250, giving late-career savers a meaningful opportunity to accelerate retirement savings.

Q: Can I take an emergency withdrawal from my 401(k) under the new rules?

A: Yes. Effective 2024, SECURE Act 2.0 allows one penalty-free emergency withdrawal of up to $1,000 per year from employer retirement plans for unforeseeable personal or family financial emergencies. The amount can be repaid within three years, and another emergency withdrawal cannot be taken during the repayment period.

Why being a grandparent has positive effects on your mental health and overall well-being

Tue, 11 Aug 2026 18:24:59 GMT

Originally published: 1/22/24

Updated: 8/11/2026

As a grandparent, you hold a special place in the family structure. Your wisdom, experience, and unconditional love have a profound impact on the lives of your children and grandchildren.

“And how does this relate to retirement planning?”, you may ask. Well, being an involved grandparent requires time, attention, and for some – travel and financial means.

In today’s society, where families often lead busy lives, the role of a grandparent has evolved and expanded to become more important than ever. Once retired, grandparents tend to have a little free time on their hands and can help families navigate hectic schedules; especially when both parents work. As a grandparent, you can sometimes provide a wider support network for your own children. For example, some grandparents help provide after school care or will participate in commuting kids to sports activities and so on. This not only gives a grandparent extra quality time with the grandchildren but can help relieve both stress and financial burden from the household.

Regardless of the supporting roles you may play in your children’s and grandchildren’s lives, the most important part of being a grandparent is the experience, for all of you!

Being a grandparent comes with many benefits. According to a few recent articles quoting and surveying grandparents across various sources, some of the best things about being a grandparent include:

Watching your family grow from near and far
Unconditional love, without the responsibilities
Children can re-energize you
An opportunity for mischief and memories
You become a valuable resource to your family
Sharing stories and old photos
Experiencing the ‘firsts’
You don’t have to change diapers
Your job is to play with your grandkids and appreciate the magic of a developing mind.

Boy, isn’t this all true! And as such, according to Psychology Today, being a grandparent can also have positive effects on your mental health and well-being, especially in retirement. Sometimes when we retire, we can go through a period where we struggle to find our place. However, some people feel as though being a grandparent gives them a new sense of purpose and fulfillment. ( https://www.psychologytoday.com/us/blog/inside-out-outside-in/202005/the-value-being-grandparent )

The flip side is of course the impact you can have on your grandchildren and the unique contributions you can make to their lives.

Dr Alan Ralph, Head of Training and Clinical Psychologist at Triple P International, and a grandparent himself, stated in Triple P’s “Team Parenting for Grandparents” article ( https://www.triplep-parenting.com/us/articles-and-news/post/team-parenting-for-grandparents/ ), “Nowadays, grandparents tend to live longer and stay active more than in previous generations. This can create a broader range of experiences and expertise to draw on by both parents and children.” He went on to describe how this might play out in the lives of you and your grandchildren:

Mentorship: Grandparents often step into a mentorship role, offering guidance and advice that is distinct from what parents can provide. They’ve “been there, done that”, and their life experiences can be educational and sometimes entertaining for grandchildren navigating their own life’s challenges.
Resilience and coping skills: Grandparents can share how they’ve specifically overcome obstacles and dealt with life’s ups and downs. This can help instill a sense of resilience, strength, and teach practical coping skills to their grandchildren.
Emotional support and wisdom: Grandparents have the experience and wisdom that is both beneficial but also essential for a child’s development. Their stories and life lessons can enrich the child’s perspective and offer a deeper understanding of the world around them.
Family traditions: They are usually seen as the bridge to the family’s history and culture. Through stories, traditions, and family rituals, grandparents can share this sense of belonging and identity with their grandchildren, which is key in shaping their values and beliefs.
Unconditional love: The love between grandparents and their grandchildren is pure and unconditional. It’s a relationship that’s less about discipline and more about acceptance. They offer a safe space, where children feel heard and valued, which can be incredibly reassuring and comforting for them.
Learning: Grandparents often have the patience and time that parents might struggle to find. They can participate with their grandchildren in many learning activities: from reading and playing games to gardening and cooking, which in return support children with both intellectual and practical skills.

Now, grandparenting is not all hopscotch and ice cream. There can be challenges as you learn to navigate shifting relationships, difference in parenting styles, and the new issues of today that you may not have had to face when your children were growing up (i.e., social media, gaming, health and safety risks, etc.). But, with some open communication and a little flexibility, you can build strong and positive relationships with your adult children and grandchildren.

When you are preparing for your retirement years, don’t forget to plan for the “extras” you might want or need if you one day step into the role of grandparent. Will you want to have the time to participate and help with daily activities? Would you like to have the financial means to take your grandchild to the zoo, or out to eat, or on a fun trip from time to time? Would Nana like to host a sleepover or would Pop like to plan a camp-out in the backyard on occasion? Life offers many joys. With a little financial planning, time, and a whole lotta love, this is surely one of them!

1 The essential do’s and don’ts for first time grandparents – Starts at 60 | Pub. 10/12/2023 ( https://startsat60.com/media/lifestyle/relationships/grandparenting/the-essential-dos-and-donts-for-first-time-grandparents )

2 The Value of Being a Grandparent – Psychology Today | Pub. 05/18/2020 ( https://www.psychologytoday.com/us/blog/inside-out-outside-in/202005/the-value-being-grandparent )

Frequently Asked Questions

Q: What are the mental health benefits of being a grandparent?

A: Being a grandparent can have positive effects on mental health and well-being, especially after retirement. It often provides a renewed sense of purpose and fulfillment during a stage of life when many retirees struggle to redefine their identity and find their place ( https://www.psychologytoday.com/us/blog/inside-out-outside-in/202005/the-value-being-grandparent ).

Q: How can retirement change a grandparent's role in the family?

A: Retirement often frees up time grandparents can use to support their children’s households, such as providing after-school care or driving grandchildren to activities. This extra involvement gives grandparents quality time with grandkids while easing scheduling pressure and financial strain on busy families.

Q: What do grandparents offer grandchildren beyond childcare?

A: Grandparents often serve as mentors, sharing life experience and coping skills that differ from parental guidance. They also help pass down family history and traditions, and offer unconditional, low-pressure love that helps grandchildren feel heard, valued, and understood.

Q: Should retirement planning account for the cost of being an active grandparent?

A: Yes. Activities like family trips, outings, sleepovers, or hosting grandchildren can require both time and money. Building these “extras” into a retirement plan can help ensure you have the flexibility and means to be as involved as you’d like to be.

Q: What challenges do modern grandparents face?

A: Grandparents today often navigate issues their own kids didn’t face growing up, such as social media, gaming, and modern health and safety concerns, along with differing parenting styles. Open communication and flexibility help maintain strong relationships with adult children and grandchildren.

Why women, especially, should have a solid retirement plan

Tue, 11 Aug 2026 18:17:21 GMT

Originally published: November 10, 2023

Updated: August 11, 2026

While getting an early start on retirement planning is important for both men and women alike, women tend to face some unique challenges in life that make it even more urgent. Moreover, if you're a woman who feels behind in retirement planning to begin with, the disparities can be even larger.

According to BLS Report 1092, “Women in the Labor Force: A Databook” (2022), women comprise almost half of the workforce ( https://www.bls.gov/opub/reports/womens-databook/2022/home.htm ). Women also control roughly one-third of total U.S. household financial assets, according to McKinsey ( https://www.mckinsey.com/featured-insights/week-in-charts/women-control-only-a-third-of-household-financial-assets-in-the-united-states-for-now ). Yet, many women end up with lower lifetime incomes and therefore lower social security benefits upon retirement. This could be for a variety of reasons, but one of which is the gap in wages earned by men versus women. Due to potential gender inequalities in wages, women may have less to set aside for a retirement nest egg.

Another contributing factor, and likely the largest one, is women taking time away from the workforce to care for children, spouses, or other family members. According to AARP's 2025 Caregiving in the U.S. report, 63 million Americans — nearly 1 in 4 adults — provided unpaid care to a family member or close friend in the past year ( https://www.aarp.org/press/releases/2025-07-24-new-report-reveals-crisis-point-for-americas-63-million-family-caregivers.html ), and the majority of caregivers are typically women. Providing care to another person, if unpaid, takes time away from a job or other income-earning source. This results in billions of dollars of unpaid care being provided each year, and again puts women farther behind in saving for the future.

Another factor that can affect retirement planning is unexpected financial events or emergencies, such as having a spouse or partner pass away. The CDC reports that women tend to have a longer average life expectancy than men (81.4 years versus 76.5 years, according to the most current 2024 data: https://www.cdc.gov/nchs/products/databriefs/db548.htm ), which means women are more likely to be widowed and must therefore deal with the physical, emotional and financial implications of their spouse's death. Life events like this can also drain one's retirement savings if there is no cushion or emergency fund to cover potential medical expenses and funeral costs.

So, what can you do to feel more confident about retirement planning? Whether you have a solid retirement plan, or no plan at all, it can be beneficial to seek the help of a financial professional, such as Summerlin Benefits Consulting, Inc. Our team of experts offer educational seminars geared towards understanding different retirement strategies, as well as complimentary, no-obligation financial reviews . Regardless of where you are in your journey, we can provide simple, easy to understand options to help you define and/or meet your retirement goals. Don't spend another minute feeling behind!

Important Tax and Legal Information

Frequently Asked Questions

Q: Why is retirement planning especially important for women?

A: Women face distinct retirement challenges — wage gaps, caregiving-related career breaks, and longer life expectancy — that often leave them with smaller savings and lower Social Security benefits than men. Starting early and building a dedicated plan helps close these gaps over time.

Q: How does unpaid caregiving affect women's retirement savings?

A: Caregiving is a major factor, since women make up most of the nation's 63 million unpaid family caregivers (AARP, 2025). Time spent caring for others instead of working reduces both current income and future retirement contributions.

Q: Why do women often need their retirement savings to last longer?

A: Women have a longer average life expectancy than men — 81.4 years versus 76.5 years in 2024 (CDC) — so savings must stretch further, and women are statistically more likely to face the financial impact of widowhood.

Q: What can women do to feel more confident about their retirement plan?

A: Meeting with a financial professional for a complimentary, no-obligation retirement review can help identify gaps and clarify options. Summerlin Benefits Consulting offers educational seminars and personalized reviews to help women define and meet their retirement goals, regardless of where they're starting.

Do you need to step up your game when it comes to retirement saving?

Tue, 11 Aug 2026 16:53:58 GMT

Originally published: February 8, 2024

Updated: August 11, 2026

Your financial health can have a profound impact on how comfortably you live down the road. Even if you are several years off from retiring, there’s no time like the present to take a deep dive into your retirement plan to make sure you feel confident about your future.

Generally speaking, most people don’t feel like they are saving enough, or they simply don’t know how much to save in order to retire with the lifestyle that they envision. Instead of being a catalyst for action, however, these feelings can sometimes have the opposite effect and cause decision paralysis. Without knowing what steps to take, people will often choose not to think about the topic of retirement planning and will therefore let more time slip by without a solid plan.

It’s never too late to start planning, though. Some groups, such as AARP, have started campaigns to help people at any stage of their retirement planning process. AARP calls their campaign, “This is Pretirement” with hopes that it will raise awareness and alleviate some of the stress people may be feeling when they think about saving for the future. The campaign features ads on radio, tv, and social media, and has a website, ThisIsPretirement.org , where you can take a quiz and begin building your plan.

Budgeting

Many experts will tell you to start with a simple budget outlining your income and expenses. If not sure how to get a budget set up, a financial professional, such as Summerlin Benefits Consulting, can assist you. You and/or the financial professional can then dive deeper into the areas where you are spending your money in order to better identify where you can save. You can then set goals as to how much you’d like to “put away” towards retirement each month. Having a written budget may also hold you more accountable to your spending (and therefore goals) once you get started.

Take a look at your contributions

If you are still working and your employer offers a 401(k), you can set up contributions that will come directly out of your paycheck. For those who don’t have access to an employer-sponsored plan, or those who are retired or self-employed, there are individual retirement accounts, such as IRAs, that can be set up to do the same thing. You will just have to make the contributions as opposed to them pulling directly from a paycheck. Even if small, contributions can help build a nest egg for you to use in retirement.

What if you have been making contributions, but wish the contributions had been larger? There is something called a catch-up contribution for individuals who are age 50 or older, which allows you to make additional contributions each year beyond the standard limits and can help you make up for those lower contributions earlier in life. For 2026, the 401(k) catch-up contribution is $8,000, and the IRA catch-up contribution is $1,100, both on top of the standard limits below (IRS). Savers ages 60 through 63 may also qualify for an enhanced “super” catch-up of $11,250 in a 401(k), in place of the standard catch-up amount (IRS).

Starting in 2026, under SECURE 2.0, if you earned more than $150,000 in FICA wages the prior year, any catch-up contributions you make to your 401(k) must be made on a Roth (after-tax) basis rather than pre-tax. This is worth keeping in mind if you’re a higher earner planning to use catch-up contributions as part of your strategy. So, current contribution limits are as follows.

401(k) contributions:

Under age 50 may contribute up to $24,500
Age 50+ may contribute up to $32,500
Age 60–63 (enhanced catch-up) may contribute up to $35,750

IRA contributions:

Under age 50 may contribute up to $7,500
Age 50+ may contribute up to $8,600

Source: IRS, “401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500,” Nov. 13, 2025

Estimate Your Income

Start to identify the sources of income you’ll have in retirement, including pensions, social security, and other investments. Did you know you can go to the Social Security Administration website, SSA.gov and see how much you will get depending on when you choose to initiate your Social Security benefits?

If you anticipate needing more money in retirement to offset the expenses you’ll have, you can also look into other sources of income, such as Fixed Index Annuities (FIA). Some FIA operate similar to a pension and allow you to turn on income when you need it. Some even include long term care benefits, which can be a huge benefit considering the cost of long-term care should you need it. FIA will grow your initial premium at a reasonable rate over time until you are ready to initiate the income.

Work as long as you can

Retirement is viewed as the time of life when you finally get to relax from the continuous, daily grind of working, raising a family, etc. Many picture their retirement taking place on a sunny beach with a drink in one hand and a book in the other. While this can certainly be a reality, you may want to entertain the idea of working a little longer than expected or doing part-time or consulting work once you have retired.

While you may think this sounds crazy, there are also several benefits to consider. First, the additional income that you weren’t accounting for could certainly help boost your nest egg and make it last longer, if needed. Additionally, working in retirement may help you maintain the sense of productivity that some tend to lose when they quit working. A job can become a large part of one’s identity while in their working years, and leaving the job when beginning retirement can often put an unexpected strain on one’s mental health.

But, not all are healthy enough to continue working in retirement, so it is probably best to look at it as an “added bonus” to your nest egg if you are able to do so and not rely on the extra income.

Hopefully you’ve picked up on the theme by now, and that is to put aside as much as possible. It is never too late to start and there are baby steps you can take if the topic of retirement planning overwhelms you.

You can also ask for help from a financial professional, such as Summerlin Benefits Consulting. We keep things simple and walk our clients through each step of the way! Don’t spend another day stressing about your retirement plan - call us today for a free, no-obligation meeting.

Important Tax and Legal Information

Important Retirement Planning Information

Q: What is a catch-up contribution and who qualifies for it?

A: A catch-up contribution lets savers age 50 or older put extra money into a 401(k) or IRA beyond the standard annual limit. For 2026, that means up to $8,000 extra in a 401(k) (or $11,250 for ages 60–63) and $1,100 extra in an IRA.

Q: How much can I contribute to my 401(k) in 2026?

A: In 2026, workers under 50 can contribute up to $24,500 to a 401(k), and those 50 and older can contribute up to $32,500. Savers ages 60–63 may qualify for an enhanced “super” catch-up of $11,250, bringing their total to $35,750.

Q: What’s the IRA contribution limit for 2026?

A: For 2026, individuals under 50 can contribute up to $7,500 to an IRA, and those 50 and older can contribute up to $8,600, which includes a $1,100 catch-up contribution.

Q: How do I know if I’m saving enough for retirement?

A: There’s no universal number — it depends on your income, expenses, and desired lifestyle. Building a budget, reviewing your contributions, and estimating income sources like Social Security and pensions are the first steps toward answering that for your situation.

Q: Can I keep working after I retire?

A: Yes. Many retirees choose part-time or consulting work to supplement savings and stay engaged. It’s best treated as a bonus to your nest egg rather than a required income source, since health and opportunity can vary.

It may be time to ditch savings accounts and mutual funds for fixed index annuities

Tue, 11 Aug 2026 15:38:09 GMT

Originally published: August 18, 2023

Updated: August 11, 2026

As of August 2026, the Federal Reserve's benchmark federal funds rate stands at 3.50%–3.75% (Federal Reserve, July 2026 policy decision) — down significantly from the 22-year high of 5.25%–5.50% it reached after the Fed's July 2023 rate hike. So, what does that mean for people who are trying to save up? Of course, cash savers may see a slight boost to their accounts any time interest rates go up, but there are other factors and options to consider, especially if you are planning to use your savings for retirement and expecting it to last throughout the remainder of your life.

Looking at yields alone, top-paying savings accounts today still offer annual percentage yields of around 4% (Bankrate, August 2026). Anyone can see that this makes savings accounts a more desirable option. Money-market mutual funds — mutual funds composed of holdings like government debt, repurchase agreements and corporate debt — are now yielding closer to 3.5%–3.7% (YieldFinder, August 2026), down from the roughly 5% they offered in 2023 as the Federal Reserve has cut rates.

One might think this creates a no-brainer decision and that these high yield savings accounts, or even more so, mutual funds, are the obvious way to go based on rates alone. It is important to look a little deeper, however, as mutual funds can have a lower liquidity than savings accounts due to the minimum balance stipulations and monthly withdrawal limits. They also tend to be much riskier and are not covered by FDIC insurance. With both of these strategies though, there is also the fact that when the Fed cuts rates, both money market mutual funds and savings accounts tend to drop their rates. This makes both of these options much less appealing to those who have their sights set on long-term growth for the future. This is exactly what has happened since 2023.

Overall, savings accounts and money market mutual funds may not be the “safest” option with the most “reasonable rate of return over time” for protecting your nest egg.

So, what if there is another investment vehicle that offers principal protection with growth potential, regardless of which direction the Federal Reserve moves rates next? Well, there is! And, it’s one that can potentially check all of the boxes today’s savers are looking for. We are talking about Fixed Index Annuities (FIA). Fixed Index Annuities provide an environment for your savings with no risk at all, as the money is protected from market declines while still typically making a reasonable rate of return. FIA’s grow based on the performance of a specific market index. When the index goes up, the asset grows, and when the index performs poorly, the investment is backed by an insurance company and protected, so there is no loss is incurred.

FIA’s allow your money to grow safely over time, while still providing you with access to your funds if you need it, since most FIA’s offer a free 10% withdrawal each year. This provides today’s savers with security, growth, and liquidity. For these and other reasons, we at Summerlin Benefits Consulting call FIA’s “safe money vehicles” and consider these to be a better option for many of our clients, especially during these uncertain times.

We would be happy to take your call today if you’d like to speak with one of our safe money experts and learn more about how you can maximize your savings and prepare for your future, safely in today’s market climate.

Important Retirement Planning Information

Frequently Asked Questions

Q: What is a fixed index annuity and how does it work?

A: A fixed index annuity (FIA) is an insurance-backed savings vehicle that grows based on the performance of a specific market index. When the index rises, the annuity's value grows; when the index performs poorly, the insurance company protects the account from loss, so no market decline can reduce your principal.

Q: Is a fixed index annuity safer than a savings account or money market mutual fund?

A: In terms of principal protection, yes. Fixed index annuities protect savings from market declines through insurance-company backing, while money market mutual funds carry investment risk and aren't covered by FDIC insurance. Savings accounts are federally insured but offer lower long-term growth potential, and their rates drop whenever the Fed cuts rates.

Q: How much money can I withdraw from a fixed index annuity each year?

A: Most fixed index annuities allow a free withdrawal of up to 10% of the account value each year without triggering surrender charges. This gives savers access to a portion of their funds while the rest continues growing, protected from market losses.

Q: Why have money market mutual fund yields dropped since 2023?

A: Money market mutual fund yields are tied directly to the Federal Reserve's benchmark rate. As the Fed cut rates from a 2023 peak of 5.25%–5.50% to the current 3.50%–3.75% range, money market yields fell from around 5% to roughly 3.5%–3.7%.

Wanting to Retire Early? Factors to Consider Before Taking the Plunge

Tue, 11 Aug 2026 15:03:05 GMT

Originally published: 8/29/23

Updated: 8/11/2026

Most of us dream about the day we'll retire and imagine doing so while we are still young enough to enjoy it. Oftentimes, though, people who retire early find themselves “unretiring” and returning to work just a short time later.

There are many reasons why this may happen, but the most common one is people underestimating their expenses. While we are still working, the typical rule of thumb is to have an “emergency fund” on hand for those unforeseen medical events, car problems, and other surprises. So yes, we should also plan for these unforeseen events even in retirement.

Here are some tips to think about before you jump headfirst into retirement.

Prepare for the costs of healthcare and leisure

Healthcare is one of the biggest expenses in retirement. Let's say you plan to retire at 55 years old. That means you'll no longer be able to rely on health insurance from your employer and may have to pay for healthcare out of pocket for the next 10 years. Given what healthcare costs are today, there is no telling what that would look like 5 or 10 years from now. Furthermore, just one major illness or hospitalization can deplete your savings in an instant if you are uninsured. Ask yourself, “How healthy am I?” and “Will major healthcare costs potentially be part of my retirement future?”

Being healthy is always the ultimate goal so that we can enjoy our retirement years, in which case you may spend more money on experiences and travel than you do on healthcare. To prepare for these potential costs, you must take a close look at your current investments. Will they keep up with rising costs? Also ask yourself, “Is travel important to me in retirement?” and think about where you may want to go once you have the free time to do so. With these answers, you can begin to devise your financial plan.

Determine which investment vehicles are best suited for your retirement needs

Once you stop working, you will likely stop contributions to your 401K and/or IRA. As you begin drawing from these retirement accounts to pay for everyday expenses, the growth of these assets may slow, therefore decreasing your savings potential. To many, this is the most important time to transition such accounts into a safe environment, so that the money you do have saved for retirement is protected as you transition into this new phase of life. These types of accounts, as well as other investments such as brokerage accounts, are tied to the stock market and can also carry a lot of risk. One could work hard their entire life putting money into a 401K or IRA just to see the savings depleted in a down market.

It may be beneficial to consider transferring your 401K or IRA money into a new kind of retirement savings vehicle, like a Fixed Index Annuity (FIA). Fixed Index Annuities are offered by insurance companies and grow by following a specific market index. When the index is doing well, the account will earn interest; when the index is not doing so well, your values are protected by the insurance company and you don't lose any money.

An FIA will allow you to grow your asset at a reasonable rate of return with the intent of turning on income in the future. This income can be beneficial in supplementing your social security benefits and other income sources, which can go a long way towards helping you pay for healthcare and/or travel in retirement. Some FIA's even offer long-term care and assisted living benefits, which offer a sense of security when planning for those unforeseen medical needs that could arise in your future.

Account for the cost of taxes

Taxes are a huge factor to consider in estimating your costs in retirement, including property tax, sales tax, and income tax. The type of asset from which you withdraw your retirement income will also determine the different tax implications. Taxes may also vary from state to state, making where you plan to live in retirement an important consideration.

Your retirement plan should include the total cost of taxes and it all starts with location. Ask yourself, “Where do I plan on living in retirement?” If you plan to move, research how the cost of living in the new city compares to your current city. If you plan to purchase a new or additional home, find out what those property taxes cost. These are all factors that will help you better plan for your income needs, regardless of the age at which you hope to retire.

Decide how you will keep busy

Finances are one aspect, but having too much time on one's hands is another thing that drives people back into the workforce after they have retired. We need a sense of purpose, a reason to get out of bed in the morning. As blissful and dreamy as early retirement sounds, few actually think about all of that additional time and how they're going to fill it.

Think about what your days will look like without the structure and routine of work. Remember, you can only go out to eat, to social events, and travel so much, especially when living on a retiree's budget. Then what? If most of your friends are still working full-time, you may need to come up with some hobbies or other ideas to fill your time. It is important for you and your spouse to maintain individual interests as well, as you likely didn't spend 100% of your time together before retirement so this can be an overwhelming transition for some.

Plan for the extra costs that new hobbies or activities might bring and incorporate those additional expenses into your retirement income plan as well.

Know what your plan is before you retire

The bottom line is that life is expensive and can often throw you curveballs. It's ok to dream, and it's important to work toward goals, but it's imperative to be realistic and proactive when it comes to planning for your financial future. This is especially true if you want to retire early.

At Summerlin Benefits Consulting, we help clients of all ages and in all stages of life, whether they have already retired or are just beginning the planning process. Our process generally begins with a free educational seminar for potential clients and a no-obligation consultation so that we can help you navigate which savings vehicles are best suited to reaching your retirement goals. We then make things simple and easy-to-understand as we lay out potential options and how those options affect retirement. Contact our office today , if you'd like to learn more.

Important Tax and Legal Information

Important Retirement Planning Information

Frequently Asked Questions

Q: What should I consider before deciding to retire early?

A: Early retirement requires more than reaching a savings goal — you need a plan for healthcare costs before you qualify for other coverage, taxes tied to where you live, and how you'll spend your time. Underestimating these expenses is the top reason early retirees return to work.

Q: How do I pay for healthcare if I retire before I'm eligible for other coverage?

A: If you retire before qualifying for other health coverage, you'll likely need to cover healthcare out of pocket — potentially for a decade or more. One major illness or hospitalization without insurance can quickly deplete retirement savings, so factor this cost into your plan before you retire.

Q: What is a Fixed Index Annuity (FIA) and how could it help with early retirement?

A: A Fixed Index Annuity is a retirement savings vehicle offered by insurance companies that earns interest based on a market index's performance while protecting your principal — you earn when the index rises and don't lose value when it falls. Some FIAs also offer long-term care or assisted living benefits.

Q: How do taxes factor into my retirement income plan?

A: Taxes — including property, sales, and income tax — vary by state and depend on which accounts you draw retirement income from. Where you choose to live in retirement, and whether you plan to relocate or buy a new home, directly affects your total tax burden and should factor into your income plan.

Q: How can I stay busy after retiring early?

A: Retiring early means filling significantly more free time than a traditional retirement, and running out of structure is a common reason people return to work. Before you retire, think through how you'll spend your days, develop hobbies, and maintain individual interests alongside your spouse's to make the transition sustainable.

I'd like to retire this year. How do I know if I have enough saved up?

Tue, 11 Aug 2026 14:36:08 GMT

Originally published: January 11, 2024

Updated: August 11, 2026

There is no “one size fits all” answer to how much is enough when it comes to retirement. That is why retirement planning is often thought of as a complicated and taxing topic. But it doesn’t have to be. At Summerlin Benefits Consulting, we believe in making things simple for our clients. Below, we will outline some of the basic steps one should take when determining how much they will need to have in their retirement nest egg to live comfortably when they retire.

Expenses

The first step is to look at your current expenses and then try to determine which expense categories (if any) will change once you retire. Generally speaking, one’s interests and habits during their working years are not likely to change drastically when they retire. For example, someone who likes to travel and eat out a lot in their working years is likely to continue traveling and eating out in retirement. Of course, with more free time in retirement, these habits could change, but are not likely to do so overnight.

Lifestyle

Next, you’ll need to consider the larger-expense items pertaining to your lifestyle, such as your car and your home. For example, your vehicle may be paid off; however, you’ll need to look ahead and determine whether you may need to purchase a new one at some point during your retirement. When it comes to your home, someone who has a primary residence that they own outright and intend to remain in the rest of their lives will have fewer monthly expenses in this category than someone who may have multiple vacation homes and mortgages to pay off. A complete financial inventory and lifestyle assessment is key to retirement income planning.

Unforeseen Circumstances

There are other factors you’ll need to keep in mind when planning for retirement, even if they may be somewhat out of your control; these include inflation, home or vehicle repairs, medical emergencies and the possibility of future long-term care and/or healthcare costs. Of course, you can't put an exact amount on some of these items when determining how much they’ll cost you in retirement, but you can be proactive by including them in your estimates.

When it comes to healthcare, remember that you won’t be eligible for Medicare until age 65. So, if you and/or your spouse are planning to retire before that age, you’ll need to account for the purchase of private healthcare insurance. Additionally, if you’re planning to set aside anything for potential long term care needs, this can be extremely costly. If anything, it is ideal to make sure you have a cushion in your nest egg that can help with these kinds of “what-ifs”.

How to Add it All Up

Try to come up with an estimate of how much you’ll be spending each year during retirement given the factors listed above. Our list is not all-encompassing though, so be sure to include any expenses unique to you and your lifestyle and don’t forget to plan in some travel and fun! Then, add a healthy cushion of somewhere around $10,000 per year for any emergencies; this may differ from person to person depending on their health, age of their home, marital status, and risk tolerance, etc.

Compare those expense factors to your guaranteed retirement income, such as Social Security, pensions, and other benefits that you know you’ll be receiving. More benefits can help offset your retirement expenses so leave no stone unturned and also incorporate your spouse’s retirement income, if applicable. That will give you an idea of how much additional income you will need to pull from your retirement savings accounts to supplement those other income sources. A good guideline to use when determining if you have “enough” saved, is to use the 4% Rule; this rule tells you to try to only spend about 4% of your nest egg each year in retirement. Of course, the percentage could go up or down depending on the person, but this offers a good starting point for how much to have on hand before retiring.

Example, if your “bottom line” spending, after accounting for other income benefits coming in, still leaves a deficit of $20,000, you know you’ll need to pull at least $20,000 per year from your retirement nest egg. Is that 4% of what you currently have saved or do you need to save a little more, before you take the leap into retirement? You can figure that out by taking the $20,000 and dividing it by .04 which, in this example equals: $500,000. The 4% rule says that having $500,000 set aside will allow you to pull $20,000 per year and will still last you 30 years based on your current rate of spending. If you retire at age 65 that means your savings should be enough to last until you are 95.

There are other factors to consider such as inflation and, as mentioned, unforeseen events, but the 4% rule is a good baseline to start with. A professional financial firm like Summerlin Benefits Consulting can help you dig into this a little deeper and also plan more specifically to your current and future needs.

Making the Decision

Once you’ve done all the math, it is time to decide whether you can retire this year or if you may need to keep saving. But you don’t have to make this decision alone. It is always a good idea to have a financial professional take a look at your plan so that you can feel confident about the path you’re on. A good financial professional should also be able to offer assistance with understanding market trends and how they may impact inflation and interest rates during your retirement.

At Summerlin Benefits Consulting, we help our clients navigate retirement planning in a simple, easy to understand manner, so that they can realize their individual, unique retirement goals and work towards those goals. Give us a call today for a no-obligation meeting to review your financial plan so that we can help get you on the road to retirement.

Q: How do I know if I have enough money saved to retire this year?

A: You likely have enough saved when your guaranteed income sources, like Social Security and pensions, combined with roughly 4% of your retirement nest egg, cover your expected annual expenses plus a cushion for emergencies. Comparing that total to your current savings tells you where you stand.

Q: What expenses should I expect to change once I retire?

A: Most day-to-day spending habits, like travel and dining out, tend to stay similar in retirement. What often changes are big-ticket lifestyle costs, such as paying off a car or home, plus new expenses like private health insurance if you retire before Medicare eligibility at 65.

Q: What if I retire before I’m eligible for Medicare at 65?

A: You’ll need to budget for private health insurance to bridge the gap until Medicare eligibility begins at 65. This can be a significant added cost, so factor it into your retirement expense estimate, along with potential long-term care costs later on.

Q: How much of an emergency cushion should I set aside in retirement?

A: A common guideline is to add roughly $10,000 per year to your retirement budget for unexpected costs like medical emergencies or home repairs. Your ideal cushion may be higher or lower depending on your health, marital status, and risk tolerance.

Millions of people will turn 65 this year and here's what you need to know if you're one of them.

Tue, 11 Aug 2026 11:09:39 GMT

Originally Published: March 4, 2024

Updated: August 10, 2026

The U.S. is in the middle of a record-breaking wave of Americans entering retirement. In 2025, an average of 11,400 people turned 65 each day, adding up to a record 4.18 million people for the year — the highest number on record. ( https://www.limraconsumer.com/the-peak65/ ).

This wave — often called the “silver tsunami” or “Peak 65” — began in 2024 and is projected to continue through 2027 ( https://www.limraconsumer.com/the-peak65/ ). So, if you yourself will be celebrating a 65th birthday in the next few years, there are a few things you may want to consider.

Should I Retire?

If you are still working, a question you may be eagerly asking yourself is, “When should I retire?” The answer is going to be different for every individual and depends on several factors. Will you receive a pension when you retire and, if so, will it continue to grow if you work a few more years? Do you feel prepared financially to retire so that you don’t outlive your nest egg? What will you do with all of the free time if you quit working?

Ways to fill your free time in retirement may be the more fun ideas to entertain; think grandchildren, travel, and hobbies. But, if you truly love what you do for work and are healthy enough to keep working, there is nothing that says you must retire at 65. In fact, a study by Pew Research Center found that roughly 1 in 5 people over 65 continue working ( https://www.pewresearch.org/social-trends/2023/12/14/older-workers-are-growing-in-number-and-earning-higher-wages/ ). If you are ready to take a step back from the 9-5 grind you’ve been on for so many years, but don’t like the thought of fully stepping away from the working world, there are also other options like part time jobs and volunteering.

Financial Plan

Before you decide to leave the workforce altogether, however, you’ll want to make sure you have a solid plan for how you’re going to pay for retirement and ensure you don’t outlive your nest egg.

Many people have 401k’s with an employer that they’ve been contributing to for at least some portion of their working years. Sometimes the 401k is from an employer that they have since moved on from, and in that case, we like to call those “stray 401k’s”. Others may have IRAs, or ROTH IRAs, which are individual plans that are separate from an employer.

So the question is, what do you do with your 401k or IRA in preparation for retirement? First of all, if you have a stray 401k, it is a good idea to take back control of it. This is something that our team at Summerlin Benefits Consulting can help you with.

Furthermore, as you age and get closer to retirement, many experts will tell you to reduce the amount of risk you have in your financial portfolio. In fact, there is a general guideline, called “The Rule of 100” that recommends subtracting your age from 100 to get a reasonable level of risk to maintain in your portfolio; the rest should be kept safe in low or no-risk vehicles. When your money is in a 401k or IRA, it is entirely at risk and is at the mercy of a volatile stock market. There are other options, such as Fixed Index Annuities (FIAs) that you can move your money into, which will keep it safe from market declines while it still continues to grow over time.

FIA’s are sold by insurance companies and involve an upfront payment by the owner. If moving the funds from a 401k or IRA, the upfront payment would occur by means of rollover or transfer, respectively. The annuity grows at a reasonable rate of return based on a specific market index, but is protected by the insurance company during times of down-markets so that you never lose money. FIA’s can also offer tax-deferred savings and monthly income for life so that you never have to worry about outliving your money.

If you would like to learn more about FIA’s and keeping your money safe from risk, a good step forward would be to reach out to Summerlin Benefits Consulting .

Don't Procrastinate!

Even if retirement may seem light years away, it’s truly never too early to start planning. The financial strategy of a younger person in their 40’s may look different than someone in their 60’s, but the point is that everyone should have a plan. Someone who starts contributing to a retirement plan early in life will have the opportunity to earn compounding interest and will also have time to recover during times of market volatility. Someone who is closer to retirement however, may make financial decisions focusing on growth accompanied by safety and stability. As you get older, there are also other concepts to consider, such as leaving behind legacy funds for your children or grandchildren, for example.

Of course, getting a handle on your retirement plan can be stressful. That’s why many people choose to put it on the back burner for a time when they think they’ll have less debt, student loans, mortgage payments, etc. But, there is no time like the present to solidify your plan so that you feel confident going into retirement, whenever that may be. At Summerlin Benefits Consulting, we believe in keeping things simple and helping you relieve some of the stress.

Medicare Eligibility

In addition to being the general age at which many people choose to retire, age 65 typically gets a lot of recognition because it is the year you become eligible for Medicare benefits. Most people will enroll in Medicare at this time, unless they are still receiving health insurance from an employer; in which case they may want to reach out to a Medicare expert to determine whether they should still enroll.

Medicare benefits can be broken down into Part A, which covers in-patient hospital stays, rehabilitation at skilled nursing facilities, and home health care, and Part B, which covers outpatient services and doctor appointments. You can also enroll for “supplements” to enrich your benefits further, if needed.

Riding the Wave

Turning 65 may sound overwhelming, but it doesn’t have to be. Our main goal at Summerlin Benefits Consulting is to support our clients on their path in or towards retirement while offering retirement income protection guidance in a simple and easy-to-understand method. We fondly refer to our team of professionals as “Safe Money Experts”! Reach out today if you’d like to get started with a no-obligation financial review.

Important Tax and Legal Information

Important Retirement Planning Information

Frequently Asked Questions

Q: What is “Peak 65” and why does it matter for people turning 65?

“Peak 65” is the record wave of Americans reaching age 65 between 2024 and 2027, driven by the Baby Boomer generation. In 2025 alone, about 4.18 million people turned 65 — an average of 11,400 per day ( https://www.limraconsumer.com/the-peak65/ ). It matters because so many people are making major retirement decisions at once.

Q: When is the right age to retire?

There's no single right age — it depends on factors like your pension, financial readiness, and health. Many people also keep working well past 65: roughly one in five Americans over 65 are still employed ( https://www.pewresearch.org/social-trends/2023/12/14/older-workers-are-growing-in-number-and-earning-higher-wages/ ). Part-time work and volunteering are also options for easing into retirement.

Q: What should I do with an old 401(k) from a former employer?

An old 401(k) left with a former employer — sometimes called a “stray 401(k)” — can often be rolled over or consolidated so you have more control over it. Summerlin Benefits Consulting can help you review stray 401(k)s and IRAs as part of a full retirement plan.

Q: What is a Fixed Index Annuity (FIA) and how does it protect retirement savings?

A Fixed Index Annuity is an insurance product that grows based on a market index while protecting principal from market downturns. Money can move into an FIA from a 401(k) or IRA through a rollover or transfer, and many FIAs offer tax-deferred growth and income for life.

Q: When am I eligible for Medicare, and what does it cover?

Most people become eligible for Medicare at age 65. Part A covers inpatient hospital stays, skilled nursing care, and home health care, while Part B covers outpatient services and doctor visits. Supplemental coverage is also available, and those still on employer coverage should confirm timing with a Medicare expert.

Market Volatility and Retirement: Protecting Your Nest Egg

Mon, 10 Aug 2026 16:19:57 GMT

Originally published: March 6, 2026

Updated: August 10, 2026

For many people approaching retirement, market volatility becomes a major concern. While fluctuations in the market are normal, they can have a greater impact on your finances when you are close to relying on your savings for income.

After years of building your retirement nest egg, protecting those assets becomes just as important as growing them.

Why Volatility Matters More Near Retirement

When you're early in your career, market downturns are usually easier to recover from because you have time on your side. As retirement approaches, however, that timeline becomes shorter.

A significant drop in the market right before or during retirement can reduce the value of your portfolio at the exact moment you begin withdrawing income. This is often referred to as sequence-of-returns risk, where early market losses can affect how long your retirement savings last.

A common guideline some retirees consider is the ‘Rule of 100,’ which suggests subtracting your age from 100 to estimate the percentage of your portfolio that may be appropriate for market-based investments, with the remainder potentially allocated to more conservative or protected strategies.

At Summerlin Benefits Consulting , we provide guidance and strategies for the best way to make your money safe based on your long-term goals.

Creating Balance in Your Retirement Strategy

Many retirement portfolios are heavily exposed to the stock market. While these investments can offer growth potential, they can also introduce volatility.

A balanced retirement strategy often includes a mix of solutions designed to help manage risk while still allowing for growth. This may include professionally managed investment portfolios, annuity products that can provide protected income , or insurance-based strategies that offer additional financial flexibility.

The goal is not to avoid growth, but to build a strategy that can better withstand different market conditions.

Building Reliable Retirement Income

In retirement, the focus shifts from accumulation to income. Social Security can provide a foundation, but many retirees need additional income sources to maintain their lifestyle.

Some financial strategies can help create income that is less dependent on day-to-day market performance. Having multiple income sources can help provide stability and reduce the pressure to withdraw funds during market downturns.

Planning with Confidence

A thoughtful retirement plan considers growth, risk management, and income planning. By incorporating a variety of strategies, retirees can feel more confident about navigating market ups and downs.

At S ummerlin Benefits Consulting , we help individuals explore options designed to help protect retirement savings while supporting long-term financial goals.

If you would like to review your current retirement strategy or learn more about ways to help protect your savings from market volatility, we invite you to schedule a consultation with our team!

Our goal is simple: helping you protect your money and your future.

Frequently Asked Questions

Q: What is sequence-of-returns risk and why does it matter near retirement?

A: Sequence-of-returns risk is the danger that a market downturn right before or during retirement reduces your portfolio's value at the exact moment you begin withdrawals, which can shorten how long your savings last regardless of average long-term returns.

Q: How can I protect my retirement savings from market volatility?

A: Protecting savings from market volatility typically means balancing growth-oriented investments with more conservative or protected strategies, such as professionally managed portfolios, annuities offering protected income, or insurance-based solutions, rather than relying solely on stock market exposure.

Q: What is the Rule of 100 in retirement planning?

A: The Rule of 100 is a guideline suggesting you subtract your age from 100 to estimate the percentage of your portfolio suited for market-based investments, with the remainder allocated to more conservative or protected strategies as retirement nears.

Q: Why do retirees need multiple income sources beyond Social Security?

A: Multiple income sources reduce dependence on day-to-day market performance and help retirees avoid withdrawing funds during downturns, providing greater income stability so savings can last through both strong and weak market cycles.

Reading a Financial Plan From My Advisor Shouldn't Require a Degree in Economics!

Mon, 10 Aug 2026 16:00:39 GMT

Originally published: 8/8/2024

Updated: 8/10/2026

Have you ever received a 100-page financial plan from your advisor only to find out that less than 10 of those pages were useful? Typically, only a few pages of a financial plan will focus on strategy and investment choices; the rest usually cover fee breakdowns, risk and return explanations, and regulatory compliance disclosures. This may seem overwhelming when only a fraction of the pages are actually helpful! You're not the only one that may be thinking, “Is this standard or should I consider finding a new advisor?”

It's a common frustration to receive such extensive documentation from financial advisors, and you're not alone in feeling overwhelmed by the sheer volume of compliance and disclosure paperwork. However, understanding the reasons behind this paperwork can help clarify its purpose and whether your current advisor is meeting your needs effectively.

Why So Much Paperwork?

The bulk of the paperwork you received is largely due to regulatory requirements, as much of it is mandated by the government to ensure transparency and protect clients. This is intended to prevent advisors from withholding critical information and to mitigate potential liability issues.

These compliance documents are standardized across the industry. While they might seem redundant or excessive, they are required for maintaining legal compliance and ensuring that all advice provided aligns with regulatory standards. This practice safeguards clients by ensuring consistent and transparent financial guidance.

Is The Paperwork Really Worth It?

Despite the apparent redundancy, the inclusion of comprehensive disclosures and compliance documents can actually add value to the financial services you receive if done properly. Some certified financial planners have pointed out that these documents are akin to the terms of service agreements we routinely accept without reading. They are there to validate the rationale behind the recommendations made by your advisor. While the majority of clients might not initially engage with these detailed reports, they often find them valuable as they revisit and review their financial plans over time.

With that said, that still doesn't mean that your advisor should leave you to your own devices when trying to interpret the lengthy plan. In fact, a good advisor should put things in a simple, easy-to-understand format so that you feel comfortable and confident with your plan. For example, an advisor should be willing to explain the necessity of these documents and provide clear, concise key points and summaries that align with your goals and understanding. Unfortunately, we often see that some advisors fail to take these extra steps.

Evaluating Your Advisor

If you're feeling frustrated and overwhelmed, it's essential to assess whether your advisor is truly meeting your expectations. If you feel that your advisor is not providing adequate explanations or personalized attention, it might be time to consider a change.

You also want to be sure that your advisor isn't more focused on fulfilling compliance obligations than addressing your specific needs and concerns. While compliance is a necessity, it's not going to help you build your nest egg for a long and happy retirement.

Finally, you'll want to take a look at the fees your advisor is charging you. Remember, he or she is likely charging you the same amount of fees whether your investments are making money or losing money, so it is their job to make sure you understand and feel confident in your financial plan.

Moving Forward

Regardless of the length of the financial plan, if you feel that communication with your current advisor is lacking, or that they are adding further stress to your financial planning process, it may be time to consider a change. Furthermore, you shouldn't have to pay a ton of fees in order to get the service you are looking for.

At Summerlin Benefits Consulting, we specialize in safe strategies for retirement using proven insurance products to accomplish this. We don't charge our clients management fees, as our goal is to help clients build their nest eggs, not deplete them. And, simplicity is one of our three core values. We work hard to keep things simple and easy-to-understand for our clients. If you'd like a no-obligation financial review from a team of financial insurance professionals, give us a call today!

Frequently Asked Questions

Q: Why is my financial plan from my advisor so long?

A: Most of a financial plan's length comes from mandated regulatory disclosures, fee breakdowns, and risk/return explanations — usually just a handful of pages actually cover strategy and investment choices. This paperwork is legally required to ensure transparency and protect clients.

Q: Is it normal to get a 100-page financial plan from my advisor?

A: Yes — most of that length is standardized industry paperwork, not extra work specific to you. Only a few pages typically cover your actual strategy and investments; the rest is fee disclosure, risk explanations, and compliance documentation required across the industry.

Q: How can I tell if my financial advisor isn't explaining my plan well enough?

A: A good advisor puts your plan in simple, easy-to-understand terms and walks you through key points instead of leaving you to interpret dense paperwork alone. If your advisor isn't offering clear explanations or personalized attention, it may be time to consider a change.

Q: Does Summerlin Benefits Consulting charge management fees?

A: No — Summerlin Benefits Consulting doesn't charge management fees, since the goal is to help clients build their retirement nest egg rather than deplete it through ongoing costs. Simplicity is one of the firm's three core values, prioritizing clear, easy-to-understand guidance over complex fee structures.

Whether to Claim SSI or Withdraw from 401K

Mon, 10 Aug 2026 12:04:26 GMT

Originally published: August 19, 2022

Updated: August 10, 2026

Consider what you might be giving up.

Markets have pushed to near record highs in recent years, but the rally has been unusually narrow — led by a handful of AI-driven technology stocks — while sector rotation and persistently sticky inflation continue to create uncertainty for retirees’ and pre-retirees’ portfolios.

Those at an age to claim Social Security may be thinking about claiming sooner than previously planned to give them a steady source of income while giving their broader portfolio room to navigate that uncertainty.

There is no right answer to when to claim Social Security. An individual receives 100% of the benefits they’re owed at full retirement age, which also depends on when they were born.

Retirees can begin claiming as early as age 62, but any time before full retirement age results in a reduced benefit. Individuals can also receive more than what they’re owed for every month they delay up to age 70. Benefits are based on a formula that factors in age and earnings history.

There’s also no right time to start withdrawing from a retirement account, or exact amount a person should take from these accounts every month. The 4% rule, which suggests individuals take 4% of their portfolio balance every year to stretch their money over their retirement, has been widely contested in recent years. Some experts still recommend closer to 3%, while others — including Bill Bengen, the economist who originated the 4% rule — now argue for withdrawal rates as high as 4.7% to start, depending on market valuations and how long the money needs to last ( https://www.kiplinger.com/retirement/retirement-planning/the-4-rule-gets-a-closer-look ).

Market volatility and rising inflation has been a big concern for Americans of all ages, but for retirees it can be especially stressful as they tend to live on fixed budgets after leaving the workforce. Taking too much from an investment portfolio can trigger the sequence of returns risk, which is when a portfolio has fewer assets in it to grow when the markets rebound. Beginning Social Security too early, on the other hand, results in a permanently reduced benefit for the rest of one’s lifetime.

There’s certainly interest in taking from a 401(k) in an effort to postpone Social Security benefits. In a study about a 401(k) bridge option, which is when investors use assets from their retirement accounts equivalent to Social Security benefits so that they can delay claiming, between roughly 27% and 35% of people who were given information about this option said they would consider using it, depending on how the option was presented ( https://crr.bc.edu/wp-content/uploads/2021/12/wp_2021-27.pdf ). This survey, conducted by NORC at the University of Chicago and the Center for Retirement Research at Boston College, was likely the first time these respondents had heard of a “bridge,” and if there were more exposure to this option in retirement accounts, more Americans may choose it in their own retirement journeys, says Alicia Munnell, senior advisor and former director of the Center for Retirement Research at Boston College ( https://crr.bc.edu/alicia-munnell-to-step-down-as-center-for-retirement-research-director/ ).

Of course, waiting to take Social Security isn’t always the best option either. One of the many factors retirees should consider when deciding when to claim includes medical history and status as well as longevity – someone who only expects to live to their mid-70s wouldn’t enjoy the benefits they worked hard for if they only started claiming at 70. In other instances, people may use Social Security as one component of their retirement income strategy, pairing it with annuities or a pension, and would rather their retirement savings vehicles, like a 401(k) or an IRA, continue to grow for the decades to come.

Another option to consider is a fixed index annuity. In a fixed index annuity, a portion of your money can be set to grow with the index of the market, but never risk loss. Fixed index annuities help both savings and benefits last longer, helping provide an experience of lifelong savings and income that retains its buying power both now and in the future.

At Summerlin Benefits Consulting we want to make sure your money is protected no matter how markets are performing. Our team of advisors will work with you to figure out the best vehicle for protecting your retirement nest egg, so that you can feel confident no matter what happens in the market.

Important Tax and Legal Information

Important Retirement Planning Information

Frequently Asked Questions

Q: Should I claim Social Security early or withdraw from my 401(k) first in retirement?

A: There’s no single right choice — it depends on your health, income needs, and other savings. Claiming Social Security before full retirement age permanently lowers your benefit, while pulling too much from a 401(k) early can leave your portfolio less able to recover from market losses.

Q: What happens to my Social Security benefit if I claim before full retirement age?

A: Claiming Social Security before your full retirement age permanently reduces your monthly benefit for the rest of your life. Waiting until age 70 instead increases your benefit through delayed retirement credits, so the age you choose to claim has a lasting financial impact.

Q: Is the 4% rule still the right withdrawal rate for retirement in 2026?

A: The 4% rule suggests withdrawing 4% of your portfolio annually, but the guidance has shifted. Some experts still recommend closer to 3%, while others — including the rule’s original author — now argue for up to 4.7% depending on market valuations and how long savings need to last.

Q: What is a 401(k) bridge strategy for delaying Social Security?

A: A 401(k) bridge strategy means using retirement account withdrawals to cover living expenses so you can delay Social Security until a larger benefit kicks in, often at age 70. Research from Boston College’s Center for Retirement Research found roughly 27% to 35% of savers would consider it.

Q: What is sequence of returns risk in retirement?

A: Sequence of returns risk happens when you withdraw from your portfolio during a market downturn, leaving fewer assets left to grow once the market recovers. It’s one reason some retirees protect part of their savings in a vehicle like a fixed index annuity, which avoids market losses.

How will you replace your salary when you retire?

Mon, 10 Aug 2026 11:44:23 GMT

WHETHER BY CHOICE OR CHANCE — an illness or layoff, for example — nearly half of us retire sooner than we’d planned. In fact, 46% of retirees say they left the workforce earlier than expected, according to the 2026 EBRI/Greenwald Retirement Confidence Survey.

Originally Published: March 2, 2026

Updated: August 10, 2026

Retiring earlier means living in retirement longer: The assets you’ve saved over your career will need to stretch farther, even as you stop contributing to your 401(k) or other retirement accounts.

“Retiring at 55 can have meaningfully different implications versus retiring at 65,” says David H. Koh, Chief Investment Strategist – Global Fixed Income at BlackRock. In addition, early retirees often have higher expenses than those retiring later in life; for instance, you may still be paying a mortgage or tuition bills. On top of that, you might have to cover the entire cost of health insurance until you’re eligible for Medicare.

As a result, the strategies early retirees choose to create their “retirement paycheck” can take on heightened importance. Will I still be able to pay all of my bills and live the life I want in retirement? How much will I be able to withdraw monthly without jeopardizing my long-term financial security? What are the tax implications — and tradeoffs? Your financial and tax advisors can help answer those and other questions as you work together to create an income stream custom designed to support you throughout your life.

So How Do You Ensure an Income Stream in Retirement?

First, sit down with your spouse or partner — if you have one — and your financial advisor and calculate your regular expenses, which generally include housing, food, transportation and insurance. Other expenses to consider are charitable donations, education costs, travel and gifts.

Next, you’ll want to identify the income sources you can draw from to create a monthly “paycheck.” Your list may include a severance package, a pension and retirement accounts — such as traditional or Roth 401(k) or 403(b) plan accounts, and traditional and Roth IRAs — in addition to Social Security benefits and possibly even rental income, disability benefits, or other income streams such as annuities.

Once you have a clear picture of your finances, your financial and tax advisors can help you determine an appropriate overall withdrawal strategy. This strategy will be determined based on your assets, age, income sources, tax considerations and other factors. If it looks like you’re currently spending more money than your projected monthly retirement income, then your financial advisor may suggest ways to help you adjust your finances. This may be by delaying retirement or taking on part-time consulting work, perhaps, or moving the date at which one or both of you begin claiming Social Security benefits. You might also begin to look for ways to trim expenses in one area or another.

It isn’t enough to know how much you can afford to draw from your income sources each month. You’ll need to consider the tax and investment implications of withdrawing money from each source, among other factors. Again, that’s where your advisors can help you understand your choices.

Now let us take a dive into Social Security. Though you can begin collecting Social Security at age 62, your benefits will increase each year you wait on collecting; up to age 70. “If you can afford to delay tapping your Social Security benefits, you’ll likely have greater funds available later, when you may need them most,” says Koh. Still, sometimes it might make sense to consider claiming benefits sooner. For one, doing so might allow you to delay withdrawing money from your retirement savings accounts to give them more time to grow.

Lump sum or monthly payments? Pensions and some retirement packages may offer you a choice: take a lump-sum payout or begin monthly payments immediately, or, if you retire early, delay those regular payments until the normal retirement age under the plan or later. It’s a good idea to consult your tax advisor on the implications of each option.

When it comes to withdrawals from your retirement accounts, the tax rules and implications can be complex. If, for instance, you leave your job during or after the year you turn 55, the Rule of 55 generally allows you to tap your account under your employer’s retirement plan, such as a 401(k), without owing the 10% early withdrawal tax.

From a tax perspective, in general, it’s wise to withdraw from your taxable accounts first, then tax-deferred, then tax-free. That’s because the money you take from a taxable account (such as a brokerage account) may be taxed as capital gains at a lower rate than what you’d owe on distributions from traditional 401(k) plan accounts, traditional IRAs and some other tax-deferred savings, which are taxable as ordinary income.

“Your financial advisor can help you determine the best mix of withdrawals,” says Merrill Financial Advisor Lisa Kent. “As you create your drawdown plan, you’ll want to try to avoid landing in a higher tax bracket or derailing your preferred asset allocation,” she notes, adding, “When clients convert their retirement assets into cash, we generally help transfer them someplace liquid and secure until they need them.”

After you’ve addressed your short-term income needs, it’s time to review your portfolio to see whether it has the potential to last 30 or more years. In a low interest-rate environment, “an overly conservative portfolio is unlikely to provide the growth you may need for a longer-than-expected retirement,” says Koh — especially in a high-inflation environment. So you may want to consult with your financial advisor on the appropriate asset allocation mix.

While a fixed income provides diversification and potentially offers a ballast to market volatility, “for purposes of growth, you should engage with your financial advisor to determine what the right fixed income solutions would be, given your risk appetite and tax sensitivity,” suggests Koh. For purposes of income, some alternatives include dividend-paying equities, real estate investment trusts (REITs), or other options such as Fixed Index Annuities.

Fixed Index Annuities (FIA) offer a reasonable rate of return while protecting one’s principal from market declines. Essentially, with a FIA, your principal is protected from market declines, subject to policy terms. Many FIA also offer a free 10% withdrawal each year, which can help provide an income stream with no taxable consequences. Another great feature is that some FIA's offer additional benefits that can even help cover the cost of long term care should you need it.

Diversification is vital, adds Merrill Financial Advisor Mary Jo Harper. “The biggest mistake I see among retirees is a portfolio overly concentrated in the stock of a former employer or in one sector, usually the sector the client worked in,” she explains.

At Summerlin Benefits Consulting, we recommend using the “Rule of 100” to determine how you should diversify your portfolio. The Rule of 100 suggests subtracting your age from 100 to determine a benchmark of how much of your money you should keep at risk versus putting it in safer strategies. For example, for a 70 year old, 30% of their money in a truly diversified portfolio could remain at risk, while 70% should be made safe.

It’s a good idea to review your plan with your financial advisor regularly so that you can make adjustments depending on market conditions, inflation, personal goals and other factors. That way, you can take comfort in knowing you’re managing the retirement assets you’ve saved over your career in the most thoughtful way possible.

Summerlin Benefits Consulting does this day in and day out with our clients. Our top priority is safety first; we help our client family protect their nest eggs so they can do less worrying and enjoy retirement.

Important Tax and Legal Information

Important Retirement Planning Information

Frequently Asked Questions

Q: How do I replace my salary when I retire?

A: Replacing your salary in retirement means building a “retirement paycheck” from multiple income sources — Social Security, pensions, 401(k) or IRA withdrawals, and other savings. A financial advisor can help you calculate expenses and design a withdrawal strategy that covers your costs without running out of money.

Q: What is the Rule of 55 and how does it work?

A: The Rule of 55 lets you withdraw from your current employer’s 401(k) penalty-free if you leave that job in or after the year you turn 55. Regular income taxes still apply. It doesn’t cover IRAs or accounts from previous employers.

Q: Should I delay claiming Social Security benefits?

A: Delaying Social Security past age 62, up to age 70, increases your monthly benefit each year you wait. If you can cover expenses from other income sources in the meantime, delaying can mean more guaranteed income later — but claiming early may let retirement savings grow longer untouched.

Q: In what order should I withdraw money from my retirement accounts?

A: Generally, withdraw from taxable accounts first, then tax-deferred accounts (like traditional 401(k)s and IRAs), then tax-free accounts last. This order can help you avoid a higher tax bracket, since taxable withdrawals are often taxed at lower capital gains rates than ordinary income.

Q: How common is it to retire earlier than planned?

A: Nearly half of retirees — 46%, according to the 2026 EBRI/Greenwald Retirement Confidence Survey — say they retired earlier than expected, often due to health issues, layoffs, or caregiving needs. Because early retirement stretches savings over more years, having an income strategy in place matters even more.

How will decreased buying power affect my retirement?

Fri, 07 Aug 2026 18:05:21 GMT

Originally published: June 12, 2023

Updated: August 7, 2026

The buying power of Social Security has dropped 20% since 2010, according to The Senior Citizens League's (TSCL) 2024 Loss of Buying Power study. That means the average retired worker's benefit would need to rise by about $370 a month — roughly $4,443 a year — just to match the buying power it had in 2010.

TSCL also projected the 2024 cost-of-living adjustment (COLA) for Social Security to land at 3.1% or lower, compared with the 8.7% increase in 2023's COLA. The 2024 COLA was ultimately set at 3.2%, followed by 2.5% in 2025 and 2.8% in 2026 (Social Security Administration, 2026 COLA Fact Sheet: ssa.gov/news/en/cola/factsheets/2026.html ).

The buying power of Social Security benefits can erode when the annual COLA fails to keep pace with rising costs. Inflation moderated in the years that followed, but a lower rate of inflation did not necessarily mean that prices came down, according to Mary Johnson, an independent Social Security and Medicare policy analyst who spent years covering Social Security and Medicare policy for the Senior Citizens League before retiring from the organization in 2024.

TSCL's 2024 study found that between 2010 and 2024, only about 4 in 10 Social Security COLAs kept pace with inflation — down from 6 in 10 during the 1990s and 2000s. Just one of the five COLAs implemented so far in the 2020s (2023's 8.7%) has beaten inflation for the year.

How the Buying Power Adds Up

The average Social Security benefit for retired workers was $1,176 per month in 2010, according to the Social Security Administration. By 2024 it had grown to $1,860, and as of mid-2026 it stands at $2,084 (The Senior Citizens League, COLA Watch, updated July 2026: seniorsleague.org/cola-watch/ ). But to give retirees the same buying power they had in 2010, TSCL's study found the 2024 benefit would have needed to be $2,230.46 — a gap of $370.23 a month, or $4,442.80 a year.

At the time of the original study in 2023, prices were not rising as fast as the year before, but many prices on key items remained stubbornly high. Since then, COLAs have landed at 3.2%, 2.5% and 2.8% for 2024 through 2026 — each falling short of what TSCL says is needed to fully restore lost buying power.

TSCL's Loss of Buying Power index compares the growth in Social Security's COLA since 2010 with increases in the price of 36 goods and services typically used by retirees over the same period, weighted to reflect a typical senior's budget. That buying power was hit hardest by fast-rising transportation costs (up 96.6% since 2010), communication costs (up 92.7%, driven largely by smartphones), and housing (up 81.2%) — plus double-digit increases in grocery staples like bread and ground beef.

Topping the list of fastest-growing individual items? A basic new iPhone, which cost $199 in 2010 and $799 in 2024 — a jump of more than 300%. Close behind were used cars (up 217%) and bread (up nearly 147%).

“Without an accurate cost of living adjustment (COLA) that keeps pace with rising costs, beneficiaries lose purchasing power, especially over the course of a retirement that could last 25 to 30 years,” The Senior Citizens League said. “This loss is cumulative and grows deeper as retirees age. It can cause significant hardships, including more rapid depletion of savings than expected, growing debt and worse health outcomes. In short – a significant deterioration in an older household’s standard of living.”

From 2010 to 2024, Social Security COLAs increased benefits by 58%, averaging 3.9% annually. Meanwhile, the cost of goods and services purchased by typical retirees rose by about 73.5%, averaging roughly 4.9% annually over the same period, according to TSCL. For every $100 a retired household spent on groceries in 2010, that household could buy only about $80 worth by 2024.

“For long-retired people, this has a major impact. For people in their 80s, that’s usually the time they’re spending through their savings, maybe needing long-term care, and potentially on tighter budgets,” Johnson said.

But even if you have already entered retirement, there are still things you can do to plan ahead and combat these statistics. The first is to meet with a retirement planning professional, such as Summerlin Benefits Consulting, to explore your options.

One option to consider is a Fixed Index Annuity (FIA). An FIA can protect your nest egg during down markets, and many can even offer a reasonable rate of return during up markets. Some FIA products also offer lifetime income and long-term care benefits that can help with a higher cost of living later in life. Having this retirement “paycheck” from a fixed index annuity might give you the peace of mind you’re looking for, especially during uncertain times.

If you would like to learn more about Fixed Index Annuities, please reach out today to schedule your no-obligation meeting with our financial professionals, Stacy and Keith Summerlin. Our primary objective when meeting with our clients is to keep things simple and easy to understand. We can guide you through your options and help you feel more secure about retirement!

Frequently Asked Questions

Q: How much buying power has Social Security lost over time?

A: Social Security benefits have lost significant purchasing power against inflation-driven senior costs. TSCL's original study measured a 36% loss since 2000; its updated 2010–2024 methodology found benefits lost about 20% of their value over that period (TSCL 2024 Loss of Buying Power Report: seniorsleague.org/assets/TSCL-LOBP-Report-2024.pdf ).

Q: Will Social Security's cost-of-living adjustment (COLA) keep pace with inflation?

A: The COLA (cost-of-living adjustment) is Social Security's annual benefit increase, meant to offset inflation. Recent COLAs were 3.2% (2024), 2.5% (2025), and 2.8% (2026) (Social Security Administration, 2026 COLA Fact Sheet: ssa.gov/news/en/cola/factsheets/2026.html ), often falling short of the actual costs retirees face.

Q: What is a Fixed Index Annuity, and how can it help protect my retirement savings?

A: A Fixed Index Annuity (FIA) is a retirement product designed to protect savings from market downturns while still offering growth potential when markets rise. Many FIAs also offer lifetime income and long-term care benefits, which can help retirees manage a higher cost of living later in life.

Q: How will decreased buying power affect my retirement?

A: Decreased buying power means your Social Security check buys less as prices rise faster than benefit increases, a strain that compounds the longer you're retired. Meeting with a retirement planning professional can help you explore options, such as a Fixed Index Annuity, to help protect your savings.

Ever wondered how much you should save for retirement? The 4% rule can help.

Fri, 07 Aug 2026 16:48:55 GMT

Originally published: September 18, 2023

Updated: August 7, 2026

Retirement saving can be a daunting topic, especially if you don’t know where to start. But luckily, there is a general guideline, called the 4% rule, which can help you determine how much you can comfortably spend each year from your retirement savings. This rule not only forecasts how much money you’ll need when you retire, but also what steps to take before retirement in order to meet your goal.

The 4% rule, which was developed in the ’90s, states that you should be able to comfortably live off 4% of your money in investments in your first year of retirement, then slightly increase or decrease that amount to account for inflation each subsequent year. Nowadays, some financial planners suggest a percentage closer to 3.9% (updated from 3.3% — Morningstar's 2026 safe withdrawal rate research, https://www.morningstar.com/retirement/whats-safe-retirement-withdrawal-rate-2026). Interestingly, Bill Bengen, the original author of the 4% rule, has since revised his own recommendation upward to 4.7% in his 2025 book “A Richer Retirement,” citing the benefits of a more diversified portfolio strategy ( https://www.advisorperspectives.com/articles/2025/08/29/bill-bengen-boosts-the-4-rule-to-4-7 ). Regardless of which figure you follow, using 4% as your guideline should allow you to use your retirement portfolio to cover expenses for 30 years.

The variation in the recommended percentage for the rule comes as a result of people living longer and therefore needing more money. Additionally, factors such as the specific environment in which you live, as well as your specific needs, can affect the amount that you’ll need to save up in order to have a comfortable retirement. Not to mention, if you live 25-30 years after you retire, there are sure to be changes in the market and economy that will need to be accounted for.

If the 4% rule is a guideline for how much you can spend during retirement, you may be wondering how this helps on the saving end of things. The answer is quite simple: you need to have an idea of how much money you’re going to spend in your non-working years so that you know how much you need to save now. This rule helps you work backwards to figure out that amount.

To start, you’ll want to first estimate how much money you’ll spend each year in retirement. Think about any large expenses you may have, such as a mortgage, healthcare costs and medications, groceries and necessities, travel, etc. While this list offers a good place to start, everyone’s expenses will be different as factors such as your health and lifestyle play a huge role. Regardless of how healthy you are, however, healthcare costs are widely underestimated by most people. Additionally, most people don’t think to add a cushion when planning out how much they’ll need. It is a good idea to add an additional $7,000–$12,000 or so to your annual spending for unforeseen circumstances.

The next step would be to calculate how much you’ll be receiving from benefits, such as Social Security or pensions. The Social Security Administration has an online calculator that can assist you with this ( https://www.ssa.gov/OACT/quickcalc/ ). The higher the benefits amount, the less you’ll need to pull each year from your retirement savings and investments.

Now that you’ve got your annual retirement spending figured out, you can use the 4% rule to figure out the total amount you’ll need to have saved up before you exit the workforce. For example, if your annual retirement spending is estimated at $20,000, simply take that number and divide it by 0.04 to get $500,000.00; this amount will last you 30 years if you only withdraw $20,000 (4%) a year. It’s important to also note that if you want to take a more conservative amount and use the 3.9% as your guideline, the amount you’ll need to save will go up.

Next steps to start saving

Now that you have calculated how much you’ll need to save, the next steps are to start saving. There are various calculators out there that can help you determine how much money you’ll need to start with depending on the risk level of the “vehicles” you are using.

One such vehicle option is a 401(k), which may be offered through your employer. With a 401(k), a percentage of your paycheck is automatically invested for you each pay period; just keep in mind that the money being invested is pre-tax, so you’ll owe taxes on the amount you withdraw in retirement. A traditional IRA works the same way, except it is not a company-sponsored account so you would have to set up the account on your own.

There are also post-tax retirement accounts — like a Roth IRA or Roth 401(k) — which allow you to invest money that has already been taxed. Those contributions will grow over the years, and you won’t owe any taxes on withdrawals in retirement.

All of the above investment vehicles carry with them some sort of risk, as they are tied to the U.S. stock market and we all know how volatile it can be. The level of risk is important to take into account, especially if you have already been saving for most of your adult lifetime and are getting closer to retirement. The older you get, the less time you have to make up for any losses due to down markets. For this reason, many people also consider Fixed Index Annuities (FIA) as great savings vehicles for retirement.

Fixed Index Annuities (FIA’s) can be started with cash or from a transfer of your 401(k), IRA, or other account mentioned above (if you’ve already been saving). They have varying levels of time commitments and are backed by insurance companies; as a result, your money is protected during down markets, but grows at a reasonable rate during up-years. We like to say, “Zero is Your Hero,” when it comes to FIA’s, because when others are losing money in their investments you won’t lose money in your FIA. These accounts can also offer guaranteed lifetime income and some even have long term care benefits, which can help with some of those unforeseen healthcare costs we referenced above.

Regardless of where you are in your retirement saving journey, Summerlin Benefits Consulting can help. We help our clients achieve their unique, individualized retirement goals every day and we do so by laying out options in a simple, easy to understand manner. Retirement planning can be overwhelming and scary, but you don’t have to do it alone. Reach out today for a free consultation!

Important Tax and Legal Information

Frequently Asked Questions

Q: What is the 4% rule for retirement savings?

A: The 4% rule is a guideline stating you can withdraw 4% of your retirement portfolio in your first year of retirement, then adjust that amount annually for inflation, and reasonably expect your savings to last 30 years. Some planners now suggest a more conservative 3.9% starting rate. (https://www.morningstar.com/retirement/whats-safe-retirement-withdrawal-rate-2026)

Q: How do I calculate how much I need to save for retirement?

A: Estimate your annual retirement spending, then divide that number by 0.04 for the traditional 4% guideline. For example, $20,000 in annual spending divided by 0.04 equals $500,000 in total retirement savings needed to last roughly 30 years. Using a more conservative 3.9% rate raises that target slightly.

Q: Is the 4% rule still accurate today?

A: The 4% rule remains a solid starting guideline, though some planners now recommend a more conservative 3.9% withdrawal rate due to longer lifespans and market variability, a figure that’s reviewed and adjusted annually. Bill Bengen, the rule’s original creator, has even revised his own recommendation upward to 4.7% in his 2025 book, citing the benefits of a more diversified portfolio. Actual needs depend on your health, expenses, and location, so personalized planning matters.

Q: What retirement accounts can I use to save toward the 4% rule?

A: Common options include 401(k)s and traditional IRAs (pre-tax, taxed on withdrawal), Roth IRAs and Roth 401(k)s (post-tax, tax-free withdrawals), and Fixed Index Annuities, which protect principal from market downturns while offering growth potential and optional guaranteed lifetime income. The right mix depends on your tax situation and risk tolerance.

 Q: Are Fixed Index Annuities a good option for retirement savings?

A: Fixed Index Annuities can be a strong option for protecting savings closer to retirement, since they shield your principal from market losses while still allowing growth in up years. Many also offer guaranteed lifetime income and long-term care benefits. This makes them appealing to retirees prioritizing stability over maximum growth.

What Happens to My Annuity When I Die?

Fri, 24 Jul 2026 15:04:22 GMT

Published: June 24, 2026

For many retirees and pre-retirees, some annuities are designed to provide stability, predictable income, and peace of mind throughout retirement. But an important question often comes up during retirement planning:

What happens to my annuity when I pass away?

The answer depends on the type of annuity you own, the beneficiary designations you've chosen, and how the contract is structured. Understanding these details can help ensure your loved ones are protected and that your wishes are carried out the way you intended.

Let's walk through the key considerations.

Understanding Annuity Death Benefits

Most annuities include a death benefit, which is designed to pass value to your beneficiaries after your death and can skip probate.

A death benefit helps ensure that any remaining value in your annuity does not simply disappear when you pass away. Instead, it can provide financial support to your spouse, children, or other designated beneficiaries.

The exact death benefit available depends on the type of annuity you own.

Common Annuity Death Benefit Options

Not every annuity offers every option, which is why reviewing your contract and beneficiary designations regularly is important.

What Happens if I Have a Spouse as Beneficiary?

In many cases, a surviving spouse receives special treatment under annuity rules.

Depending on the contract, a spouse may be able to:

Continue the annuity as their own
Maintain tax-deferred growth
Continue receiving income payments
Delay distributions until a later date

This option is often referred to as spousal continuation and can provide flexibility while helping preserve retirement assets. Spousal continuation generally requires the surviving spouse to be named as the sole primary beneficiary on the contract — it may not be available if there are multiple beneficiaries, or if the spouse is a joint owner but not the named beneficiary.

For married couples, ensuring beneficiary designations are current is one of the simplest ways to help protect each other financially.

What Happens if My Children or Other Heirs Inherit the Annuity?

When a non-spouse beneficiary inherits an annuity, different distribution rules generally apply.

Depending on the contract and current tax regulations, beneficiaries may have several options:

The available options vary by contract and beneficiary relationship. Note that the five-year rule generally applies to nonqualified annuities under IRC §72(s); if the annuity is held within an IRA or other qualified account, the SECURE Act's 10-year rule typically applies instead, unless the beneficiary qualifies as an eligible designated beneficiary.

Because tax consequences can differ significantly, beneficiaries should consult a qualified tax professional before making decisions.

Are Annuity Death Benefits Taxable?

This is one of the most common concerns families have.

For non-qualified annuities, or annuities started with after-tax funds, the good news is that beneficiaries generally do not owe income tax on the portion representing the owner's original investment (known as the cost basis). However, any earnings or gains inside the annuity are typically subject to ordinary income taxes when distributed.

For qualified annuities that are still in a traditional IRA tax status, the whole amount will indeed be coded as taxable income as your beneficiary takes the death benefit distributions.

General Tax Treatment

It's important to remember that tax rules can be complex and may change over time. Beneficiaries should work with a tax advisor to understand their specific situation.

The Importance of Beneficiary Planning

One of the biggest mistakes people make is assuming their annuity will automatically go to the right person.

Beneficiary designations typically override instructions in a will. That means if your beneficiary form is outdated, the proceeds could go somewhere you did not intend.

Consider reviewing your beneficiaries after:

Marriage
Divorce
Birth of a child or grandchild
Death of a beneficiary
Major life changes
Retirement

A simple review can help prevent unnecessary complications for your loved ones later.

Questions to Ask During Your Annuity Review

If you own an annuity, consider asking:

Who is currently listed as my beneficiary?
Does my annuity include a death benefit?
What payout options will my beneficiaries have?
How would taxes affect my heirs?
Does my contract offer spousal continuation?
Are there any updates I should make based on my current goals?

These conversations can help ensure your retirement strategy remains aligned with your family's needs.

Final Thoughts

An annuity can be more than just a source of retirement income. It can also play an important role in protecting the people you care about most.

Understanding your death benefit options, keeping beneficiary designations current, and considering the tax implications for your heirs can help create greater clarity and confidence for your family.

Retirement planning isn't just about protecting your future—it's also about making thoughtful decisions that can benefit the next generation.

Ready for a Retirement Review?

At Summerlin Benefits Consulting, we believe education comes before decisions. If you'd like to better understand how your annuity fits into your overall retirement plan, we're here to help you explore your options with a safety-first approach and no pressure.

Schedule a complimentary retirement review and gain confidence that your plans today can help support the people you love tomorrow.

Frequently Asked Questions

Q1: What happens to my annuity when I die?

A1: Most annuities include a death benefit that passes any remaining value to your named beneficiaries rather than forfeiting it. The exact amount depends on your contract type — options include the account value, a return of premium, or a guaranteed minimum payout. Reviewing your contract and beneficiary designations confirms which applies to you.

Q2: Can my spouse keep my annuity instead of taking a payout?

A2: A surviving spouse listed as beneficiary can often continue the annuity as their own through spousal continuation. This preserves tax-deferred growth, lets income payments continue, and allows distributions to be delayed — offering more flexibility than an immediate beneficiary payout.

Q3: What happens if my children inherit my annuity instead of my spouse?

A3: Non-spouse beneficiaries generally follow different distribution rules than a spouse, such as a lump-sum payment, periodic payments, annuitization, or a required distribution timeframe like the five-year rule. The options available depend on the specific contract, so beneficiaries should review terms with a tax professional before deciding.

Q4: Will my beneficiaries owe taxes on an inherited annuity?

A4: Beneficiaries generally don't owe income tax on the portion representing the original contributions, known as the cost basis if the contract was started with after tax funds. However, any investment growth or earnings inside the annuity are typically taxed as ordinary income when distributed. A tax advisor can clarify how this applies to your specific situation.

Q5: How often should I review my annuity beneficiary designations?

A5: Beneficiary designations typically override instructions in a will, so outdated forms can send your annuity to the wrong person. Review your designations after marriage, divorce, the birth of a child or grandchild, the death of a beneficiary, or any other major life change.

The Hidden Benefits of Working with a Financial Advisor

Wed, 22 Jul 2026 20:11:47 GMT

Originally published: June 17, 2025

Updated: June 24, 2026

When most people think about working with a financial advisor, they tend to focus on the dollars and cents—building wealth, managing investments, and planning for retirement. But what often goes overlooked are the profound emotional and psychological benefits that come with having a trusted financial professional in your corner.

1. Less Stress, More Clarity

Money is one of the most common sources of stress in people’s lives. Whether it’s uncertainty about the future, fear of making mistakes, or anxiety during economic downturns, financial worries can take a toll on mental health. A financial advisor brings structure and perspective, helping to ease that burden. By offering clear plans and expert guidance, they reduce the weight of financial decision-making, especially during uncertain times.

2. Confidence in Your Financial Future

It’s not just about having a plan—it’s about knowing that plan is being professionally managed. Many people feel more confident and secure when they know an expert is helping them make informed decisions. Whether you’re saving for a home, paying off debt, or planning for retirement, the peace of mind that comes from knowing you’re on track can be priceless.

3. A Greater Sense of Control

One of the most empowering effects of working with a financial advisor is the feeling of being in control of your financial life. Advisors help clients get organized, streamlining budgets, clarifying goals, and making sense of the bigger picture. Instead of feeling overwhelmed, clients often feel empowered to take action with purpose and direction.

4. Sharper Goals and Priorities

A good advisor does more than just crunch numbers—they help you define what success looks like. Whether you’re unsure about which goals to tackle first or need help prioritizing competing financial demands, advisors bring focus to your planning. With clear, achievable milestones, you can stop second-guessing and start moving forward with confidence.

5. Emotional Support During Tough Times

Markets fluctuate. Life throws curveballs. And sometimes, emotions get in the way of smart financial choices. That’s where a financial advisor can act as a behavioral coach, helping you avoid rash decisions like panic selling during a downturn or overspending during a windfall. Their steady, experienced perspective can keep you on course when emotions run high.

6. A Relationship Built on Trust

Over time, the advisor-client relationship can become one of deep trust and support. Clients often describe their advisors as sounding boards, accountability partners, and even friends. Knowing there’s someone who understands your financial goals and genuinely has your best interest in mind is a source of comfort and security.

Backed by Research

Studies from respected institutions like Vanguard , Morningstar , and the CFP Board have consistently shown that the value of a financial advisor extends beyond investment returns. This added value—sometimes referred to as “advisor’s alpha”—includes the emotional and behavioral benefits that ultimately lead to better financial and personal outcomes.

Frequently Asked Questions

Q: Why should I work with a financial advisor instead of managing my own investments?

A: A financial advisor provides more than investment management—they bring structure, accountability, and behavioral coaching that most people struggle to replicate on their own. Research from Vanguard has shown that advisors can add roughly 3% in net annual returns through behavioral coaching alone (helping clients avoid emotional decisions like panic selling). Beyond returns, an advisor helps you define goals, stay organized, and make informed decisions during life transitions. At Summerlin Benefits Consulting, we focus on annuities, life insurance, and managed investments to create a comprehensive strategy tailored to your needs.

Q: How does a financial advisor help reduce financial stress?

A: Financial stress often comes from uncertainty—not knowing if you’re making the right decisions or whether you’ll have enough money in retirement. A financial advisor addresses this by building a clear, written plan and reviewing it with you regularly. When markets become volatile or life changes unexpectedly, your advisor acts as a steady voice of reason, helping you stay on course instead of reacting emotionally. At Summerlin Benefits Consulting, we believe that true financial wellness means feeling confident and in control—not anxious about every market headline.

Q: What is “advisor’s alpha” and why does it matter?

A: “Advisor’s alpha” is a concept developed by Vanguard to describe the additional value a financial advisor provides beyond investment selection—including tax-efficient strategies, behavioral coaching, and systematic rebalancing. Vanguard’s research suggests this added value can be approximately 3% or more in net returns per year for the average investor, though results vary. The key insight is that the biggest benefit of working with an advisor is often not beating the market—it’s avoiding the costly mistakes (like panic selling or under-saving) that erode long-term wealth. Summerlin Benefits Consulting puts this philosophy into practice by pairing technical expertise with personalized, ongoing guidance.

Is an Annuity the Right Fit for Your Retirement Plan?

Wed, 22 Jul 2026 19:10:14 GMT

Originally published: July 31, 2025

Updated: June 24, 2026

With retirement planning top of mind for many Americans, annuities are gaining attention as a potential solution for creating steady income in retirement. Recent changes like the SECURE Act 2.0—which makes it easier to include annuities in 401(k) plans—have only increased their appeal.

In fact, a 2024 LIMRA survey revealed that 7 in 10 working Americans not yet retired would be inclined to choose an annuity option within their retirement plan if offered. Their top reason? The opportunity to receive guaranteed lifetime income.

This growing interest is reflected in the numbers: annuity sales hit a record $464.1 billion in 2025, up 7% from the previous year, marking the fourth straight year of record growth, according to LIMRA.

With more employers incorporating annuity options into workplace retirement plans, many people are asking: Should I consider adding an annuity to my retirement strategy? The answer depends on your unique financial situation and retirement goals.

When Might an Annuity Make Sense?

Here are five scenarios where adding an annuity could be a smart move:

1. You're worried about outliving your savings.

If you're concerned your retirement funds might not last, an annuity can offer peace of mind. Annuities work by turning a lump sum or a series of payments into income you receive later—often for the rest of your life.

There are two main types of income annuities:

• Immediate Income Annuities, which begin paying out within a year of purchase.

• Qualified Fixed Index Annuities, which allow your money to grow tax-deferred before beginning income payments at a future date you select.

These products are sometimes referred to as “personal pensions” because they can offer a dependable income stream for life—something few other financial tools can guarantee.

2. You want better returns than a CD but with minimal risk.

Fixed annuities, especially multi-year guaranteed annuities (MYGAs), can deliver better returns than bank CDs while still preserving your principal. Because insurers invest your funds over a longer period, they can typically offer more competitive interest rates, and growth is tax-deferred.

3. You've maxed out other retirement savings vehicles.

If your 401(k) and IRA contributions have reached their limits but you still want to put more away for retirement, an annuity can be a tax-efficient option. Contributions made with after-tax dollars grow tax-deferred, and withdrawals of those original contributions are not taxed again.

4. You want stock market growth but without the full risk.

Fixed indexed annuities allow for market-linked growth while protecting your principal. These annuities offer the opportunity for higher returns than traditional fixed-income investments, but without the full downside risk of stocks.

This option appeals to savers nearing retirement who want some market exposure but can't afford major losses. It's a tool to help preserve capital while still participating in some market gains.

5. Your retirement income sources aren't diversified.

According to some financial advisors, an ideal retirement income strategy includes:

• One-third from Social Security

• One-third from investment withdrawals

• One-third from guaranteed lifetime income (like annuities)

Relying too heavily on market-based income opens you up to volatility. Adding a guaranteed income component can bring greater stability to your retirement finances.

How Summerlin Benefits Consulting Can Help

At Summerlin Benefits Consulting, we understand that every retirement journey is unique. That's why we offer customized strategies to help protect your retirement income—so you can spend less time worrying and more time enjoying what matters most.

Whether you're considering an annuity for the first time or looking to evaluate your current retirement income plan, we're here to help you make informed, confident decisions. Our team can walk you through the different types of annuities available, explain how they may fit into your overall financial picture, and tailor solutions based on your long-term goals.

We specialize in building retirement income plans designed to:

• Provide predictable, lifelong income

• Preserve your principal and reduce market risk

• Maximize the benefits of tax-deferred growth

• Protect what you've worked hard to earn

With access to top-rated annuity products and a client-first approach, we'll guide you toward strategies that align with your financial priorities and retirement timeline.

Ready to explore whether an annuity belongs in your retirement strategy? Let's talk. Schedule a consultation with Stacy Summerlin today, and take the next step toward retirement with confidence.

Frequently Asked Questions

Q: What is an annuity in simple terms?

A: An annuity is a contract between you and an insurance company — you make a lump-sum payment or series of payments, and the insurer provides regular disbursements beginning immediately or at a future date. Designed to create a predictable income stream, often for life, annuities help retirees avoid outliving their savings.

Q: Are annuities a good idea for retirement?

A: Annuities can be a smart retirement tool if you want guaranteed lifetime income, have maxed out tax-advantaged accounts, or want market-linked growth without full downside risk. They work best as one piece of a diversified income strategy—alongside Social Security and investment withdrawals—rather than as your only retirement income source.

Q: Are annuities better than CDs?

A: Multi-year guaranteed annuities (MYGAs) often offer higher rates than CDs because insurance companies invest premiums over longer time horizons. Unlike CDs, annuity growth is tax-deferred, so you don't pay taxes until withdrawal. The trade-off is reduced liquidity and added complexity — making the right choice depend on your timeline and tax situation.

Q: How did SECURE Act 2.0 make annuities easier to add to a 401(k)?

A: SECURE Act 2.0 removed key barriers that made it difficult for employers to offer annuities inside 401(k) plans. It created a safe harbor for plan fiduciaries selecting annuity providers and clarified portability rules, allowing employees to take their annuity contract with them if they change jobs — making workplace annuities far more practical.

Annuities vs. CDs vs. Bonds: Which Is Right for Retirees?

Wed, 22 Jul 2026 17:39:48 GMT

Published: July 22, 2026

As retirement approaches, many people begin asking the same question:

“How do I protect what I’ve worked so hard to build while still earning a reasonable return?”

For retirees and pre-retirees who value safety and stability, three common options often come into the conversation:

• Fixed Index Annuities

• Certificates of Deposit (CDs)

• Bonds

Each can play a role in a retirement strategy, but they serve different purposes. The key is understanding when each option makes the most sense and how it aligns with your retirement goals.

At Summerlin Benefits Consulting, we believe education comes before decisions. Let’s look at how these options compare.

Side-by-Side Comparison: Annuities vs. CDs vs. Bonds

Understanding Each Option

Fixed Index Annuities (FIAs)

A fixed index annuity is a contract with an insurance company designed to help provide retirement income.

Many retirees appreciate fixed index annuities because they can offer:

• Principal protection

• Tax-deferred growth

• Predictable income

• The option for lifetime income

Think of an FIA like creating your own pension. You exchange a portion of your savings for the opportunity to receive income that may continue for the rest of your life.

Real-World Example

Susan, age 64, plans to retire in two years.

She has saved diligently but worries about market ups and downs affecting her retirement income. Susan places a portion of her retirement savings into an annuity designed to provide guaranteed lifetime income.

Now she knows that regardless of what the market does, she has a predictable stream of income to help cover essential expenses.

Certificates of Deposit (CDs)

CDs are savings products offered by banks and credit unions.

You deposit money for a set period of time and receive a fixed interest rate in return.

Benefits include:

• FDIC insurance (up to $250,000 per depositor, per insured bank, per ownership category)

• Predictable returns

• Very low risk

• Simple structure

The tradeoff is that growth potential is usually limited compared to other retirement strategies.

Real-World Example

Mike, age 60, plans to retire in three years.

He wants to keep his emergency fund completely safe while earning more than a traditional savings account. Mike places those funds in a laddered CD strategy so portions become available at different times.

His money remains protected while earning a predictable return.

Bonds

When you purchase a bond, you’re essentially lending money to a government or corporation in exchange for interest payments.

Benefits can include:

• Regular income

• Diversification

• Potentially higher yields than CDs

However, many retirees are surprised to learn that bonds can lose value when interest rates rise.

 Real-World Example

David, age 67, is already retired and wants income while maintaining some flexibility. He allocates a portion of his portfolio to high-quality bonds that generate regular interest payments while helping diversify his overall retirement strategy.

When Each Option Wins

Fixed Index Annuities May Be a Good Fit When:

✅ You want predictable retirement income

✅ You’re concerned about outliving your savings

✅ You value protection from market downturns

✅ You want tax-deferred growth

Best use: Creating a reliable income stream for retirement.

CDs May Be a Good Fit When:

✅ You need short-term access to funds

✅ Safety is your top priority

✅ You’re building an emergency reserve

✅ You want a simple, low-risk option

Best use: Protecting cash reserves and short-term savings.

Bonds May Be a Good Fit When:

✅ You want regular income

✅ You’re comfortable with some market fluctuation

✅ You need portfolio diversification

✅ You have a longer time horizon

Best use: Supplementing income while maintaining flexibility.

The Real Answer: It Doesn’t Have to Be One or the Other

One of the biggest misconceptions in retirement planning is believing you must choose only one option.

In reality, many successful retirement strategies use a combination of all three. For example:

• CDs may hold emergency funds.

• Bonds may provide additional income and diversification.

• Fixed Index Annuities may create protected, predictable retirement income.

The right mix depends on your goals, risk tolerance, income needs, and timeline.

Focus on Your Retirement Goals First

The question isn’t simply:

“Which option earns the highest return?”

The better question is:

“Which option helps me retire with greater confidence and peace of mind?”

Every retiree’s situation is different. That’s why personalized retirement planning is so important. The goal is not just growth—it’s creating a strategy that helps protect your savings, generate income, and support the retirement lifestyle you’ve worked hard to achieve.

Ready to Explore Your Options?

At Summerlin Benefits Consulting, we help pre-retirees and retirees understand their choices through education, not pressure. We’ll help you evaluate how FIAs, CDs, bonds, and other retirement strategies may fit into your long-term plan so you can move forward with confidence.

Schedule a complimentary retirement review and discover which strategies may help protect what you’ve worked so hard to build.

Frequently Asked Questions

Q: What’s the difference between annuities, CDs, and bonds for retirement?

Annuities are insurance contracts that can provide lifetime income and tax-deferred growth; CDs are bank products offering FDIC-insured, fixed-rate savings; and bonds are loans to a government or corporation that pay regular interest but can fluctuate in value. Each serves a different role: income, safety, or diversification.

Q: Can bonds lose value in retirement?

Yes. Bonds can lose market value when interest rates rise, even though they continue paying regular interest income along the way. This makes bonds useful for income and diversification, but less predictable than CDs held to maturity or principal-protected annuities designed for retirement income.

Q: Are CDs a good choice for retirement savings?

CDs work well for short-term safety and emergency reserves because they’re FDIC-insured and offer predictable, fixed returns over a set term. Their growth potential is typically lower than annuities or bonds, making them better suited for cash reserves than long-term retirement income.

Q: Do I have to choose only one of these options?

No. Many successful retirement strategies combine all three: CDs for emergency funds, bonds for additional income and diversification, and fixed index annuities for protected, predictable retirement income. The right mix ultimately depends on your goals, risk tolerance, income needs, and overall timeline.

 Q: Which retirement option provides guaranteed lifetime income?

Fixed Index Annuities are the only option among the three that can provide guaranteed lifetime income you can’t outlive. CDs and bonds offer fixed or regular interest payments, but neither is designed to guarantee income for life the way an annuity contract can.

Annuities: A Key to Retirement That Many Americans Overlook

Wed, 22 Jul 2026 17:39:48 GMT

Originally published: March 10, 2025

Updated: June 24, 2026

Annuities can play a vital role in retirement security, yet many Americans fail to understand or take advantage of them. Social Security provides a guaranteed income stream in retirement but often retirees find that to be their only guaranteed income source in retirement. Annuities can help to supplement social security and other pensions by providing additional income for life, yet they are often underutilized with only a small percentage of Americans owning one. We are going to dive deeper into annuities and how they can be a powerful tool for ensuring long-term financial stability.

The Knowledge Gap Around Annuities

Surveys reveal a striking lack of awareness about annuities. The American College of Financial Services found that older adults scored just 20% on annuity literacy questions—the lowest score among the 12 retirement topics tested, trailing far behind Medicare, life insurance, and long-term care. Another study from the TIAA Institute and Stanford University’s Global Financial Literacy Excellence Center asked participants how best to prevent outliving their savings. Only about half correctly identified purchasing an annuity as the solution.

A major reason for this knowledge gap is the complexity of annuities. In fact, many Americans don’t even fully understand Social Security, which is a fundamental part of retirement income. This lack of understanding is the primary reason annuities, which can be complex, remain a mystery to many. While the concept is simple—receiving fixed payments over time—annuities come in multiple forms, including fixed, variable, and indexed options, each with different terms and conditions. This challenge of finding what will work best for you is often what discourages people from considering them as a viable retirement tool.

Why Annuities Matter

There are some specific differences that are important when considering annuities as part of your retirement plan. Fixed Indexed Annuities (FIAs) can offer financial security by providing growth potential without market risk while Variable Annuities can fluctuate based on market performance and are often fee heavy. Fixed Annuities provide a conservative “fixed” interest rate (usually with lower albeit steady growth for a specified period of time). As a retirement tool, FIAs are often preferable because they are tied to an index, such as the S&P 500, so they give the owner the best of both worlds. Meaning, they provide a more reasonable rate of return over time than Fixed Annuities but still protect against losses, unlike Variable. Even if the market declines, an FIA ensures that your principal AND your year-over-year gains, all remains intact.

Since FIAs provide a balance between growth and security this makes them an attractive alternative to traditional savings or investment accounts. Retirees can benefit from tax-deferred growth, and many FIAs also offer lifetime income, ensuring a steady stream of payments throughout retirement just like a pension would.

So why are annuities important? Well, the average Social Security benefit in early 2025 was approximately $1,976 per month, while the average household run by someone 65 or older spends $5,119 per month, according to the 2024 Bureau of Labor Statistics Consumer Expenditure Survey. This gap can put some retirees at risk of outliving their savings if they are constantly having to pull from retirement accounts to close that gap. By using an annuity instead, you can fill that gap with another source of guaranteed monthly income and allow yourself to draw less from your other savings every year— making it last longer. Plus, in the annuity even if your balance hits zero, it will keep paying you the monthly income for the rest of your life, so you truly will never run out of money.

Despite their benefits, annuities can be overlooked due to lack of understanding as we’ve described, but also due to a misperception of high costs, complexity, and even some mistrust. Some annuities, such as variable annuities, may come with hidden fees and lengthy contracts. Unfortunately, this can create an overall negative perception about ALL annuities, especially for a consumer that doesn’t understand the differences between Variable and FIA. Most FIA’s can be structured with little to no fees, for example.

Unfavorable perceptions have also been reinforced by financial firms’ advertising and misrepresentation designed to paint annuities as lackluster financial products. Statements like, “the market outperforms everything” further feed this agenda. At the end of the day though, not all annuities are created equal. FIAs stand out because they do not typically include heavy fees, and they eliminate market risk while offering upside potential—a key advantage over other annuity options. Are annuities right for everyone? No. But can the right annuity be a good retirement tool for the right person based on their goals and objectives? Absolutely.

The Shift Toward Annuities in Retirement Planning

A step forward for annuities in the financial planning world has come about as recent policy changes aim to make annuities more accessible in employer-sponsored retirement plans. Legislation now allows 401(k) plans to include annuity options, helping retirees build their own lifetime income pool, as many employers are no longer offering pensions. Companies like BlackRock, Vanguard, and Fidelity have introduced products that allow workers to allocate a portion of their 401(k) contributions into annuities, simplifying the purchasing process. This has been common for teachers and municipal employees for years but is becoming more mainstream for private sector employers more recently. These changes should help create awareness and ensure that people start learning about the way to effectively use annuities in their retirement planning, at a younger age.

Additionally, as life expectancy increases the risk of outliving savings grows. In today’s world, financial experts stress the importance of planning ahead, especially for those within a decade of retirement. While annuities may not be the right fit for everyone, Fixed Indexed Annuities can provide a reliable option for those seeking principal protection with growth potential. Firms like Summerlin Benefits Consulting, a leader in retirement income protection, specialize in FIAs as a key strategy for bringing safety and guaranteed income into retirement portfolios.

Conclusion

Annuities are a crucial yet underutilized component of retirement planning. A lack of understanding, complexity, and historical mistrust contribute to their low adoption. However, with Social Security alone often being insufficient to support retirees, Fixed Indexed Annuities can play a key role in ensuring long-term financial security. Summerlin Benefits Consulting helps clients navigate FIA options to protect their financial future, ensuring they have a stable and secure retirement. As awareness grows and access improves, more Americans may begin to see FIAs as an essential part of their retirement strategy. Reach out today if you’d like to learn more about Fixed Index Annuities and how they can be beneficial for your retirement portfolio!

Frequently Asked Questions

Q: What is an annuity in simple terms?

A: An annuity is a financial contract where you make a payment—lump-sum or in installments—to an insurance company, which then provides guaranteed income payments over time, either for a set period or for life. Annuities are designed to supplement Social Security and help retirees avoid outliving their savings.

Q: Are annuities a good idea for retirement?

A: For the right person, yes. Fixed Indexed Annuities (FIAs) offer principal protection, tax-deferred growth, and lifetime income without market risk—ideal for retirees seeking guaranteed income to close the gap between average Social Security benefits of approximately $1,976/month and actual monthly household expenses. They work best for those focused on income security.

Q: What’s the difference between fixed and variable annuities?

A: Fixed annuities offer a guaranteed, conservative interest rate. Variable annuities fluctuate with market performance and often carry heavy fees. Fixed Indexed Annuities (FIAs) offer a middle ground: they track a market index like the S&P 500 for growth potential while fully protecting your principal and prior gains from any market decline.

Q: How do indexed annuities work?

A: A Fixed Indexed Annuity (FIA) earns interest based on the performance of a market index—like the S&P 500—up to a capped rate. When the index rises, you earn interest; when it falls, your principal is protected and no losses are applied. All growth accumulates tax-deferred until you begin taking income distributions.

Q: What are the downsides of annuities?

A: Annuities can carry surrender charges for early withdrawals, and variable annuities often have high fees and complex terms. These drawbacks have fueled broad negative perception. However, Fixed Indexed Annuities typically carry little to no fees and allow annual penalty-free withdrawals of around 10%. Not every annuity type is equal—choosing correctly matters.

Laddering Annuities- A Strategy that may be of Interest to Retirees

Wed, 22 Jul 2026 17:02:23 GMT

Annuity laddering is a financial strategy of purchasing several annuities of lower value over a period of several years. When interest rates are volatile or uncertain, laddering helps you capture different rate environments over time — allowing the owner to stagger the end dates of contracts and maximize flexibility.

What is Laddering?

Financial laddering is typically a method of investing in bonds and CDs, but it's also a good financial strategy for maximizing the value of annuities.

Financial expert and Forbes contributor Matt Carey said, "Laddering spreads out maturities of different fixed income instruments so that you are consistently able to access some funds for liquidity, while simultaneously taking advantage of higher rates on longer-term instruments."

So, it's basically a way to increase the chance of earning more money when interest rates swing upward. You might, for example, open a new CD, invest in a different bond or buy an annuity every year for several years to get the best deal available under the economic conditions of the time period during which you make each transaction.

Those conditions include changing interest rates, which the insurance companies determine using factors that include your age and life expectancy, your age at the time of an annuity purchase and, more importantly, your age when payouts begin will affect the offer you get for an annuity.

Why This Strategy Makes Sense

Laddering annuities is meant to offset slow returns and mitigate risk. There is a significant opportunity cost to investing in a long-term product under unfavorable conditions. This strategy serves to mitigate that risk.

Laddering is attractive to investors for other reasons, too. "The main benefits of laddering are spreading interest rate and reinvestment risk over time and getting short-term liquidity while taking advantage of longer-term rates," Carey told Forbes.

This can be especially consequential when you're talking about setting up your retirement funds, which should not be so rigid that your income can't keep up with the increases in your cost of living.

In other words, you don't want to tie up all your money in low-rate vehicles and forgo the opportunity to move it into investments that would perform better. At the same time, you don't want to invest in hopes interest rates will go up only to see the rates sink even lower.

Different Ways to Ladder

A financial professional, such as Summerlin Benefits Consulting, can help you determine the best laddering strategy for your situation and may suggest one of the following methods.

Spreading Out Your Principal

Maybe you have a total of $500,000 to invest in annuities. You can use $100,000 each year toward an annuity purchase. This also allows you to invest just a part of your retirement savings to give annuities a try before tying up a large percentage of your savings.

Annuities With Different Surrender Periods

Another way to ladder annuities is to buy several fixed-rate annuities with different surrender periods. The surrender period is the amount of time you must wait to withdraw funds from your annuity without facing a penalty. If you do need to withdraw more than what is allowed in the contract, you will have to pay a surrender charge.

At the end of the surrender periods, you can withdraw your money without penalty as long as you're at least 59½ years old. Alternatively, you can move the funds to an annuity with better terms through a 1035 exchange. These exchanges are a way to trade in one annuity for another without tax consequences. The 1035 refers to the provision in the tax code that covers them.

If the annuity contract is as good as the offerings at the end of the surrender period, you can keep the annuity contract as is. Having several annuities with different surrender periods allows you to review the terms of each contract at the end of its surrender period and decide whether you could get better returns in another annuity.

Take Advantage of Different Features

You can also ladder various types of annuities. For example, you can invest some of your money into the purchase of fixed annuities while investing other funds into indexed or variable annuities. This allows you to have a balance of the advantages and disadvantages of each type. Each type of annuity has unique benefits and drawbacks — such as the reliability of predetermined interest rates on fixed annuities versus the less stable rates of variable annuities.

Increase Your Payments by Staggering Payout Dates

Finally, in addition to laddering the actual purchase of annuities, you can ladder when they will start paying you income, beginning at the age of 59½. The older you are when you start receiving the payments, the higher the payments will be. This is because life expectancy is one of the factors that determine annuity payout amounts. The longer your life expectancy, the lower your payments will be.

Hence, you'll receive larger payments from a deferred annuity that doesn't start paying out until you turn 75 years old than you would from an immediate annuity that starts paying you at age 60.

Where do I Begin?

You may be thinking to yourself, "Laddering sounds fine and dandy, but how am I going to figure out which strategy is best for me?" At Summerlin Benefits Consulting, it is our job to help you navigate through this process; we try to take out the guesswork for you. While each client's specific financial situation may be different, our goals remain the same: protecting your principal, helping you obtain a reasonable rate of return, and keeping it simple. Call us today and let's start protecting your money!

Frequently Asked Questions

Q: What is annuity laddering?

A: Annuity laddering means purchasing multiple annuities over several years instead of one large contract at once. By staggering purchases, you capture different interest rate environments, maintain more liquidity, and avoid locking all your savings into a single contract at one rate. You can also stagger income start dates to engineer increasing payouts as you age deeper into retirement.

Q: What is a 1035 exchange for annuities?

A: A 1035 exchange lets you transfer one annuity contract to another — or from a life insurance policy to an annuity — without triggering income tax on accumulated gains. Named for Section 1035 of the tax code, it gives you the flexibility to upgrade to a contract with better terms when your current surrender period ends, without a taxable event.

Q: How does staggering annuity payout dates increase retirement income?

A: Annuity payments are partly determined by life expectancy — the older you are when payments begin, the larger each monthly payment will be. By laddering start dates across multiple annuities — one beginning at 62, another at 68, another at 72 — you create a rising income stream that grows as you age, providing more income precisely when you're likely to need it most.

Rethinking Retirement: How Life Insurance & Fixed Index Annuities Can Play a Strategic Role

Wed, 22 Jul 2026 12:36:13 GMT

Originally published: October 23, 2025

Updated: June 24, 2026

At Summerlin Benefits Consulting, we believe retirement planning should go beyond simply accumulating savings. In an era of longer lifespans, market turbulence, and uncertainty around how to generate income in retirement, it’s wise to consider how you’ll draw income, what risks you face, and which tools can help you meet both income and legacy goals.

In this article, we’ll explore how life-insurance-based strategies (particularly indexed universal life – IUL) and fixed index annuity solutions can complement traditional investments, improve outcomes and enhance flexibility.

1. The Changing Retirement Landscape

More people are facing three major shifts:

• Longevity – Retirees now may spend decades in retirement, increasing the risk of outliving their savings.

• Market & inflation risk – Traditional portfolios are exposed to sequence-of-returns risk, equity downturns and low returns in fixed income.

• Fading pensions, rising responsibility – With fewer defined benefit plans, the burden for securing income falls on individuals and their advisors.

Given these dynamics, strategies that simply rely on “save and invest” may not fully address the income and legacy challenges many clients face.

2. Beyond Investments — Why Add Life Insurance and Fixed Index Annuities?

Traditional portfolios serve an important role, but certain additional tools bring features that can fill gaps:

• Fixed Index Annuities can offer guaranteed income for life, principal protection in many designs and relief from market timing risk.

• IUL (Indexed Universal Life) can build cash value with downside protection, offer tax-deferred growth, and potentially tax-free access via policy loans (when structured correctly) as well as a death benefit.

• Combined, these can create a hybrid solution that allows portfolio growth, income certainty, protection from downside, and legacy potential.

3. What the Research Shows

Recent modeling (via Monte Carlo simulation across many market scenarios) reveals interesting patterns:

• Strategies that mix insurance tools (IUL + indexed fixed index annuities + investments) often outperformed investment-only strategies when looking at two key outcomes: sustainable retirement income and legacy value.

• For example, in one hypothetical scenario modeled via Monte Carlo simulation, a 65-year-old couple allocating 30% of retirement assets to an IUL and 30% to a fixed indexed annuity (with the rest in investments) saw an illustrative 5.5% increase in retirement income and roughly a 29.6% higher legacy value compared to an investment-only portfolio. These figures are hypothetical, based on modeling rather than actual client results, and are not guaranteed.

• Insurance solutions were treated in the model as part of the “fixed income” or conservative bucket thereby allowing reduction in traditional bond holdings and freeing up more room for equity growth.

• The tax-efficient nature of IUL (growth not taxed until withdrawn/loaned, death benefit typically tax-free) and fixed index annuities (tax-deferred accumulation) helped improve net outcomes after taxes.

4. How to Think About the Roles

• Income maximization → Fixed Index Annuities (especially those with lifetime income features) tend to shine when the primary objective is reliable cash flow in retirement.

• Legacy preservation / wealth transfer → IULs can be structured to provide death benefits and tax-efficient access so they favor clients with strong legacy goals.

• Balanced objectives → A mix of both (e.g., some allocation to IUL, some to fixed index annuities, rest in investments) offers flexibility and allows for tailored outcomes.

• Liquidity & flexibility → While fixed index annuities often reduce access to capital (in exchange for guarantees), IULs can provide an accessible cash value buffer that can be used in downturns instead of tapping equities at the wrong time.

5. Why Partnering with Experienced Advisors Matters

Successful implementation of these tools often requires a deeper understanding of product features, tax implications, design trade-offs, and long-term modelling. At Summerlin Benefits Consulting, we support clients by:

• Reviewing how insurance-based solutions fit into your overall portfolio.

• Customizing allocations based on individual goals (income, legacy, risk tolerance, time horizon).

• Coordinating with tax and legal advisors to align distributions and estate planning.

• Keeping an eye on the evolving market, regulatory or product developments so the strategy remains current.

Frequently Asked Questions

Q: How can Fixed Index Annuities protect me from sequence-of-returns risk in retirement?

A: Sequence-of-returns risk is the danger that a market downturn early in your retirement permanently reduces your portfolio. Fixed Index Annuities (FIAs) address this by providing guaranteed income you cannot outlive—independent of market performance. By allocating a portion of retirement assets to an FIA, you create a reliable income floor, which allows the rest of your portfolio to remain invested and recover during downturns without forcing you to sell at a loss. At Summerlin Benefits Consulting, we model how an FIA allocation can improve both income sustainability and legacy outcomes for your specific situation.

Q: What is the difference between IUL and a Fixed Index Annuity for retirement income?

A: Both IUL (Indexed Universal Life) and Fixed Index Annuities (FIAs) link growth to a market index with downside protection, but they serve different primary purposes. FIAs are insurance contracts designed mainly to generate guaranteed lifetime income—they excel when your top priority is reliable cash flow. IUL is a life insurance policy that also builds tax-advantaged cash value accessible through policy loans, making it stronger for legacy planning and flexible supplemental income. Many clients benefit from a combination: an FIA for income certainty and an IUL for cash value flexibility and a death benefit.

Q: Is adding life insurance to my retirement plan a good strategy?

A: For many clients, yes—particularly when legacy goals or tax efficiency are priorities. Indexed Universal Life (IUL) provides a death benefit for your family plus a cash value that grows tax-deferred and can be accessed tax-free in retirement through policy loans (when properly structured). Unlike taxable investment accounts, IUL cash value is not subject to capital gains taxes, which can improve net retirement income. However, IUL is not suitable for everyone—it involves insurance costs and requires proper design. Summerlin Benefits Consulting evaluates whether an IUL fits your goals before recommending it.

Retirement Is Changing: Why Longevity Planning Matters More Than Ever

Thu, 25 Jun 2026 15:20:41 GMT

Retirement Is Changing: Why Longevity Planning Matters More Than Ever

Published: June 25, 2026

For generations, retirement was often viewed as a relatively short chapter of life. Many people expected to retire in their mid-60s and spend 10 to 15 years enjoying their golden years.

Today, that picture looks very different.

Thanks to advances in healthcare, nutrition, and overall quality of life, more Americans are living longer than ever before. According to the Centers for Disease Control and Prevention, U.S. life expectancy reached 79 years in 2024, continuing a multi-year climb. While that's certainly something to celebrate, it also introduces a new challenge: making sure your retirement savings and income can support a retirement that may last 25, 30, or even 35 years.

The reality is simple: longevity has changed the retirement planning conversation.

A Longer Retirement Can Be a Wonderful Opportunity

Living longer means more time to enjoy family, travel, hobbies, volunteering, and the experiences you've worked so hard to earn.

Many retirees are spending decades pursuing passions they never had time for during their working years. Some even begin entirely new careers, businesses, or volunteer endeavors after retirement.

But a longer retirement also means your financial strategy needs to work harder and last longer.

The Biggest Risk Most Retirees Overlook

When people think about retirement risks, they often focus on market declines.

While market ups and downs certainly matter, one of the biggest risks facing retirees today is longevity risk—the possibility of outliving your retirement savings . The Social Security Administration's own actuarial tables show that a 65-year-old man has roughly a 35% chance of living to 90 (and a 65-year-old woman an even higher chance), and that a 65-year-old couple has a 53% chance that at least one spouse will live past 90—odds many retirees underestimate when building their income plan.

Consider this:

If you retire at age 65 and live to age 95, your retirement income may need to last 30 years. That's longer than many people's entire careers. Without proper planning, a retirement that was intended to provide peace of mind can become a source of stress later in life.

Why Traditional Retirement Rules May No Longer Apply

You may have heard common retirement guidelines such as:

"The 4% rule"
"Your expenses will decrease in retirement"
"Social Security will cover most of your needs"

While these ideas can provide general guidance, every retirement is unique.

Today's retirees face challenges previous generations didn't experience to the same degree, including:

Longer life expectancies
Rising healthcare costs
Inflation over extended periods
Greater responsibility for managing their own retirement assets

This is why personalized retirement planning has become so important.

Healthcare May Become a Bigger Expense Than Expected

One of the most significant financial considerations associated with longevity is healthcare.

Even healthy retirees can face increasing medical expenses as they age. Prescription medications, specialist visits, long-term care needs, and other healthcare costs can have a substantial impact on retirement income . In fact, Fidelity's 2025 Retiree Health Care Cost Estimate found that a 65-year-old retiring today can expect to spend an average of $172,500 on health care throughout retirement—a figure that doesn't even include long-term care.

Planning ahead doesn't mean expecting the worst.

It means preparing thoughtfully so you can maintain confidence regardless of what the future brings.

Building a Retirement Plan Designed for the Long Haul

Longevity planning isn't about predicting exactly how long you'll live.

It's about creating a strategy that can help support you if you live longer than expected.

Some areas that may deserve attention include:

Reliable Income Sources

Many retirees value having portions of their retirement income that are predictable and not directly tied to daily market fluctuations.

Reliable income can help create confidence during uncertain economic periods.

Managing Risk

As retirement approaches, many individuals begin evaluating how much market risk they're comfortable taking .

The goal isn't necessarily eliminating growth opportunities. Instead, it's finding the right balance between growth potential and protecting what you've worked so hard to build.

Healthcare and Long-Term Care Planning

Having a plan for potential healthcare expenses can help prevent unexpected costs from disrupting your overall retirement strategy.

Regular Reviews

Retirement planning isn't a one-time event.

Your goals, expenses, health, family circumstances, and economic conditions may change over time. Regular reviews help ensure your plan continues to align with your needs.

The Goal Isn't Just a Longer Life—It's a More Confident Retirement

Most people don't spend decades saving for retirement simply to worry about money once they get there.

The goal is confidence.

Confidence that your income strategy is designed to last.

Confidence that you've considered the risks that could affect your future.

Confidence that you have a plan built around your unique situation.

Longevity is one of the greatest gifts of modern life. With thoughtful planning and a safety-first approach, it's possible to prepare for a longer retirement while maintaining the peace of mind you've worked so hard to achieve.

Ready to Learn More?

At Summerlin Benefits Consulting, we believe retirement planning starts with education and understanding your options. Our goal is to help you protect what you've worked hard to build and create a personalized strategy designed to support your long-term retirement goals. You're also welcome to attend one of our educational seminars to learn more before scheduling a one-on-one conversation.

Contact us today to schedule a complimentary retirement review and learn how longevity planning may fit into your overall retirement strategy.

This content is for educational purposes only and should not be considered financial, tax, or legal advice. Individual situations vary. Please consult with qualified professionals regarding your specific circumstances.

Frequently Asked Questions

Q: What is longevity risk in retirement?

A: Longevity risk is the possibility of outliving your retirement savings because you live longer than expected. With retirement potentially lasting 25 to 35 years, planning for a longer lifespan—not just market performance—has become one of the most important parts of a sound retirement strategy.

Q: Why doesn't a rule like the 4% rule work for every retiree?

A: Rules like the 4% rule offer general guidance, but every retirement is unique. Longer life expectancies, rising healthcare costs, inflation, and greater responsibility for managing your own assets mean a personalized strategy often serves retirees better than a one-size-fits-all guideline.

Q: How does healthcare affect a longer retirement?

A: Healthcare often becomes a bigger expense than retirees expect, even for those in good health. Prescription costs, specialist visits, and long-term care needs can add up significantly, making it important to plan for rising medical expenses as part of your overall retirement strategy.

Q: What does a longevity-focused retirement plan typically include?

A: A longevity-focused plan typically addresses reliable income sources, risk management, healthcare and long-term care costs, and regular reviews. Rather than predicting an exact lifespan, the goal is a strategy flexible enough to support you if you live longer than expected.

How Much Does a Financial Advisor Cost in 2026?

Thu, 18 Jun 2026 17:05:55 GMT

How Much Does a Financial Advisor Cost in 2026?

Originally published: October 10, 2022

Updated: June 16, 2026

If you have ever wondered how much you are really paying your financial advisor — or whether those fees are actually worth it — you are not alone. Advisor fees are one of the least-discussed yet most impactful factors in long-term portfolio performance. Over a 20-year retirement, even a 1% annual fee can quietly reduce your nest egg by tens of thousands of dollars through its compounding drag.

The good news: you have more options than most people realize. This guide breaks down every major fee structure used by financial advisors in 2026, provides industry benchmarks for what is normal, and gives you a practical framework for calculating whether your advisor is delivering enough value to justify the cost.

The AUM Model: How Percentage-Based Fees Work

Many financial advisors charge fees based on how much money they manage on your behalf — this is called an Assets Under Management (AUM) fee. Typically, 1% of your total assets per year is the standard rate, though the actual percentage varies based on portfolio size and the advisor's pricing model.

On a $500,000 portfolio, a 1% AUM fee costs $5,000 per year. On a $3 million portfolio, that same 1% fee costs $25,000–$30,000 per year. Many consumers do not feel the weight of these fees until they begin taking distributions in retirement — and realize how much of their growth has been quietly redirected.

There is also a deeper structural problem with AUM pricing: if your portfolio drops 20% during a market correction, your advisor's workload does not drop 20%. Percentage-based fees scale with your balance, not with the effort or value delivered. This is why more retirees and high-net-worth investors are exploring flat-fee and fee-free alternatives.

Financial Advisor Fee Structures: A 2026 Benchmark Guide

The financial advisory industry uses several different pricing models. Understanding each one helps you evaluate whether what you are paying is competitive — and whether a different structure might serve you better.

Flat Fee Modeling: When It Makes More Sense

Let's look more closely at the flat fee structure. This model tends to make more financial sense if you have an account balance of $1 million or more under your advisor's management. For example: if you have $3 million to invest and hire a financial advisor at a typical AUM fee of 0.8%–1%, that is going to cost you $25,000–$30,000 per year. By contrast, flat-fee advisors typically charge between $2,500 and $15,000 per year depending on portfolio complexity — potentially saving you $10,000 to $27,500 annually compared with a 1% AUM fee on the same $3 million portfolio.

As a general rule: percentage-based fees tend to work well for smaller balances, while flat fees become advantageous for larger asset balances. The $1 million threshold is a common benchmark — once your portfolio crosses that level, it is worth running the numbers on whether a flat fee structure would cost you less.

Consider this scenario: You roll a $500,000 balance into an existing $1 million account — bringing your total to $1.5 million. Under a 1% AUM model, your annual fee just jumped by $5,000 — more than $400 per month — not because your advisor did any additional work, but simply because your balance grew. That extra cost does not reflect the time, energy, or expertise required to serve you better. It just reflects a bigger number.

Many investors do not notice the true drag of these fees until market downturns make every dollar count. A portfolio that loses 20% in value still owes its advisor the same percentage — regardless of performance.

A Common Question: "Can I Negotiate the Percentage I Pay My Advisor?"

The short answer is yes. While 1% is the most common AUM rate, advisors who charge based on AUM will often scale fees down for larger portfolios. Some firms use tiered pricing — for example, 1% on the first $1 million and 0.75% on amounts above that. It is always worth asking.

But there is a more important question underneath the negotiation conversation: should you be paying percentage-based fees at all? For retirees living on portfolio income, even a discounted AUM fee compounds against you over time.

Value Calculation Framework: Is Your Advisor Worth the Cost?

Fee comparisons only tell part of the story. The real question is whether your advisor is generating enough value to justify — and ideally exceed — what you are paying. Here is a practical framework for evaluating that.

Step 1: Quantify what your advisor actually does for you

Step 2: Compare total value to total fee

Add up the estimated value of each service your advisor provides and compare it to your total annual fee. If the value clearly exceeds the cost — especially when you factor in behavioral coaching and tax optimization — the fee may be justified. If you struggle to identify specific services that add up to your annual fee amount, that is a meaningful signal.

Step 3: Factor in what industry research says

Vanguard's "Advisor's Alpha" research estimates that working with a skilled advisor can add approximately 3% in net returns annually — primarily through behavioral coaching, tax optimization, and withdrawal sequencing rather than investment selection. Morningstar's "Gamma" research similarly found that disciplined financial planning decisions can add approximately 1.82% annually in risk-adjusted wealth. If these benchmarks reflect your advisor's service quality, the math may still favor paying a 1% fee — but only if those services are actually being delivered.

The key insight: advisor value is not primarily about beating the market. It is about the planning, behavioral, and tax decisions that add up quietly over decades.

Fee-Free Modeling: Eliminating Advisor Fees Entirely

One might assume that the only way to invest is to pay an advisor to manage your money. But every dollar paid in fees comes directly out of your nest egg, out of your growth and gains, and goes straight into your advisor's pocket. Over a 20-year retirement, even a modest annual fee quietly erodes your compounding growth.

Some financial professionals — including Summerlin Benefits Consulting — practice what are called "safe money strategies" that protect clients from market losses and eliminate fees entirely. These strategies center on Fixed Index Annuities (FIAs).

A Fixed Index Annuity links your growth to a market index like the S&P 500. When the index performs well, your account grows based on that performance. When the market declines, your account is protected — you do not lose value during market downturns. And critically: the financial professional is compensated by the insurance company, not by your account. No fees are deducted from your balance.

With this approach, you benefit from: principal protection during market corrections, reasonable growth tied to market indices, zero advisory fees reducing your account balance, and a guaranteed income stream available when you are ready to turn it on. For retirees where every dollar of portfolio income matters, this model offers a compelling alternative to percentage-based fee structures.

Questions to Ask Before Hiring or Staying with a Financial Advisor

How are you compensated? Ask directly whether they earn AUM fees, commissions, flat fees, or some combination. This shapes every recommendation they make.
What specific services do I receive for my fee? Get a written list. If the answer is vague, that is a red flag.
Are you a fiduciary? A fiduciary is legally required to act in your best interest — not all advisors are.
What would a fee-free alternative look like for my situation? If they cannot or will not engage with this question, consider whether they have your best interests in mind.
How has your approach performed during market downturns? Ask specifically about 2020 and 2022 — years of significant volatility. What happened to clients' portfolios?

The Bottom Line

You do not have to pay large amounts of money in fees for a financial plan tailored to your retirement needs. Understanding your options — AUM, flat fee, hourly, retainer, or fee-free — puts you in a much stronger position to negotiate, compare, and choose the structure that truly serves your financial future.

At Summerlin Benefits Consulting, we specialize in safe money strategies that protect your assets from market losses and eliminate fees entirely. Your money stays in your account, growing at a reasonable rate, always there when you need it. No fees mean a higher principal, better compounding, and a more reliable nest egg for retirement or to pass down to your loved ones.

Ready to find out what a fee-free approach could mean for your portfolio? Contact Summerlin Benefits Consulting for a no-obligation review.

Content is for informational purposes only. Does not constitute financial, tax, or legal advice. SBC does not provide specific tax or legal advice. Advisor's Alpha and Morningstar Gamma figures are industry research benchmarks cited for general educational purposes. Consult a licensed financial professional for guidance with your individual situation.

Frequently Asked Questions

Q: How much do financial advisors charge in 2026?

A: Financial advisors typically charge around 1% of assets under management (AUM) annually, though fees range from 0.5%–1.5% depending on portfolio size. On a $3 million portfolio, that is $25,000–$30,000 per year. Flat-fee advisors charge $2,500–$15,000 annually regardless of account size — often far less expensive for large portfolios. Fee-free alternatives using fixed index annuities eliminate advisor fees entirely.

Q: Are financial advisors worth the cost?

A: It depends on what services are being delivered. Research by Vanguard suggests a skilled advisor can add approximately 3% in net annual returns through behavioral coaching, tax optimization, and withdrawal planning — which can exceed a 1% AUM fee. However, if your advisor is primarily managing a passive portfolio without personalized planning, fee-free alternatives may deliver better net outcomes.

Q: Can I negotiate my financial advisor's fee?

A: Yes — most AUM-based advisors will scale fees down for larger portfolios, and tiered pricing is common. You can also explore whether a flat-fee, hourly, or fee-free structure better fits your situation. On large portfolios, switching from a 1% AUM fee to a flat fee or fee-free model can save $10,000 or more annually.

Q: What is the difference between fee-only and fee-free advisors?

A: A fee-only advisor charges clients directly — through AUM fees, flat fees, or hourly rates — and earns no commissions on product sales. A fee-free advisor using safe money strategies such as fixed index annuities earns compensation from the insurance company, not from your account. In both cases, the advisor's compensation is transparent — but only the fee-free model eliminates the drag on your portfolio balance entirely.

Q: What is a fee-free investment strategy and how does it work?

A: A fee-free strategy typically uses fixed index annuities (FIAs), linked to a market index like the S&P 500. Your account grows when markets rise and is protected when markets decline — you never lose principal during downturns. The advisor is compensated by the insurance company, so no fees are deducted from your account. This approach is especially valuable for retirees who rely on their portfolio for monthly income.

Want To Live to 100? Longevity is a Hot Topic for Today’s Retiree!

Thu, 18 Jun 2026 16:41:39 GMT

Want To Live to 100? Longevity is a Hot Topic for Today’s Retiree!

Originally published: July 22, 2022

Updated: June 18, 2026

You have two choices when pondering how— and whether— you will live a long, healthy life. You can either apply the latest findings of longevity research to boost your odds, or you can eat what you want, forgo health and wellness habits, and figure it’s mostly genetics anyway. Most of us choose the middle ground.

If your goal is making it to 100, more power to you. It’s a crapshoot! Only about 0.009% of the current global population—an estimated 722,000 people worldwide—has done it, according to United Nations population estimates.

These lucky few are not easy to categorize. Some regularly enjoy alcohol, fat or sugar (in moderation). Researchers theorize that daily routines—even seemingly unhealthy ones like eating a dish of ice cream every night—might provide a beneficial stability.

A positive attitude helps them wave off irritants and overcome setbacks. They don’t worry about what they can’t control. And they derive joy from everyday experiences like watering plants or watching clouds cross the sky.

“People who live longer tend to be optimistic and manage their stress well,” said Tom Perls, M.D., a distinguished professor of medicine at Boston University School of Medicine. “And optimistic people tend not to be neurotic, where they internalize their stress rather than let go of it.”

Founder and director of the New England Centenarian Study, Perls marvels at the resilience of individuals who reach an advanced age. He notes that a surprising number of people who approach age 100 live productively despite serious health ailments.

“About half of them have a history of aging-related disease like heart disease,” Perls said. “Maybe they had a stroke at 85 or have a history of cancer or diabetes. What’s remarkable is how they’re still living independently in their mid 90s. Normally, such diseases would carry a higher mortality risk. But, these individuals have a level of resilience that mitigates these diseases.”

Like most longevity experts, he also credits good genes. “Genetics is playing an incredibly strong role at the very oldest ages,” he said.

Perls offers a free online resource, the Living to 100 Life Expectancy Calculator, to help you assess your odds at Livingto100.com. After creating an account, you can answer a few questions, and the results include a life expectancy calculation along with personal feedback and recommendations.

For decades, we’ve known that good nutrition, regular exercise, and maintaining a healthy body weight can extend our lifespan. And it’s no secret that socially engaged folks with an active mind and a rosy outlook on life can boost their longevity. But we don’t always stop to think that longevity requires a good, solid financial plan as well, and lifetime income can sometimes be a key component to plan for.

There are new and exciting fields of study helping us live longer, like one that involves biomarkers of aging. Using various tests and measurements, researchers seek to contrast one’s biological age from their chronological age.

“Different people appear to age at different rates,” said Dr. Matt Kaeberlein, CEO of Optispan and affiliate professor at the University of Washington in Seattle. “But we don’t understand why. So we’re developing biomarkers that are predictive at an individual level.”

So do what it takes to be physically and financially healthy for many years to come. At Summerlin Benefits Consulting , we specialize in financial well-being, no matter how long you live.

Frequently Asked Questions

Q: What does longevity planning mean for retirement finances?

A: Longevity planning means preparing financially to fund a retirement that could last 25–35 years or more. Because only a small fraction of people reach 100, most retirees need strategies—like lifetime income products—that protect against outliving savings regardless of how long they live.

Q: How can a Fixed Index Annuity help if I live a very long life?

A: A Fixed Index Annuity with a lifetime income rider guarantees monthly payments you cannot outlive, no matter how long retirement lasts. It protects principal from market loss while still allowing growth tied to a market index, making it a strong tool for longevity-focused retirement plans.

Q: What is the New England Centenarian Study and what has it found?

A: The New England Centenarian Study, led by Dr. Tom Perls at Boston University, is the world’s largest study of people aged 100 and older. Key findings: genetics, stress resilience, and a positive outlook are the strongest predictors of extreme longevity—and most centenarians remain functional well into their 90s.

Content is for informational purposes only. Does not constitute tax or legal advice. SBC does not provide specific tax or legal advice. Consult a tax/legal professional for guidance with your individual situation.

Social Security and Retirement. What does "Full Retirement Age" Mean?

Tue, 16 Jun 2026 14:49:43 GMT

Social Security and Retirement: What Does "Full Retirement Age" Mean?

Originally published: February 17, 2023

Updated: June 16, 2026

An informal survey of staff at the Center for Retirement Research asking "What is the current retirement age for Social Security?" produced a range of responses. About half — mostly the "old hands" — said 67. The other half — generally younger and newer staff members — gave answers including 62, 65, 66, and 68. Essentially, they are all wrong. Social Security’s full retirement age is based on the year you were born, so the fact that people are confused is not surprising.

You can start receiving your Social Security retirement benefits as early as age 62. However, you are not entitled to full benefits until you reach your full retirement age — and even then, if you actually delay taking your benefits until age 70, your benefit amount will be increased further.

Your Full Retirement Age by Year of Birth

Source: SSA.gov — Full Retirement Age

Why Did the Full Retirement Age Change?

Full retirement age, also called "normal retirement age," was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age. The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.

If Age 70 Pays the Highest Benefits, Why Does Full Retirement Age Still Matter?

Before the delayed retirement credit became actuarially fair, full retirement age was a meaningful concept — it was the age at which lifetime benefits were the highest. But once the delayed retirement credit became actuarially fair, full retirement age became largely symbolic. It does not describe when benefits are first available (that is age 62), nor when monthly benefits are at their maximum (that is age 70).

But it is important to note that a number of specific Social Security provisions are linked to full retirement age: an earnings test applies before FRA but not thereafter, and benefits for widows and spouses are reduced if claimed before FRA and not thereafter.

The 2026 Social Security Earnings Test

The earnings test is one practical reason full retirement age still matters. In 2026, if you collect Social Security before your full retirement age while still working, SSA will temporarily reduce your benefit if your earnings exceed $24,480 per year — roughly $2,040 per month. For every $2 you earn above that limit, SSA withholds $1 in benefits. In the calendar year you reach your full retirement age, the threshold rises to $65,160 ($5,430/month), and SSA withholds $1 for every $3 over the limit. Once you reach your full retirement age, the earnings test no longer applies and withheld amounts are added back into your future monthly benefit.

Sources: SSA.gov — Receiving Benefits While Working | SSA.gov — COLA 2026 Fact Sheet | SSA.gov FAQ — Work and Social Security

These thresholds are SSA-confirmed 2026 figures. This is particularly relevant if you are still working and considering an early claim — the earnings test can temporarily reduce your monthly payment until you reach FRA.

Early vs. Delayed Claiming: What the Math Looks Like

The age at which you claim Social Security has a permanent effect on your monthly benefit. For someone with a full retirement age of 67, here is how the numbers work:

Note: Exact reduction percentages depend on the number of months before your FRA that you claim. The 8% per year delayed retirement credit applies for each full year you wait past FRA up to age 70.

Source: SSA.gov — Delayed Retirement Credits

Spousal and Survivor Benefits: How Full Retirement Age Applies

Full retirement age is not just relevant to your own retirement benefit — it also governs spousal and survivor benefits, which is why it still matters even for those who plan to delay claiming.

Spousal Benefits: If you are married, you may be eligible for a spousal benefit worth up to 50% of your spouse’s full retirement age benefit. You can claim a spousal benefit as early as age 62, but — just like your own retirement benefit — claiming before your FRA results in a permanent reduction. You must be at least 62 years old (or any age if caring for a qualifying child under 16 or disabled), and your spouse must already be receiving their own Social Security benefit.

Survivor Benefits: If your spouse passes away, you may be eligible for a survivor benefit worth up to 100% of your deceased spouse’s benefit — including any delayed retirement credits they had earned. Survivor benefits can be claimed as early as age 60 (age 50 if you are disabled). Claiming before your FRA results in a reduced survivor benefit, so timing matters here as well.

For both spousal and survivor benefits, your full retirement age is the benchmark — claim before it and benefits are reduced; claim at or after it and you receive the full amount available to you.

Source: SSA.gov — Spousal Benefits | SSA.gov — Survivor Benefits

So, How Do I Decide When to Start Taking My Benefits?

There is no right or wrong answer; it truly does depend on the individual. You want to think about life expectancy, health, and other income sources when making up your mind.

A good first step is to get your own personalized estimate directly from the SSA. You can visit the SSA Retirement Estimator at ssa.gov/benefits/retirement/estimator.html to see projected benefit amounts at different claiming ages based on your actual earnings record.

There are other options to consider if you need retirement income but do not want to start pulling from your Social Security benefits until later. For example, some opt to take distributions from their 401(k), or they look to other income sources such as pensions or annuities. One option — a Fixed Index Annuity (FIA) — allows you to obtain a reasonable rate of return over time while shielding you from losses when the market is down. Most FIAs also allow for a penalty-free 10% withdrawal per year, providing a potential income source so you can delay turning Social Security on.

At Summerlin Benefits Consulting, we specialize in helping our clients preserve and grow their nest eggs so that they can focus on enjoying their retirement instead of worrying about their means. We also help our clients consider ALL of their retirement income options — including Social Security benefits — so that they can make the best decision for themselves. One of our core values is educating our clients and making things simple to understand so that they feel empowered to choose the path that is right for them!

Last Updated: June 16, 2026

Frequently Asked Questions

Q: What is full retirement age for Social Security in 2026?

A: If you were born in 1960 or later, your full retirement age (FRA) is 67. You can claim Social Security as early as age 62 — but your monthly benefit will be permanently reduced by up to 30%. Waiting until age 70 earns you the maximum possible monthly benefit, with delayed retirement credits increasing your payment by approximately 8% for each year past FRA. ( SSA.gov — Full Retirement Age )

Q: When should I take Social Security?

A: The right age depends on your health, life expectancy, and other income sources. Claiming early at 62 gives you more years of payments but at a permanently reduced monthly amount. Waiting until 70 maximizes your monthly benefit — often 24% more than claiming at FRA. If you have other income sources like an annuity or pension that can cover expenses in the gap, delaying Social Security usually pays off. ( SSA.gov — When to Start )

Q: Can I work and collect Social Security at the same time?

A: Yes, but there are limits before you reach full retirement age. In 2026, SSA will temporarily reduce your benefit if you earn more than $24,480 per year — withholding $1 for every $2 above that amount. In the year you reach your FRA, the limit jumps to $65,160. Once you reach full retirement age, you can earn any amount without reduction, and any previously withheld benefits are added back into your monthly payment. ( SSA.gov — Receiving Benefits While Working )

Q: How much Social Security will I get?

A: Your benefit is based on your 35 highest-earning years and the age you start claiming. The SSA calculates a personalized amount from your earnings record. In 2026, the average Social Security retirement benefit is approximately $2,071 per month after the 2.8% annual COLA adjustment. Get your own estimate at ssa.gov/benefits/retirement/estimator.html using the SSA Retirement Estimator . ( SSA.gov — 2026 COLA Announcement ; Kiplinger — 2026 COLA )

Q: How does full retirement age affect spousal and survivor benefits?

A: Spousal benefits can be up to 50% of your spouse’s FRA benefit, and survivor benefits up to 100% of a deceased spouse’s benefit — but both are reduced if claimed before your own full retirement age. Timing your claim relative to your FRA determines whether you receive the full spousal or survivor amount or a permanently reduced payment. ( SSA.gov — Survivors Benefits )

Understanding IRMAA Surcharges and How to Mitigate Their Impact

Fri, 05 Jun 2026 17:36:22 GMT

How to Avoid IRMAA Surcharges on Medicare

Originally published: January 24, 2025

Updated: June 3, 2026

For retirees navigating the complexities of Medicare, the Income-Related Monthly Adjustment Amount (IRMAA) is an important factor to understand. This surcharge increases Medicare premiums for higher-income individuals, potentially reducing disposable income by hundreds of dollars per month. Below we will explore how IRMAA is calculated, the 2026 bracket figures, and the most effective strategies for minimizing — or entirely avoiding — IRMAA surcharges.

What Is IRMAA?

IRMAA is a surcharge added to Medicare Part B (medical insurance) and Part D (prescription drug) premiums whenever the insured’s income exceeds certain thresholds. Unlike standard Medicare premiums, IRMAA is income-adjusted: the more you earn, the more you pay for your Medicare health coverage.

The Social Security Administration (SSA) determines IRMAA based on your Modified Adjusted Gross Income (MAGI) from two years prior. For example, your 2026 IRMAA is calculated using your 2024 tax return. MAGI includes adjusted gross income plus any tax-exempt interest, such as municipal bond income. This two-year lookback is one of the most important planning details to understand — and one of the most powerful levers you can use to manage your premiums in advance.

How Are IRMAA Income Brackets Calculated?

IRMAA brackets are indexed annually for inflation, meaning the thresholds shift each year. If your MAGI exceeds the lowest bracket, you will pay an additional premium based on your income level. One of the most important nuances: exceeding a bracket threshold by even $1 can move you into the next surcharge tier — a so-called “cliff effect” that makes proactive income management especially valuable.

2026 IRMAA Part B Brackets (Source: CMS.gov, published November 14, 2025)

The table below reflects confirmed 2026 figures. The base Part B premium is $202.90/month (corrected from an earlier version of this post that incorrectly showed $110.40).

 2026 IRMAA Part D Brackets (Source: CMS.gov)

In addition to Part B surcharges, IRMAA also increases your Part D (prescription drug) premium. The 2026 Part D surcharge amounts by income tier are shown below. These amounts are added on top of your plan’s standard Part D premium.

Please visit CMS.gov for the most current information and, as always, seek the guidance of a certified tax adviser.

How and When Are IRMAA Fees Paid?

IRMAA surcharges are added directly to your Medicare Part B and Part D premiums. For retirees receiving Social Security benefits, the premiums — including any IRMAA surcharges — are deducted automatically from their monthly checks. This reduction in Social Security income can significantly affect monthly cash flow and create an unexpected financial burden. The good news: there are proactive steps you can take to minimize the impact of IRMAA.

Strategies to Minimize the Impact of IRMAA

1. Tax-Efficient Withdrawals

Strategies such as Roth IRA conversions can reduce taxable income over time, as qualified withdrawals from Roth accounts are not included in MAGI. Additionally, utilizing funds from Health Savings Accounts (HSAs) — which offer triple tax advantages — can help pay for medical expenses without affecting MAGI. Properly sequencing withdrawals from taxable, tax-deferred, and tax-free accounts (such as loans against a cash value life insurance policy) can also smooth out income levels and help you avoid IRMAA bracket spikes. Learn more about wealth management and how it fits into a complete retirement strategy. Planning these conversions in the years before Medicare eligibility at age 65 is particularly effective, as those years directly feed the two-year MAGI lookback.

2. Timing of Income

Careful timing of income recognition is a critical strategy. One-time events — such as selling a property, cashing out stock options, or taking large distributions from tax-deferred accounts — can push MAGI above an IRMAA threshold. To mitigate this, consider spreading such events over multiple years or deferring them to years when income is expected to be lower. Charitable giving strategies such as Qualified Charitable Distributions (QCDs) from IRAs can also reduce taxable income while supporting philanthropic goals. QCDs allow you to direct up to $105,000 per year (2026 limit) directly from your IRA to a qualifying charity — reducing your MAGI dollar-for-dollar without affecting your standard deduction.

3. Annuities (FIAs)

Fixed Index Annuities (FIAs) can serve as a reliable income source that helps offset the costs associated with IRMAA. FIAs can provide a guaranteed income stream and offer growth potential linked to market indexes without the risk of direct investment losses. By using benefits such as guaranteed lifetime income, clients can reduce their reliance on Social Security and better manage overall cash flow.

4. Cash Value Life Insurance (FIULs)

Fixed Index Universal Life Insurance (FIUL) can also provide indexed market growth without the risk of investment losses. FIUL can serve as a reliable and tax-free income source during retirement, as it allows the policy owner to draw from the cash value each year in the form of a policy loan — without increasing MAGI or triggering IRMAA surcharges. It can often also provide additional living benefits for certain health occurrences and long-term care needs that can be drawn out tax-free. This can be a valuable tool for covering care expenses without increasing taxable income. Learn more about how FIUL can reduce taxes in retirement .

Appealing IRMAA: Life-Changing Event Exceptions

One of the most underutilized tools for managing IRMAA is the life-changing event (LCE) appeal. Because IRMAA is based on income from two years prior, retirees are sometimes assessed surcharges based on income that no longer reflects their current financial situation — for example, a year with unusually high income from a property sale or a final year of full-time employment.

The Social Security Administration allows you to request a reduction in your IRMAA surcharge if you experienced one of the following qualifying life-changing events:

How to File a Life-Changing Event Appeal

To request an IRMAA adjustment based on a life-changing event, contact the Social Security Administration directly or complete Form SSA-44 (Medicare IRMAA Life-Changing Event). You will need to provide documentation of the event and evidence of your current, lower income. The SSA will then use the more recent year’s income to recalculate your IRMAA — potentially eliminating the surcharge entirely or moving you to a lower tier.

Key timing note: you should file your appeal as soon as possible after the qualifying event. The SSA can apply the correction prospectively, meaning once approved, your premiums will be adjusted going forward. However, retroactive refunds are generally not available, so acting promptly matters.

Even without a formal life-changing event, you can request that SSA use a more recent tax year if your circumstances have changed significantly. Work with a financial advisor or tax professional to prepare the documentation needed for a successful appeal.

Long-Term MAGI Planning: The Proactive Approach

The most effective way to avoid IRMAA surcharges is to plan years in advance — ideally starting at age 60 or earlier. Because your 2026 surcharges are based on your 2024 income, decisions made two or more years before Medicare eligibility can have a direct impact on what you pay.

A long-term MAGI management plan might include: gradually converting traditional IRA funds to Roth IRA in low-income years before retirement; building a tax-free income stream through FIUL or Roth assets that can be accessed without affecting MAGI; coordinating the timing of Social Security claiming with other income sources; and avoiding large, one-time income events in the years directly before or during Medicare coverage. A qualified financial advisor who understands the intersection of Medicare rules and retirement income planning is your most valuable resource in this effort.

Conclusion

IRMAA surcharges can significantly affect retirees’ financial plans, particularly for high-net-worth individuals. By understanding how IRMAA is calculated, knowing the 2026 bracket thresholds, and taking advantage of strategies such as tax-efficient withdrawals, income timing, life-changing event appeals, and tax-free income vehicles, retirees can better manage their income and protect their monthly cash flow.

As a financial firm specializing in retirement planning, Summerlin Benefits Consulting is here to help clients navigate these challenges and secure a comfortable retirement. Contact us today to learn more about how fixed index annuities, FIUL, and comprehensive income planning can fit into your retirement strategy.

Last Updated: June 3, 2026

Frequently Asked Questions

Q: What is IRMAA and who does it affect?

A: IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums for individuals whose Modified Adjusted Gross Income exceeds set thresholds. For 2026, the surcharge begins for individuals earning above $109,000. The Social Security Administration determines IRMAA using your tax return from two years prior.

Q: How is IRMAA calculated each year?

A: IRMAA is determined by your Modified Adjusted Gross Income (MAGI) from two years prior — your 2026 Medicare surcharge is based on your 2024 tax return. MAGI includes adjusted gross income plus tax-exempt interest such as municipal bond income. Exceeding a threshold by even $1 moves you to the next surcharge tier.

Q: How much does IRMAA add to my Medicare Part B premium in 2026?

A: In 2026, the standard Medicare Part B premium is $202.90 per month. IRMAA surcharges range from $81.20 to $487.00 per month depending on income, bringing total Part B premiums as high as $689.90 per month for individuals earning $500,000 or more. Surcharges are automatically deducted from Social Security benefit checks.

Q: What are the best strategies to reduce IRMAA surcharges?

A: Effective strategies include Roth IRA conversions (which reduce future MAGI), Qualified Charitable Distributions from IRAs, and careful timing of large income events like property sales. Tax-free income sources — including FIUL policy loans — generally do not count toward MAGI, making them useful tools for managing Medicare premium exposure in retirement.

Q: Can I appeal my IRMAA surcharge?

A: Yes — if you experienced a qualifying life-changing event (such as retirement, reduced income, divorce, or death of a spouse), you can request that SSA use more recent income data instead of the two-year-old figure. Complete Form SSA-44 and provide documentation of the event. A successful appeal can reduce or eliminate your surcharge going forward.

Begin the Year with a Plan

Tue, 06 Jan 2026 14:44:31 GMT

As we move into 2026 , now is the perfect moment to set the tone for your financial future. Just like reflecting on the past year, planning ahead gives you clarity, confidence, and peace of mind, especially when it comes to your financial goals. Whether you’re looking to grow your wealth, protect what you’ve built, or ensure income for retirement, having a thoughtful financial plan is key to long-term success.

At Summerlin Benefits Consulting and SBC Wealth Management , we combine strengths to help you craft a plan that works for 2026 and beyond. With decades of experience helping individuals secure their financial futures, our combined services offer a full suite of solutions tailored to your unique goals and life stage.

�� Why Start 2026 with a Financial Plan?

A solid financial plan does more than track numbers - it provides direction. It helps you:

Clarify your goals for retirement, income, investment growth, legacy, and protection.
Understand your risks and opportunities in today’s evolving financial landscape.
Take action now , so you can look back at year-end with confidence instead of questions.

Whether you’re newly focused on your finances or continuing a lifelong journey, proactive planning changes outcomes, and gives you control over your future.

�� How Our Services Can Help

Summerlin Benefits Consulting specializes in financial safety and retirement planning. We help our clients build comprehensive strategies using tools such as:

Annuities - providing reliable income streams that you can’t outlive, with protection from market downturns.
Fixed Indexed Universal Life Insurance (FIUL) - combining life insurance protection with potential cash value growth linked to market indexes without direct market risk.
Fixed annuities and indexed strategies - designed to give you growth potential while safeguarding your principal.

SBC Wealth Management , serving as a fiduciary to actively manage your investment portfolio, helps by focusing on:

Custom wealth management strategies that align with your personal financial goals.
Active money management - not set-and-forget investing, but ongoing monitoring and adjustments as markets and your needs evolve.
Holistic financial planning - considering your entire picture, including retirement income, risk tolerance, and legacy.

Together, we help you balance growth, protection, and flexibility - so your 2026 goals don’t stay goals, but become achievements!

�� Your Next Steps

Starting 2026 with a plan doesn’t have to be overwhelming - it starts with a conversation:
Schedule a complimentary consultation to review where you are now.
Evaluate your retirement income needs and savings gap.
Review your investments and consider professional management options.
Assess your life insurance coverage and legacy strategies.

At SBC Wealth Management and Summerlin Benefits Consulting, we provide ongoing support, personalized planning, and a partnership that grows with you. Whether you’re focused on retirement, wealth growth, or financial security, we’re here to help you build the plan that will take you confidently into the future.

�� Start your year with purpose -- begin with a plan!
Contact us today to begin your financial journey for 2026 and beyond.

Year-End Financial Planning: Securing Your Future This Holiday Season

Wed, 03 Dec 2025 21:07:34 GMT

As the year winds down and we gather with loved ones, it's the perfect time to reflect on what truly matters, and to act on securing your financial future. At Summerlin Benefits Consulting , we help clients build comprehensive strategies using three essential tools: annuities, professionally managed assets (AUM), and Fixed Indexed Universal Life Insurance (FIUL).

Annuities provide reliable income streams that you cannot outlive. We offer fixed annuities with guaranteed rates and fixed indexed annuities that protect your principal while offering growth potential tied to market indexes. We analyze your retirement income needs and existing resources to determine the right annuity type, funding amount, and payout structure. Our goal is to ensure you have reliable cash flow throughout retirement without worrying about market volatility.

Our Assets Under Management (AUM) service means we actively manage your investment portfolio, handling everything from initial strategy development to ongoing rebalancing and performance monitoring. We assess your risk tolerance and financial goals, then construct and actively manage a diversified portfolio tailored to your needs. You receive transparent reporting and regular reviews, with strategic adjustments as markets evolve and your life changes.

Fixed Indexed Universal Life (FIUL) provides both life insurance protection for your family and tax-free cash value growth linked to market index performance, without direct market risk. It offers flexibility to adjust premiums and access funds during your lifetime. We evaluate your life insurance needs and income objectives to determine if FIUL fits your strategy. We help structure policies for optimal coverage and cash value growth, explaining when and how to access funds for retirement or other needs.

This holiday season, give yourself the best present, a sense of financial clarity:

Schedule a complimentary consultation to review your current situation
Evaluate your retirement income gap —will Social Security and savings be enough?
Review your investment portfolio performance and consider professional management
Assess your life insurance coverage —would your family be financially secure?

Need help developing your action plan? Summerlin Benefits Consulting provides our clients with:

Specialized Expertise: We focus specifically on annuities, managed investments, and life insurance strategies, giving us deep knowledge in these critical areas.

Personalized Plans: Every client receives a customized strategy based on their unique goals—no cookie-cutter solutions.

Ongoing Partnership: We provide continuous support and adjustments as your needs evolve, ensuring your plan stays on track.

Our Process:

Comprehensive financial assessment
Gap analysis and strategy development
Product selection and implementation
Regular reviews and adjustments

Contact us today to schedule your consultation and start the new year with confidence! Let's discuss your goals and create a comprehensive strategy using annuities, professional asset management, and FIUL products tailored to your needs.

Use This Year-End Checklist to Stay on Track With Your Retirement Savings Goals

Fri, 06 Dec 2024 15:57:59 GMT

The end of the year offers a perfect opportunity to evaluate your progress toward retirement savings goals. Below, you'll find tips to help ensure you're making the most of your resources as we approach 2025.

1. Reassess Your Savings Strategy

Retirement savings goals are deeply personal, varying significantly based on the lifestyle you envision. Additionally, the retirement saving strategies that may have worked for you 10, 20, or 30 years ago may need to be reassessed at this stage of your life. So, what better time to assess your goals and strategies than before the New Year?

A good place to start is to look at the lifestyle you envision for retirement. If you are still working, you may want to consider your lifestyle now and determine how it may be similar or different in retirement. For example, will you travel more? Have more hobbies? This will help to give you a baseline for expenses in retirement and determine if you should be saving more or less.

If already retired, it's a good idea to reflect on the year, or past couple of years, and determine if there have been any significant changes that could potentially affect your retirement strategy. For example, what is inflation doing? Where are interest rates at? If we ask these questions currently as we near the end of 2024, we know that interest rates and inflation are still high. Thus, it could be the right time to assess your current investments, such as annuities and life insurance policies, to determine if there are options to potentially upgrade them. At Summerlin Benefits Consulting, we have helped many of our clients take advantage of the current economic climate in order to better reinforce and grow their retirement nest eggs.

2. Maximize Your 401(k) Contributions

If your employer offers a 401(k) match, aim to contribute enough to capture the full match — essentially free money to grow your retirement savings. Additionally, many 401(k) plans allow for automatic annual contribution increases, often by 1%. If this isn’t available, there should also be the option to manually adjust your contributions to stay proactive. Even a small percentage increase can significantly impact your long-term savings.

On the flip side of things, many people have 401Ks with previous employers and fail to do anything with those accounts once they leave the job. To put it plainly, they have left their retirement nest eggs in the hands of their former employers. It is a good time to take back control of those accounts and Summerlin Benefits Consulting can help you do that.

3. Stay Within Updated IRA Contribution Limits for 2024

For 2024, the IRA contribution limits are:

$7,000 for individuals under age 50.
$8,000 for those aged 50 or older (including the $1,000 catch-up contribution).

Remember, these are "use-it-or-lose-it" limits. Contributions not made by the deadline (April 15, 2025, for the 2024 tax year) cannot be rolled over to subsequent years. If you haven’t maxed out your IRA, consider catching up before the deadline.

4. Contribute to Other Retirement Saving Vehicles

You may have other retirement saving vehicles that you can also contribute to. For example, many Fixed Index Annuities offer the option to add funds, however you should be aware that there may be a timeframe within which you must do so. It’s important to make note of your deadline so that you don’t miss it.

If your annuity is a Tax Qualified IRA, it will also follow the same contribution limits listed above in Checklist Item #3. The annuity will have the same “use it or lose it” limits, so be sure to set reminders if you intend to add funds, that way you don’t miss out.

If you have retirement saving vehicles, but aren’t sure what you have, Summerlin Benefits Consulting can do the leg-work for you so you don’t have to. An account gathering call is often a great first step into diving deeper into your investments to make sure you are confident in what your investments are doing to grow your money for you. In fact, we’ll talk more about that in the next checklist item.

5. Rebalance Your Investment Portfolio

Year-end is an excellent time to revisit your portfolio to ensure it aligns with your goals and risk tolerance, which may shift as you experience significant life changes. You should be decreasing risk as you age, because you have less time to make up any significant losses. A general, helpful guideline to determine a reasonable level of risk to keep in your portfolio is called “The Rule of 100”. This rule states that you subtract your age from 100 and the result is an acceptable percentage of your portfolio to keep in a more risky financial vehicle. For example, if you are 60 years old, then it makes sense to keep no more than 40% of your assets in riskier areas such as stocks and mutual funds. Under this rule, 60% of your investments should then be in safer environments such as fixed index annuities or bonds.

6. Consult With a Financial Professional

If you have questions about any of the above checklist items, or simply don’t know where to start, a financial professional can help. If you are already established with a good financial advisor, then that person would be a good one to go to. But, if you’ve always managed your own retirement savings, or maybe you have a financial advisor but don’t feel like you’re getting enough support from them, it could be a good time to “shop around” and make an appointment or two to ensure you find the right fit. You should feel comfortable with your advisor and confident that you and your investments are getting the most out of the relationship.

A good financial professional will help you diversify your portfolio by balancing safety and risk, assess your financial plan during times of transition, such as job or life changes, and will help guide you through the best options for your personal needs while keeping you in the driver’s seat to make the decisions. At Summerlin Benefits Consulting, we do all of this and more, while keeping things simple and easy to understand for our clients.

Bottom Line

Whether retirement is decades away or just around the corner, an end-of-year financial review is a smart move. Revisiting your contributions, aligning with updated limits, and seeking expert guidance can set you up for continued success. Don’t hesitate to leverage the expertise of a financial planner to refine your strategy — your future self will thank you. Call Summerlin Benefits Consulting today and we are happy to provide a complete, no obligation financial review to get you started off on the right track in 2025!

Is Fixed Indexed Universal Life Insurance a Smart Choice for Adults in their 30s and 40s?

Mon, 09 Sep 2024 17:48:30 GMT

Life insurance isn't just about providing financial security for your loved ones; it can also be a strategic tool for building wealth and planning for the future. One option that stands out, especially for younger adults, is Fixed Indexed Universal Life (FIUL) Insurance. But what makes FIUL a compelling choice for those in their thirties and forties? Let’s explore!

Understanding Fixed Indexed Universal Life Insurance

FIUL is a type of permanent life insurance that combines a death benefit with a cash value component that grows over time. The cash value’s growth is linked to the performance of a stock market index, such as the S&P 500, allowing you to enjoy potential market gains without directly investing in the stock market. Importantly, FIUL policies typically include a protective floor, so your cash value won’t decline during market downturns.

Key Benefits of FIUL for Younger Adults

One of the standout features of FIUL is the potential for cash value growth linked to a market index. This offers a chance to accumulate more cash value over time compared to traditional whole life policies, which often have fixed, lower rates of return. For younger adults, who have the advantage of time on their side, this means their money can grow substantially over the years.

Flexibility is another major benefit of FIUL. Life can be unpredictable, especially when you’re balancing career growth, raising children, or making major purchases like a home. FIUL policies offer flexible premiums and death benefits that can be adjusted as your financial needs change. Whether you need more coverage at certain points or want to adjust your premiums, FIUL’s flexibility allows you to tailor the policy to your current circumstances.

A significant advantage of FIUL is its tax treatment. The cash value within an FIUL policy grows on a tax-deferred basis, which means you won’t pay taxes on the gains as long as they stay within the policy. Additionally, you can access this cash value through loans or withdrawals, typically tax-free, provided the policy is managed correctly. This can be a valuable resource for meeting unexpected expenses or planned financial needs, like funding a child’s education or making a large purchase.

For this reason, FIUL can also serve as a supplemental tax-free income stream during retirement. The accumulated cash value provides additional financial flexibility in your later years, complementing other retirement savings and helping to secure a more comfortable retirement.

Of course, at its core, FIUL is still life insurance. Beyond the investment component, it offers a death benefit that ensures your loved ones are financially protected. This can be crucial if you have dependents or significant financial obligations. The death benefit can help cover mortgage payments, replace lost income, or fund your children’s education, offering peace of mind that your family’s future is secure.

Considerations to Keep in Mind

While the benefits of FIUL are compelling, it's important to be aware of a few considerations. FIUL policies can come with various fees and charges, including costs related to the insurance coverage and administrative expenses. These costs can typically be offset by the policy's growth potential, but understanding them helps ensure the policy aligns with your financial strategy.

FIUL policies also include caps on the maximum return you can earn from market gains. These caps are designed to protect you from market downturns but also limit your potential upside. For those who value stability and a protective floor against losses, this trade-off can be a worthwhile compromise.

Lastly, FIUL is generally best suited as a long-term commitment. To fully benefit from the policy’s features and growth potential, it’s advisable to maintain the policy over the long term. While there can be charges for early withdrawals or surrendering the policy, staying the course allows you to maximize the benefits of tax advantages and cash value accumulation.

Final Thoughts

Fixed Indexed Universal Life Insurance can be a powerful tool for younger adults who want to combine life insurance protection with the potential for cash value growth. Its unique features, like tax-advantaged growth, flexibility, and a protective floor against market losses, make it a compelling choice for those planning their financial future.

At Summerlin Benefits Consulting, we specialize in helping individuals navigate the complexities of FIUL to find the right fit for their needs. Our team is dedicated to providing personalized guidance, ensuring that your FIUL policy aligns with your financial goals and offers the protection and growth potential you’re looking for. Reach out to us today to learn more about how FIUL can be a part of your financial strategy.

Why Gen Z is Getting a Jump Start on Retirement Planning

Thu, 16 May 2024 13:48:32 GMT

When you think of "retirement planning", you probably don’t associate this topic with someone in their twenties. But saving for retirement is becoming more and more important to the younger generations for many reasons.

According to a recent report by Handshake, which surveyed undergraduate students, nearly two-thirds (65 percent) stated that they would not accept a job offer lacking an employer-provided 401(k) or similar retirement benefit. While time off and healthcare coverage remain the top two essential benefits desired by students, retirement benefits followed closely behind.

More than a quarter of the students surveyed consider retirement planning to be moderately important, with 15 percent giving it significant thought. In fact, they even considered retirement planning over student loan repayment in terms of importance when it comes to employer benefits. The respondents hailed from 601 U.S. colleges and universities, all pursuing bachelor's degrees.

In response to the question, “ Why is retirement planning so important to the younger generation?” a report titled, Gen Z Brings New Expectations to the Workplace, will tell you it is because they have witnessed their parents' retirement plans being affected by financial crises and pandemics, leading to economic instability and mounting student loan debt. Even so, much of Gen Z anticipates facing even greater challenges than their parents in saving for retirement, primarily due to heightened cost of living.

In alignment with Millennials, a significant portion of Generation Z does not envision a traditional retirement. Instead, 32 percent aspire to pursue passion projects, while 27 percent aim to establish their own businesses post-retirement. As a result, many of those who have already started planning for retirement actually wish they had done so sooner.

Many young savers are of course making contributions to a 401K through their employer, investing in brokerage accounts, or building their own IRAs. But, with the volatile retirement saving circumstances they have seen their parents endure, many Gen Z members are seeking safer vehicles within which to build their nest eggs. One such vehicle is called a Fixed Index Annuity (FIA).

FIA’s start with an initial payment that grows over time and is then used down the road to provide income during retirement. The money that is put into an FIA usually grows at a conservative, yet reasonable, rate of return over time. It typically follows specific market indices; however it is backed by the insurance company and therefore is not put at risk during down-markets. This “safety” feature of an FIA is especially important given the market volatility we have experienced and are likely to keep experiencing.

FIA’s are also appealing to younger generations because they follow a “set it and forget it” strategy, which means it’s one less thing to think about during the hustle and bustle of work, school, and socializing. Alternative strategies like this, especially those dedicated to retirement income needs, can diversify one's portfolio to better prepare for their future.

At Summerlin Benefits Consulting, we specialize in retirement income protection and finding the best and safest strategy for each individual client, regardless of where they are in their retirement planning journey. We applaud Gen Z for realizing the importance and urgency of planning for their future early in life. If you’d like to discuss simple, personalized strategies for building a retirement nest egg, give us a call today for a no-obligation meeting. You don’t have to use the same strategies your parents did!

Three risks you may encounter if you're unprepared for retirement.

Mon, 25 Mar 2024 18:33:41 GMT

Those who feel underprepared for retirement will need to be extra strategic when navigating their retirement income plan. Obviously, the primary goal is to have enough income in retirement so as not to outlive your means, however one should also anticipate and account for potential risks when developing or tweaking their plan.

Some do achieve the goal of “having enough”, however most people worry about running out of money in retirement. In fact, in a study conducted by Allianz Life last year, over 60% of Americans said they were more afraid of outliving their nest eggs than of dying.

So, what can be done to reduce some of these feelings of unrest? We are about to cover three areas of risk to your retirement nest egg, as well as potential strategies one can use to combat these areas of risk.

Risk #1: Withdrawing from an underperforming account

One of the largest risks to a retirement portfolio occurs when one takes withdrawals from an underperforming account. This quite frankly solidifies the underperformance as it makes it more difficult to recoup from any market losses.

Before making any decisions to withdraw when things are looking grim, it is best to consult a financial professional who can help you consider your options. He/she will likely advise you to diversify your portfolio so that you don’t have “all your eggs in one [underperforming] basket” and may even be able to recommend better long-term options.

One such option could be moving your funds into a safer environment, such as a Fixed Index Annuity (FIA), where the funds can grow while being safe from market volatility. FIA’s also offer a guaranteed source of income in retirement, which goes back to our primary goal mentioned above: making sure you don’t outlive your money.

Risk #2: Longevity

Most of us envision an early retirement and a long life, right? I mean, that’s what we are all ultimately aiming for! While spending many years in retirement and living well into your 80’s, 90’s, or even 100’s is clearly a great thing, it can also be considered a risk as you would be drawing from your assets for a longer period of time. Over a longer period of time, there is more opportunity for unforeseen circumstances or events, such as potential market fluctuations.

This again affirms our earlier recommendation to involve a financial professional in your retirement planning process and possibly even considering more safety in your portfolio. Someone who feels underprepared for retirement may want to decrease the level of risk even further so as to not lose any more of their nest egg, especially in the last few years before they actually might need to start using it.

Risk #3: Balancing risk and reward

The “Rule of 100” (ie. taking 100- your age, to determine acceptable risk) offers a helpful guideline when deciding how much risk to maintain in your portfolio, however we know that the decision can be much more complicated in reality. We also understand that, regardless of where you are in your retirement journey, you would still like to maintain some level of growth for your assets as much as is reasonable. Can you have your cake and eat it too?

We believe you can. But again, it is about picking the right strategy for your situation and personal goals and a financial professional can help you with that. Overall, FIA’s can be good options for some, because they can offer a reasonable rate of return over time while backing your premiums and interest so that you never lose money. The same Allianz Life study mentioned above found that over 50% of Americans are leery of investing any more money in the stock market any time soon. There is just too much uncertainty in today’s market for a more mature investor and some are thirsting for other areas to put their money. Many FIA’s can offer some of the upswing of the market without the downside.

Don't be consumed by risk

While we certainly want you to be aware of the potential risks you may encounter in retirement, we are not trying to be all doom and gloom. Don’t stress! Just work with someone to help you plan accordingly. With the right strategy that incorporates a steady retirement income AND potential risk mitigation, you will be well on your way to a sandy beach somewhere, with a pina colada in your hand!

We at Summerlin Benefits Consulting specialize in Retirement Income Protection and reassure our clients day in and day out so that they feel confident in their retirement planning journey. You don’t have to feel underprepared any longer- give us a call today.

I'm in my 40s. Could annuities be right for me?

Thu, 12 Oct 2023 13:52:25 GMT

Before we dig into whether annuities make sense for a younger person in their 40s, let’s take a look at what annuities are. Annuities are insurance products that involve the owner making an upfront payment, which then earns interest and grows at a reasonable rate over time. Often, annuities are designed to provide guaranteed income in retirement, but that does not mean that they are only for retirees. A younger person that purchases an annuity before they retire will then have more time to watch it grow in order to see larger “paychecks” later in life.

There are different types of annuities that vary in ways such as how the payouts occur or interest is accumulated. We, at Summerlin Benefits Consulting, most often prefer Fixed Index Annuities for our clients. Fixed Index Annuities (FIA) are tied to a specific market index, such as the S&P 500 for example, and are backed by the insurance company so your account will earn interest on up-years in the stock market but won’t lose during down markets. As a result, the client can achieve both safety and a reasonable rate of return over time.

There is no overarching rule that sets an age minimum and maximum for purchasing annuities; the individual insurance companies are the ones that set the age restrictions for each of their products. The minimum age requirement is sometimes as low as 18, while the upper limit is typically between 75-95.

Generally speaking, most people who purchase an annuity are somewhere between 45 and 75. Where one falls in this age range may determine the type of annuity that they choose, as each product is designed to meet specific needs and goals. The needs and goals of a 40-year-old may differ vastly from those of a 70-year-old. This is where having the guidance of an annuity expert, who is well-versed in how best to use the products in your retirement strategy, can be crucial in finding the best option for you.

For example, someone who is younger and still working may purchase an annuity which allows them to add funds continuously over time so that they can continue to grow their nest egg before retiring. Furthermore, a younger person may be open to longer time commitments, for the same purpose of seeing more growth along the way, while an older person may opt for shorter time commitments or products that allow them to turn on the income sooner. An older person who chooses a longer time commitment may be doing so to grow the money for their beneficiaries in what’s called a “Lifetime and Legacy Product”.

These are just a few examples of age-specific considerations when looking at annuities. Another factor that may affect the purchase of an annuity depends on what type of funds (qualified or non-qualified) you are considering moving into the annuity. Qualified annuities are most commonly funded by pre-tax dollars, such as funds that are transferred from a 401(k) or IRA plan and will sometimes have limits on how much you can fund per year. You can roll over funds at any age without any penalties, from one of these qualified plans, but often can’t access the funds until you are 59 ½ per IRS rules. If your plan is to purchase a non-qualified annuity using after-tax funds, such as extra cash you might have on hand, you have a little more flexibility on how much and how often you can add funds to your annuity. In some cases, you can even start withdrawing income as early as age 50 with a non-qualified annuity.

A final age-related consideration is your payout amounts. The value of your annuity payments may change depending on when you choose to annuitize or turn on your income stream. Generally, the younger you are when you annuitize, the smaller your payout percentages are because it’s preparing for longer life expectancy. Some people prefer to wait until they are in their late 60’s or even their 70’s to turn on income, simply because the payout will be higher.

To sum everything up, yes- an annuity could be a great part of a 40-year-old’s retirement plan. Starting an annuity early and adding to it over the rest of your working life can be a terrific way to build yourself a retirement income source that will pay above and beyond other sources like social security and pensions. Starting a Fixed Index Annuity in your 40s also lets you take advantage of stock market performance to help your asset grow for many years before you get ready to retire.

Annuities are a great option for anyone who is trying to grow and protect their nest egg in preparation for retirement, regardless of age. The specific insurance company will set the age minimums and maximums for each annuity product that they offer, and Summerlin Benefits Consulting can help you navigate your options based on your age and needs. If you’re considering an annuity but aren’t sure if it’s right for you, call us today and we’ll schedule your no-obligation meeting with one of our licensed professionals.

How to plan for a comfortable retirement?

Fri, 04 Aug 2023 14:22:32 GMT

Various experts on retirement like to give their own estimates regarding how much you need to save: some say, “close to $1 million”, while others say, “80% to 90% of your yearly income before quitting work”. It’s also been said, “to save 12 times what you used to make annually”.

You may be wondering, “Is this true? How much do I really need to retire? Why are all of these answers so different from one another?”

The fact is, when it comes to retirement planning, there is no “one size fits all” answer, as there are several variables to consider.

A good general rule of thumb is to try to save about 15% of your current gross income towards retirement each year. If you are starting late in your retirement planning or have a shorter time horizon to save, you may need to save more than 15% of your income each year to catch up. On the other hand, if you start saving early, you may be able to save less than 15% of your income each year and still meet your retirement goals.

You also need to consider the appropriate level of risk for your age. A high-risk tolerance might be ok in your early and middle years, but those who are in the later stages of life don’t have as much time to make up any potential losses that occur. Decreasing risk as you age is important.

The bulk of your nest egg, especially that which you have allocated for lifetime retirement income, should act as your foundation for retirement. In such, it should be kept safe. A key part of retirement planning is protecting one or some of your retirement savings accounts so that the funds will grow safely in order to supplement Social Security Income, etc. One way to do this might be with an annuity.

What does an annuity have to do with retirement income?

Annuities typically provide an option for lifetime income or for income over a specified period of time. Some annuities have the option to “turn on” immediate income for life with tax-deferred growth in the interim. This can be valuable when combating inflation, especially for people who haven’t been able to save as much. Other beneficial features of certain annuities, like a Fixed Index Annuity, also include benefits for future financial needs like nursing home, assisted living, or home health care. Many can also provide valuable legacy benefits for your heirs after you are gone.

The idea behind most annuities is to achieve a reasonable rate of growth over time, without risking your nest egg to obtain that growth. This isn’t true for all annuities; for example, Variable Annuities can still experience losses and are often loaded down with fees. But safe money experts like those at Summerlin Benefits Consulting can help you assess your savings, prepare for longevity in life, and consider your options. Regardless, when used correctly an annuity should help extend the savings you do have, even if you haven’t been able to save as much as you had hoped to for retirement.

Still working and wondering how much you need to save?

There is no magic dollar amount that can answer this question because everyone’s needs are different. When you retire, the goal should be to receive a monthly paycheck that covers your annual expenses and provides an adequate cushion for you to be able to enjoy life as well. A stress-free retirement usually also means having a little overage that you can set aside for emergencies.

First, figure out how much money you will need each month for your mortgage/rent, car payment, and utilities, etc. Exclude discretionary expenses.Then determine how much money you will get from Social Security Income and/or any pensions you may have.

If these guaranteed income sources do not cover your monthly expenses, determine how much you would need to pull from other retirement accounts like a 401(k), Roth IRA, IRA, or an annuity. Prepare for life expectancy well into your 80’s or in some cases longer and apply those figures. This should give you an idea of how much money you need to save.

If your savings don’t seem to be on track, make adjustments where you can and/or consider ways to stretch your savings. This might seem daunting, but it doesn’t have to be. Consider the following example about Joe’s Story.

Joe’s Story:

Joe is 60 and plans to retire at 67. He estimates his retirement expenses will be about $3,000 per month. He will get $1,700 from SSI and has a $600/mo pension. This means he will need to pull, at the least, $700 per month from his IRA. He wants a cushion for occasionally going out for dinner and drinks with his significant other, so he decides that he will need to take $1,000 per month from his IRA. His IRA has $100,000 in it. Joe is healthy and both of his parents lived into their late 80’s.

If Joe’s IRA is invested and averages a 5% return over the next 10 years (also assuming there is no market correction and he doesn’t lose any money along the way), he will unfortunately run out of money in year 11 of his retirement, and Joe may very well be around for much longer than that.

Joe needs to make a change to his plan. Joe may either have to work past age 67 to accumulate more wealth before retirement or he might need to compromise on his quality of life either now or in retirement to save more. Or he will need to take a key step to ensure that his $100,000 doesn’t run out on him in 11 years, like introducing a Fixed Index Annuity with a Protected Income Value.

One of the ways a Fixed Index Annuity can be key to your retirement planning is because with an FIA you won’t have to worry about running out of money. Even if your account balance eventually does hit $0.00, the annuity contract will still continue to pay a monthly income to you for the rest of your life- so you are certain to never outlive your savings.

In Joe’s case, if he rolls his $100,000 IRA into a Fixed Index Annuity with a Protected Income Value and begins taking income payments in 7 years when he retires, he potentially could receive as much as $1,026 per month from his annuity. This is based on the annuity terms and market performance of course, but even if his account balance does still hit $0.00 in 11 years, it won’t matter because his monthly payments will still continue well beyond that; as in, for as long as Joe is living.

Taking the first step

There are a lot of options for savers of all kinds. Big savers, small savers, and everything in between- everyone needs guidance at times. With the right strategy, you can take back control of your savings and prepare for the future. Regardless of where you are in your retirement planning journey, Summerlin Benefits Consulting can help you navigate the best practices towards reaching your personal retirement goals. Give us a call today to schedule time with one of our professionals!

What should you be doing with your money right now?

Wed, 19 Jul 2023 17:02:27 GMT

After 10 consecutive rate hikes in the first half of 2023, the Fed has hinted that rates may remain stable for at least some time. So, what should you — and what should you not — do with your money right now?  From annuities to high-yield savings accounts, here are some things the pros say you may want to consider right now.

Do: Put your emergency savings in a high-yield savings account

Because most banks are still paying pennies on traditional savings accounts, some financial planners recommend looking at high-yield savings accounts, as some are paying 4% or more.

“Savings accounts currently have flexibility, liquidity and higher rates, which could go away if rates were to drop, but there are no penalties for early withdrawal, which gives you flexibility and liquidity,” says certified financial planner Mark Struthers at Sona Wealth Advisors.

Ken Tumin, founder of DepositAccounts.com, says the average online savings account yield in May is 3.87%, which is much higher than the overall average savings account yield of 0.38%. “That’s a difference of about 3.5 percentage points and for a $10,000 balance, the difference would result in an extra $350 of interest in a year,” says Tumin. 

But with inflation high, is this wise?  To a point, yes, pros say. “Everyone needs an emergency account, why keep your savings in one that pays less,” says Thiederman. Pros say Americans need somewhere between 3-12 months of essential living expenses in their emergency savings fund. 

Do: Take a look at Treasuries

Another option to look into are individual US Treasuries, pros say. “You want to lock in these higher rates before they drop. Your money market or savings account rate could disappear overnight, but with individual US Treasuries, you can lock in your rate if you hold them to maturity,” says Struthers.

We’re currently dealing with an inverted yield curve, which means interest rates are higher in the short term and lower in the medium and long term. “This is highly unusual and likely will not last. It may be a good time to try and lock in these higher interest rates. Of course, you need to assess your short-term needs and make sure these funds are not needed for the duration of the fixed income holding period,” says Peter Salkins, certified financial planner at Integrated Partners. 

Do: Consider a Multi-Year Guaranteed Annuity or Fixed Index Annuity

Another investment option to consider, if wanting the security of a guaranteed rate, is to choose a Multi-Year Guaranteed Annuity (MYGA). This type of annuity offers shorter terms, such as 3 years or 5 years, and gives the flexibility of taking the money out and putting it elsewhere once the term has ended. They typically offer higher rates than CDs and give a 10% free withdrawal each year.

For those who are willing to park their money for longer periods of time, such as 7-10 years, with the potential to watch it grow, Fixed Index Annuities (FIA) may be a good option. FIA’s follow a specific index, such as the S&P 500, and offer a reasonable rate of growth during up-markets, while protecting the owner’s investment in down-markets. In fact, if the market is down, the worst you can do is a zero; as in you won’t lose money but will stay flat, safely riding out the down market.

Do: Pay down your high-interest debt ASAP

Ultimately, even if the Fed is done raising rates, the cost of borrowing still remains high. “Credit card rates are over 20% and home equity lines of credit are the highest in more than 15 years, so paying down debt remains critically important. Utilize a 0% balance transfer offer to accelerate credit card debt repayment because paying down debt and boosting emergency savings will put you on firmer financial footing regardless of what happens in the economy in the months ahead,” says McBride. 

Barring a financial crisis, Tumin says the Federal Reserve is unlikely to quickly lower rates. “Thus, consumers shouldn’t expect any quick reduction of interest rates on their credit cards and other variable-rate loans. Consequently, consumers should continue to prioritize the reduction of their debt that has high interest rates,” says Tumin.

Moreover, rate hikes coming to an end should give consumers more confidence in making decisions. “We can all succeed in this new higher-rate normal if rates are stable. We might not have the growth we had when rates were 0%, but consumers and businesses can plan when rates are stable, especially if they’re coming down a little,” says Struthers.

Don’t: Assume the housing market will suddenly change

Mortgage rates remain heavily influenced by Fed rates, but they’re also affected by a number of other factors. “Lower inflation and a slowing economy are the prerequisites for lower mortgage rates,” says McBride.

Thiederman says buyers and sellers can expect home prices to stop dropping soon as real estate picks up. “It also means rates will likely start falling again mildly or at least stabilize,” says Thiederman. Still, with inflation near 5%, McBride says it has to start dropping faster before mortgage rates will see a meaningful and sustained decline. “If the economy slows significantly in the second half of the year and recession fears are validated, mortgage rates will fall even if the Fed doesn’t immediately cut rates,” says McBride. 

If you’re buying a new home, be conservative with any assumptions and don’t assume rates will improve anytime soon. “The home loan market has accounted for all the Fed rate hikes in advance, because mortgages have fixed rates that are priced with a far longer timeframe in mind compared to other types of loans. If the Fed stops rate hikes, mortgage rates should also stabilize,” says WalletHub analyst Jill Gonzalez. 

While refinancing may be an option down the road, don’t count on that happening right away. “Just because rate increases stop or pause does not mean rates will go down anytime soon. The Fed could keep rates at the same levels for some time,” says Thomas. Struthers says the error for rates is on the downside, so if you’re considering buying a home, it might pay to wait. “Prices will often stabilize once people get used to the new lower rate. Trying to time affordability and the combination of rates and price can be difficult,” says Struthers.

While a lot of homeowners might be tempted to sell, many who refinanced in the last couple of years are now likely reluctant to give up their low mortgage rates if it means having to take out a mortgage at a higher rate. “But if mortgage rates fall to 5.5% or lower, that might be low enough to motivate a lot of people to sell and move,” says Holden Lewis, home and mortgage expert at NerdWallet.

Do: Consider meeting with a safe money expert

You may be thinking, “This all sounds fine and dandy, but where do I start?” If so, it may be a good idea to meet with a financial professional who specializes in “Safe Money Strategies”, like those at Summerlin Benefits Consulting. To learn more about these strategies, please reach out today to set up your free, no-obligation financial review. We can help you get started on the right path to protecting your money.

The U.S. Dollar remains the world’s reserve currency for three reasons

Wed, 24 May 2023 15:57:12 GMT

With inflation steadily increasing and a reduced speed of the economy, there has been a great concern over the long-lasting stability of the U.S. dollar. Rumors of competing currencies emerging, such as the Brazil, Russia, China, and India economies calling for de-dollarization, have caused individuals to question if the U.S. dollar will stay on top. While we may experience a slight decline in dollar trade, the demise of the U.S. dollar is not a credible theory for these reasons:

Global reserves are still dominated by the U.S. dollar.

The U.S. dollar controls the foreign exchange reserves held by global central banks in foreign currencies. These foreign reserves were originated to use for trade payments or if needed, to help support a currency. The U.S. dollar has lessened in the percentage of reserves it holds within the past few decades, but it still remains as the most held currency. As of 2022, about 60% of global reserves are held in U.S. dollar. The next largest reserve is the euro which makes up about 20% of reserves. The other currencies just do not compare, even the Chinese renminbi only makes up 2.7% of global reserves. These statistics just show the powerful hold that the U.S dollar still has.

Global trade is in majority conducted with U.S. dollars.

Oil trade, which accounts for about 6% of all global trading, is still predominantly conducted with the dollar. While we may see a slight decline in this sector overall, the dollar will still be used for a long time with this trade. In fact, the Federal Reserve has estimated between 1999 and 2019, the dollar had been used for 96% of overall trading conducted in North America, 74% in the Asia-Pacific areas, and 79% for the rest of the world. The only region not included in this is Europe, which is where the euro remained the primary currency for trading.

There are deep, liquid, and regulated financial markets backing the U.S. dollar.

The United States holds the largest stock and bonds market in the world. This alone has assisted the U.S. economy with obtaining strength and stability which in turn, has led to the dollar becoming a global dominant currency. These deep and liquid U.S. financial markets are highly regulated which assists the U.S. overall to have the world’s largest economy with increasingly deep capital markets.

At this time, there are no comparable alternatives to the U.S. dollar. Possible alternatives such as the euro would not be a good fit due to the political risk in the past, and the renminbi has always had restricted capital flow in the Chinese government. Since these hurtles remain constant, the dollar will likely keep its dominant hold in global trade and finance for the foreseeable future.

So, what are the next steps for investors who are concerned with safeguarding their savings?

There are many headlines circling around about the U.S. dollar and it may raise some concerns for today’s investors. There may continue to be fluctuations in the dollar’s value but that will be completely normal due to factors such as inflation, economic growth, and central bank interest rate policies. Unfortunately, due to events like the Great Recession of 2008 and the 2020 pandemic shutdown, financial market volatility has become a norm. The primary thing investors can do is to remain diversified within their portfolio and follow the Rule of 100 when exposing your funds to the market.

The Rule of 100 is when you take your age and subtract it by 100, this gives you the ratio of how much of your money should be at risk in the market and how much should be in a safe place where you can’t lose any of your principal or gains. For instance, if you are aged 60 then no more than 40% of your portfolio should be at risk. Many financial professionals use this rule to help guide consumers during times of economic turmoil.

At Summerlin Benefits Consulting , we are “Safe Money Experts” and can help you review your portfolio to ensure you are on the right side of the Rule of 100. This will help you not only remain diversified but also to ensure you have a retirement nest egg to lean on in the future when you need it. We specialize in products that have benefits such as Safety, Long Term Care, and Lifetime income which contractually protect every dollar in your nest egg, if you choose to. If you want to learn more about our safe money strategies, contact our office today.

How to donate your RMD using Qualified Charitable Distributions

Tue, 09 May 2023 14:03:18 GMT

You have moved your Qualified account out of risk in the market into a “Safe Money” account with Summerlin Benefits Consulting , but now you need to take your Required Minimum Distribution (RMD) and you don’t really need those funds. Is there a way to give a portion or all your RMD to a charity? For Individuals who are of the age group and have these distribution requirements, the answer is yes! Many retirees don’t realize that they can donate a portion, or even all of their RMD directly to a charity of their choosing. This is referred to as a qualified charitable donation (QCD).

Qualified charitable distributions can reduce your taxable income

RMD’s can increase taxes that you may need to pay. By doing a QCD, you would be sending a check directly from your IRA to the charity, which can allow you to exclude the amount from taxable income. Here are some examples of how your RMD can increases your tax obligations:

· Your RMD can put you in a higher tax bracket. Your distributions are normally considered taxable income, which can move a retiree into a higher tax bracket.

· Medicare surtax. RMDs increase your modified adjusted gross income, or MAGI. This could consequently trigger the standard 3.8% Medicare surtax. The surtax would apply to the lesser of either net investment income or MAGI more than $200,000 for individuals or $250,000 for married couples filing jointly.

· Social Security tax. Withdrawals from a retirement account could cause Social Security benefits to become taxable. This happens to 85% of single filing individuals with an annual income above $34,000 or joint filing married couples with an annual income above $44,000.

· Medicare Part B & D premiums. These premiums are calculated by using the MAGI from the last two years. If you take a large RMD, this could increase your Medicare costs.

You should consult your tax advisor to see if any of these could be applicable if you take your full RMD amount. A qualified charitable distribution could be the solution you need. Keep in mind that a QCD does not provide a charitable donation for taxpayers, this is just to assist with your taxable income amount. If your tax advisor thinks this is a good idea for you, get with your Summerlin Benefits Consulting team to help you execute a QCD from your qualified policy.

What are the rules and regulations for a qualified charitable distribution?

To be able to do a QCD you need to be have a qualified IRA such as a traditional, rollover, inherited, inactive SEP, or a SIMPLE and be already of age for RMD’s. This means individuals who turned age 70 ½ as of 2019 and have been taking RMD’s since then, or who turned 72 in 2020 and began RMD’s then, or most currently, those who are turning 73 in 2023). Your qualified charitable donations must go directly from the qualified retirement account to the charity of your choice, you can’t move your RMD into your own bank account and then redistribute to the charity. The annual limit for QCDs is $100,000.

If you are already taking distributions or making contributions, it would be beneficial to consult with your Summerlin Benefits Consulting advisor on how to complete the QCD request. The distributions would satisfy your RMD since the IRS counts any withdrawals taken throughout the year. If you’re still working and make IRA contributions, these can also reduce your deduction for QCDs if both are made in the same year.

Major tax benefits when using qualified charitable distribution

QCDs can offer some big tax savings if it’s the right option for you. If you consulted with your tax advisor and they helped you figure out that you don’t benefit from itemizing your tax deductions and they think a QCD would be beneficial then Summerlin Benefits Consulting can help you complete the request. Our team is knowledgeable about all the forms and procedures to assist you with completing your QCD.

Don’t have account with us? Then this is a great opportunity to give our office a call to meet with one of our Safe Money experts. They can assist you with moving your at risk funds into a safer vehicle and will touch base with you every year to help satisfy your RMDs. Call our office today to make your retirement nest egg safe from market declines.

Assisting the Senior in your life to prepare for Long Term Nursing Care/Living Assistance

Fri, 28 Apr 2023 14:35:43 GMT

“Stand Up for Seniors” seems to be a rallying phrase in 2023. But what does it mean?

If you have a parent or loved one who needs assistance with activities of daily living or round-the-clock nursing care, you know better than anyone what all goes into "standing up" for them. Trying to advocate for their needs, managing the financial aspect of long-term care, and ensuring good quality care can be difficult especially when there is very little guidance available for a personal caregiver.

It's not as simple as being handed the dreaded nursing home list. You know the one- every doctor or hospital nowadays seems to have one of these contact sheets of skilled nursing facilities that they give to families when they want to discharge a patient who is deemed not sick enough to stay in the hospital but is not well enough to go home. Most people are under the impression that Medicare covers confined care stays and though it can cover some of the costs- it doesn’t take care of everything. And, it covers even less if it’s home health care.

The actuality is that Medicare pays up to 90 days of inpatient care, which resets if you have 60 days between incidents, and you have 60 lifetime reserve days. That’s it! And, it all has to be justified by doctors which means it can often work out to much less time in reality, not to mention it's not always “enough” when longer terms or permanent residency come into play.

What initial roadblocks, might I run into as an advocate for my Senior?

Unfortunately, when advocating for our loved ones, we don’t get clued into the nuances of hospital discharge policies, confinement limitations, or care requirements until we are standing in the hallway talking to a case manager. Even then, the details of how the care will be covered (ie. the financial impact of care) aren't usually even discussed.

Another reality check often hits when the patient arrives at the skilled nursing facility and you realize there’s a countdown clock on that stay, too. Medicare covers up to 100 days in a skilled nursing care facility , but only when deemed medically necessary. The caseworker is likely to come looking for you on or before the 20 ^th day of confinement and will want you (the advocate) to make a discharge decision. That’s primarily because, after 20 days, Medicare will start charging a $200 copay per day. If a Medicare patient has secondary coverage, such as a Medicare Advantage plan or a Long-Term Care policy, that might pick up the cost of the remaining 80 days of care, but it does not mean the doctors will deem it medically necessary to stay that long and it definitely doesn’t change things if a longer or more permanent stay is warranted due to living assistance support and not an actual medical need.

How can I be proactive? Or the least, get on top of things quickly?

As you try to help advocate for your senior, it definitely important to have the number from the Medicare disclosure form the patient is given at admission- which should have a designated “quick appeal” contact . That way, if a longer stay is likely going to be needed you can jump on it well before the time of discharge. You can also ask to speak to the hospital's/care facility's patient representative. If you need to take things further, you can pay out-of-pocket to hire an independent patient advocate but this can be extremely costly since most charge by the hour.

You can also buy some time going through a re-evaluation and working your way up the chain of command. Be mindful that you may eventually be on the hook for charges you weren’t expecting, which is another reason to stay in good communication with the facility.

When it comes to longer-term care needs, not all Medicare-approved skilled nursing facilities are equal, and there could be some options available to you that aren’t on the official hospital list you’re given at discharge. Many family members who are trying to advocate for their seniors, will check reviews online and ask around at the hospital or if they know people locally. If you want to dig further, you can check state websites for violations and complaints . If you can, always go check out the facilities in person though. It’s important to see with your own eyes how the care facility is managed and ask questions about safety protocols, visitation, etc.

What does managing long-term care look like for the advocate?

Once you do choose a facility, keep an eye on your loved one once they are transferred there. The inspection process shouldn’t stop once the patient moves in. You'll want to stop by and check on things unannounced, on varying days of the week, and at random times. You can tell a lot on a single visit with your Senior, like how frequently someone checks in on them, cleanliness, toileting and hygiene routines, and nutrition protocols. Ask about their procedures to minimize a run of illness through the facility, not just Covid but the flu and/or other communicable diseases. Lastly, it might also be a good idea to test how long it takes for nurses to respond to a call button; and frankly, it wouldn’t hurt to become friendly with, or at the least, get to know the staff caring for your Senior. Little things like that can make the world of difference in their quality of life.

What kind of financial planning support is there?

Often the most tedious aspects of advocating for a loved one’s long-term care needs are the finances. There’s been talk in politics about shoring up the Social Security trust fund and securing Medicare and Medicaid funding . Those are big things that the government needs to do for sure, but every financial situation is different. Preparing in advance for the cost of care can be essential. Some financial vehicles like long-term care insurance policies, indexed universal life insurance, and even annuities can help you and your loved one prepare for the future cost of care.

At Summerlin Benefits Consulting we know that regardless of your Senior's circumstances, one thing is almost always the same. Along the way, someone is going to have to stand up for and advocate for them. This means not only helping them prepare but also ensuring they receive the care they need when the time comes. The Summerlin Benefits 2023 Caregiver’s Readiness Guide (available to all clients) is designed to help with the planning and many of our financial vehicles are designed to help with the cost. It’s just a matter of you and your Senior doing a little preparation before the need is imminent.

If you are someone who knows you may be a loved one’s advocate in the future, or if you are actively planning a loved one’s care right now, it’s a good time to ask for help. At the least, we can present some options to help plan for the cost of future care now so that there's one less thing to worry about later.

Older Employees' Retirement Expectations are Changing

Tue, 11 Apr 2023 15:08:36 GMT

Boy! This is an important topic to stay on top of in today’s economic times as more and more of our Baby Boomers continue to face the decision to either make the transition into retirement or keep working for a while longer. This should also be a time where these workers can get some help.

In fact, if you are within 5 to 10 years of possibly retiring, get proactive! Have a sit down with a financial professional like you will find at Summerlin Benefits Consulting, to get some guidance and do some planning for your financial future. Why? Read on to find out…..

Declining Retirement Confidence

It’s unfortunate, but in a recent publication by SHRM (Society for Human Resource Management), retirement confidence is down amongst today’s employees, with fewer workplace savers seeing themselves on track to retire in the time frame they originally planned to.

In fact, workers outlook on retiring have seen a reversal from the last few years, where confidence remained steady and even increased. Most workplace savers now say they're unsure about the economic outlook given the rising inflation, interest rates, and steep market declines in 2022. In recent studies, only 63% of savers feel they are on track for retirement. The current status reflects a steadily decreasing expectations and confidence for the last several years, since just a year ago the percentage was at 68%.

SHRM surveyed 1,308 people and confirmed that inflation is the main driver for the decline in confidence amongst respondents, all of which who do already participate in their employer's 401(k) or 403(b) plans. 87% of those workplace savers reported that they have concerns about inflation affecting their retirement.

It was also found in this survey, that older workers may have a more realistic view of retirement expectations than younger workers. Nearly half of Baby Boomers said they'll need to save between $1 million and $3 million for a comfortable retirement, which is at least four times the amount that those from Generation Z anticipate needing. This data could also lead to the conclusion that many of today’s workers may also not be getting the proper education and guidance in the workplace to properly prepare for their financial future.

Delayed Retirements

A more pressing issue is that half of those who planned to retire in 2023 are reconsidering or have put that plan on hold, according to a mid-2022 survey of 1,000 U.S. consumers by software-maker Quicken Inc. And workers ages 58 to 74 who were not planning on retiring in 2023 are now considering delaying retirement even further.

Inflation pushing up costs (cited by 65 percent).
The decline in the stock market (45 percent).
Increased interest rates (30 percent).

Even before this years economic challenges, retirement ages have been rising. People are just working longer. The major drivers for delaying retirement in recent decades, as researchers noted, include the shift from guaranteed defined benefit pensions to defined contribution 401(k)s, and the decline of retiree health insurance, as well as extended life spans and the desire to remain active and engaged.

Protecting Your Retirement Savings

At Summerlin Benefits Consulting we know that today’s more mature employees want help with saving for retirement and safely transitioning into retirement when the time is right. It would be good if all employers provided resources to help their employees make informed decisions about their long-term savings, but unfortunately not all employers do.

Advisors at Summerlin Benefits Consulting can help because they will know what guidelines should apply to you and will be familiar with strategies that the average worker isn’t made aware of.

For example, did you know that employees in their mid to late 50’s are often allowed to do an In-Service Transfer from their 401k to a safe external environment, like rolling the funds over into an IRA that’s protected by a Fixed Index Annuity. This will allow the employee to move their money to safety NOW- even while they are still working, so that they won’t experience the impact of major losses in their lifesavings right before they get ready to retire.

Would You Like Help?

Stacy J. Summerlin, President of Summerlin Benefits Consulting Inc. was recently quoted saying " More mature investors, even when still employed, should be considering making the shift- as in, moving their retirement savings focus to Safety 1 ^st . It’s not just smart, but vital that in the months and years leading up to retirement, you protect the money you already have while still getting a reasonable rate of return over time. This is the only way that today’s more mature workers are going to regain some of their confidence to retire."

At Summerlin Benefits Consulting we are focused on helping today’s more mature employees prepare for their retirement future. Contact us today for a no obligation planning meeting.

Not sure what to do with your large lump sum pension payment?

Thu, 30 Mar 2023 15:07:14 GMT

Consider this scenario: You are about to receive a lump-sum payout from a pension plan that you were in and it’s around $130,000. You are turning 60 in April and do not have a 401(k) or an IRA plan already established. You need some advice on the best way to invest this money. This is the majority of your retirement savings, and you need to make it last!

First, it’s good to be proactive and think about your options for moving a major sum of money like this. A little planning before you move the assets can save you a lot of pain later on. Too many people move the money first and ask questions after, which can cost quite a bit in taxes and lost gains.

“I can’t tell you how often I’ve been asked for help after a consumer has made an incorrect rollover decision or an unadvisable Roth conversion incurring hefty tax liability. At that point, when they call me to ask for help it’s after the damage is done, and most times- there just isn’t much that can be done for them,” says Stacy J. Summerlin, President of Summerlin Benefits Consulting Inc.

In the example above, if this $130,000 is an essential part of your retirement income plan and since its available to you as funds that have not yet been taxed, the first place to start would be to consider setting up and doing a direct rollover into an Individual Retirement Account (IRA).

Your pension plan administrator should be able to send the money directly to a new financial institution with whom you have set up a Traditional IRA. This is done via a process called a Qualified Transfer- meaning funds move from one financial institution to another without the consumer receiving a direct distribution of funds. “With a qualified transfer of this nature,” said Stacy, “you won’t owe taxes on the rollover and it can continue to grow in a tax-deferred status for you until you start taking income distributions later.” Stacy went on to say, “if you also utilize a product like a lifetime income annuity within the Rollover IRA you can protect your lump sum savings so that it will grow safely from here on out and potentially will even improve your future income dollars down the road.”

If by chance, you have already received your lump sum pension payout as a distribution (ex. the check was made out to you), then you still help yourself avoid taxation now by depositing it into a Traditional IRA within 60 days of the distribution. As such, you can still likely defer the tax but the timing can be tricky and if you miss your window, you’ll owe the IRS income tax on the full amount. On an amount like $130,000, those taxes can take away a huge chunk of your money.

Taxes are not the only thing to think about because frankly if you’re putting your lump sum pension rollover directly into an IRA and following the IRS guidelines when doing so, taxes becomes a moot point for now. The bigger questions consumers should ask themselves before taking a lump sum pension distribution of any kind are (1) how much of this money can I afford to lose in a volatile stock market, and (2) how do I intend to use these funds during retirement? That’s where the true strategizing begins.

When rolling over a lump sum pension there are safer and more simple strategies that can be used, instead of the risky investment funds often found in a rollover IRA. Being conservative with an asset like this can mean the difference between making your money last vs outliving your savings.

So what is the best vehicle for a lump sum rollover pension into an IRA?

Well for some, using fixed income options like indexed annuities, multi-year guaranteed annuities, and lifetime income annuities is one solid way to go. All three of these vehicles will help you ensure you will not lose money during market declines and can prepare for you a valuable income stream to supplement your Social Security benefits. [ Remember, if you are about to retire the longer you wait to take social security means you will increase the payout that you qualify for. You can claim Social Security as early as 62, but for many people, it might be advisable to try and wait until age 70 if you can hold out that long. ]

“Safe Money Strategies” are key to every savvy investor’s retirement plan. For today’s retiree it’s all about protecting your principal during market declines while offering a reasonable rate of return during market upswings. It can truly be that simple.

At Summerlin Benefits Consulting Inc. we specialize in helping clients figure out if taking their pension as monthly income payments OR taking it as a lump sum pension rollover would be best for them. We’ll work with you to develop the right strategy based on your unique needs. Our goal is to help our clients feel secure in their personal financial future.

No matter how large or how small your retirement savings fund is, your money is important to you, and making it last the rest of your life is essential to your financial health. If you need help deciding how to do a pension rollover or with any other Safety-First oriented retirement strategy, contact Summerlin Benefits Consulting today!

2022 was the worst year on record for U.S. bonds. What can we expect in 2023?

Wed, 15 Mar 2023 15:55:45 GMT

U.S. bonds are coming off their worst year in almost a half-century of record-keeping, but the question is, do they look poised for a better performance in 2023?

THE BOND UNCERTAINTY PROBLEM

Most of us know that inflation started demonstrating signs of easing in late 2022, giving Federal Reserve policy makers a chance to switch to a less-aggressive rate hike for 2023. Forecasters see the 10-year rate ending at around 3.5% this year, which could make an attractive entry point for some potential buyers to come in.

A lot of repricing of Treasury yields already took place in 2022, and this is the best core bonds have looked in over a decade; that’s why economists think the prospects for fixed income are pretty attractive at current levels, and the consensus is that fixed-income returns are going to be better this year.

Of course, this is hopeful thinking, but how do we know for sure? The fact is- We Don’t. And is it smarter for today’s retirees to PREPARE for best-case scenario or worst-case scenario?

At Summerlin Benefits Consulting, we believe in helping clients prepare for the worst while still positioning them to succeed when our market experiences best-case outcomes. The simple truth is that in 2023, there are still too many risk factors at-play to be certain in your bond yields.

ONGOING RISKS TO BOND YIELD

One big risk to bond performance would be if inflation doesn’t fall below 4.5% or 5% by mid-2023, which would force the Fed to push the fed-funds rate up toward 6% from 3.75% to 4%.

A toxic combination is the ongoing “hot” inflation combined with the string of Fed rate hikes since last March. This has led to a punishing sell off in Treasurys over much of 2022. In short, 2022’s sharp rise in the 10-year rate has been accompanied by a falling price in the underlying note, hurting existing bondholders.

An example of this is the Bloomberg Aggregate Bond Index — the broadest domestic measure of the core fixed-income market and which includes Treasurys, agency mortgage-backed securities and investment-grade corporate debt. It declined 11.2% in 2022. That’s the index’s worst annual showing since 1976, the earliest period that data collecting began.

Unfortunately, it has become obvious that the bond sector’s poor performance for 2022 has come as a rude surprise to investors accustomed to the steady performance that fixed income investments have experienced over the last several decades. Fixed income planning is a fundamental component of any savvy investor’s retirement plan.

A BETTER OPTION TO BONDS IN 2023

What it boils down to for 2023 is that there are other alternatives that may prove to be the better options for fixed income- without the uncertainty.

One option is a fixed index annuity, where your return can be tied to a market index, but your principal is protected in down years. These accounts commonly follow market indexes like the S&P 500 or larger bond funds like Bloomberg, etc. But, this year, some fixed index annuities are also offering the option to just follow a fixed interest rate- many of which are ranging between 3% to 5% in comes cases, in lieu of following an actual market index. This means during a time when almost all investments, including bonds, are losing value, you may be able to guarantee a return that will help you safely ride out the recession and negate its impact to your retirement savings.

Fixed index annuities (FIA’s) can also generate more income than bonds of similar maturity purchased at the same time and be better at holding value while generating a more predictable cash flow. FIA’s offer consumers Safety first and foremost, with a Reasonable Rate of Return over time, and guaranteed Increasing Lifetime Income- thus, solve the uncertainty of your bond portfolio.

Of course, just like with stocks, bonds, or other investment options- not all annuities are created equal, especially during uncertain times like these, its important to use a safe money expert to help guide you through your options.

At Summerlin Benefits Consulting, we specialize in helping our clients eliminate the uncertainty in their retirement planning and determine what path is best for their specific situation.

Finding Good Value in Life Insurance

Fri, 02 Dec 2022 17:15:08 GMT

Life insurance can be an important part of your financial plans. After you have decided which kind of life insurance is best for you, it's always good to compare similar policies from different companies to find out which one is likely to give you the best value for your money. A simple comparison of the premiums is not enough. There are other things you should consider such as:

Do benefits or premiums vary from year to year?
How much do the benefits build up in the policy?
What part of the benefits or premiums is not guaranteed?
What is the effect of interest on money paid and received at different times on the policy?

Once you have decided which type of policy to buy, you can use a cost comparison index to help you compare similar policies. Life insurance agents, like Summerlin Benefits Consulting (SBC), can give you information about different kinds of indexes that each work a little differently.

One index may help you compare the costs between two policies if you give up the policy and take out the cash value. Another may help compare your costs if you don’t give up your policy before its coverage ends. Some options could help you decide what future income needs could be met. Each index is useful in some ways, but many can provide tax- free growth. It’s all about what you need specifically for your individual situation.

Remember that not one company offers the lowest cost at ALL ages for ALL kinds and amounts of insurance. Other factors you should also consider:

How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level cash value build-up. A year-by-year display of values and benefits can be very helpful.
Are there special policy features that particularly suit your needs? Some may even offer benefits for long term care financial planning.
How are non guaranteed values calculated? For example, interest rates are important in determining policy returns. In some companies increases reflect the average interest earnings on all of that company’s policies regardless of when it was issued. In others, the return for policies issued in a recent year, or a group of years, reflects the interest earnings on that group of policies; and amounts paid are likely to change more rapidly when interest rates change.

Selecting the insurance policy that is right for you may seem like a daunting task, but Summerlin Benefits Consulting helps people with this every single day. It’s what we do! We take the guesswork out of things and present options in a simple, easy to understand manner. Call us today and we can help you too!

How To Make Sure You Have Enough For Retirement

Mon, 14 Nov 2022 15:25:38 GMT

Many Americans are surprised to see they have not prepared as well as they had hoped for retirement when they finally get ready to call it quits. Having a medical condition certainly does not help the situation either.

The good news is you have time, especially if you’re still working, and have another five to seven years. If you’re lucky enough to have a pension, which is something many Americans these days cannot rely on, you’re also off to a good start.

The bad news is, you may have to make some realistic assumptions of what your retirement will look like. If you’ve lived primarily paycheck to paycheck in your working years, that may continue to feel like the case in your retirement.

Think very carefully about the sort of income you’ll be receiving until you can begin claiming Social Security at whatever age that should be. If you retire and your spouse is still working, you may want to try and rely solely on his/her income for a while as opposed to taking social security or dipping into your 401(K), so that the money in there can continue to grow over time. It is hard to tell how long anyone will live, but you should plan to live a couple more decades at least, and you’ll need all the savings you have to last that timeframe.

For most people, filling in that income stream gap can also be achieved with a fixed index annuity, which can take an asset like your 401(k), and turn it into a lifetime income stream for you.

Whether you’ll be able to live a comfortable and simple lifestyle in your retirement depends largely on how you’re planning. Assess how much income you’re bringing in now and compare it to what you will be getting from your account withdrawals and Social Security, when the time comes.

Also make realistic assumptions for how much everything will cost in your retirement – your housing and utility bills, groceries, healthcare , taxes, and some of the fun stuff. You have worked all these years, you and your spouse deserve to enjoy this next chapter.

We can help further by providing a few useful tips. First, try using an annual withdrawal rate of 3% from your qualified retirement accounts.

Then see how much you can expect to get from Social Security. You can do this by making an account on the Social Security Administration’s website. You’ll be able to view your work and earnings history (which is important—your benefits are based on that, and you want it to be accurate), and you’ll also get an estimate for your benefits at various claiming ages. Add those numbers together and see what you get. How does that compare to the amount of money you’re bringing in now, and will it cover the bills and then some for the future? If not, seek the help from an annuity expert to see if an income annuity could help.

Next, live within your means. A few other suggestions include not putting extra payments toward the house, especially if you have a low interest rate. If you’re able to pay the mortgage, just keep doing what you're doing, and stash away any excess money for your future. The equity in your house is important, but that money becomes illiquid when you put it towards your mortgage, and you may want to focus on assets you can easily tap into because one crucial account you’ll need, for now and in retirement, is an emergency fund.

As for your cars, now may be a good time to sell. The current auto economy is a seller’s market, quoted by Ford, and you may be able to sell them for a higher price now than in a few years when interest rates jump and supply chain issues are less of a problem.

Also, consider reviewing your 401(k)- asset allocation. Even if you’re not aggressively invested, it may still require a review. Bond values are not too hot these days and riskier investments can lose money. If you’ve tuned into the news at all, you’ll likely see that the stock market has been hit hard lately, with inflation and the war between Ukraine and Russia, you may want to find a financial professional who can offer you safe strategies to "stop the bleeding" in your accounts ASAP.

Finally, be conscientious of your spending habits and how they affect your savings. Money is a very personal topic, and everyone approaches it differently based on how they view it, which may be the result of how they were raised or what they saw happen to their parents, their grandparents, or their peers during major financial events (i.e the 2008 housing crisis). Savers may always feel a reluctance to spend and spenders might find trouble fighting the desire to splurge, but small, meaningful changes are possible.

At Summerlin Benefits Consulting we help clients protect the assets they have and prepare for the future with what they have saved.

Is U.S. Recession Arriving in 2023 or 2024?

Fri, 04 Nov 2022 17:13:49 GMT

As the world waited for the Federal Reserve to deliver its third “jumbo” interest-rate hike, Bridgewater Associates founder Ray Dalio shared a warning for anybody still hanging on to the hope that beaten-down asset prices might soon bounce back.

In Dalio’s estimation, the Fed must continue to substantially raise interest rates if it hopes to succeed at taming inflation. Because of this, and other factors like the ongoing war in Ukraine, Dalio anticipates that stocks and bonds will continue to suffer as the U.S. economy likely slides into recession either in 2023 or 2024. When stocks and bonds suffer, so do many retirement “nest eggs”. This, combined with the rising cost of goods and services, makes it necessary to really take a good look at spending and saving habits.

Fed Chairman Jerome Powell has pledged that the central bank will do everything in its power to curb inflation, even if it crashes markets and the economy in the process. Dalio addressed this by stating, “…the only way the Fed can successfully fight inflation is by doling out economic pain.”

In the U.S., inflation has eased slightly after hitting its highest level in more than 40 years over the summer, but it’s not the true reprieve that everyone hoped for. Financial markets were sent into a tailspin recently as elements of “core” inflation, like housing costs, appeared more stubborn in October than economists had anticipated. The ongoing energy crisis in Europe has led to even more severe increases in the cost of everything from heat to consumer goods.

Unfortunately, some might say that increasing interest rates are actually doing more harm than good to our financial assets, investments, and other property assets like real estate.

Simply put, when interest rates rise, investors must increase the discount rate they use to determine the present value of future cash flows, or interest payments, tied to a given stock or bond. Since higher interest rates and inflation are essentially a tax on these future revenue streams, investors typically compensate by assigning a lower valuation. That’s what makes the overall financial markets rise and decline, together.

Dalio’s recent warning was clear. He, along with many economists, expects that stocks will endure more losses, but that the more immediate area of concern is actually the bond market.

In September, the Fed set forth a plan to double the pace at which Treasury and mortgage bonds will roll off the central bank’s balance sheet. “Who is going to buy those bonds?” Dalio asked, before noting that the Chinese central bank and pension funds around the world are now less motivated to buy, partly because the real return that bonds offer when adjusted for inflation has moved substantially lower.

So, what can Americans do to help themselves counteract this ongoing financial volatility, as both stocks and bonds continue to lose value?

Now is a very good time for people to start considering alternatives to bonds. One such alternative, called a Fixed Index Annuity (FIA), is considered to be a “safe money strategy” because of the manner in which an FIA protects consumers’ savings and growth in down markets, while still achieving a reasonable rate of return over time. Annuities can also generate more income than bonds of similar maturity purchased at the same time. And because annuities aren’t priced daily in an open market as bonds are, they can be better than bonds at holding their value while generating a more predictable cash flow.

Additionally, retirees are encouraged to have some cash on hand so as to avoid tapping into their investment portfolio during market volatility, so retirement savers often find value in the fact that accounts like Fixed Index Annuities provide just enough access to their cash (typically allowing a 10% free withdraw yearly) to ensure liquidity needs are met during turbulent times.

In closing, Dalio offered a humorous retort when asked to share his thoughts on where markets might be headed. “There’s a saying: ‘he who lives by the crystal ball is destined to eat ground glass’.”

No one knows what the future may bring but it is important to follow market trends and overall economic circumstances. Especially during uncertain times like we are in now, it may be wise to work with a financial professional who specializes in safety over risk, someone who can assess your portfolio and help you restructure in a way that makes the most sense for you.

We at Summerlin Benefits do this day in and day out with our clients. Call us today so that we can help walk you through your options in a simple, easy to understand way!

Florida makes the list of best states for retirement.

Tue, 25 Oct 2022 17:12:27 GMT

A comfortable retirement is a lifelong goal for people of almost any age, in any profession, and from every state.

But that isn’t to say retirement has equal value across state lines. Taxes, cost of living, and even climate give certain states an upper hand when it comes to retirement; the same income and investments can have much different values in different parts of the country. In this blog, we will be looking at a ranking of the most ideal states for retirement.

Before making any plans, we recommend speaking with a financial professional who can help you find the state that makes the most sense for your financial situation.

The value of working with a financial professional varies by person, however research suggests people who work with a financial professional feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

Best States for Minimizing Taxes in Retirement

If shrinking your tax liability is high on your list of priorities, a few states stand out. The winners on the list below either have no state income tax, no tax on retirement income, or a substantial discount on the taxes levied on retirement income. But that’s just the start.

While several additional states have no state income tax, the states that made the list also have favorable sales, property, inheritance, and estate taxes.

Alaska
Florida
Georgia
Mississippi
Nevada
South Dakota
Wyoming

f those seven locations aren’t ideal, consider the next tier of tax-friendly states. Tax benefits aren’t quite as high as those above, but they do stand out in one specific category: no taxes on social security income.

That’s not to say they don’t make up for it in other areas, however. Washington State, for example, has no state income tax, but does have a 6.5% state sales tax. Still, it’s always beneficial to avoid income tax when possible.

Alabama
Arkansas
Colorado
Delaware
Idaho
Illinois
Kentucky

Top States Favored by Retirees

While Alaska may have favorable tax policies, lounging in Anchorage may not be your idea of a relaxing retirement. To uncover where retirees actually want to live, let’s dive into another set of numbers.

According to the Federal Interagency Forum on Aging Statistics, six states are the standout favorites among the over-65 crowd. No other states surpass their density of residents over the age of 65:

Maine (20.6%)
Florida (20.5%)
West Virginia (19.9%)
Vermont (19.4%)
Montana (18.7%)
Delaware (18.7%)

Best Overall State for Retiring

Now, let’s compare. By cross-referencing the list of “Best States for Minimizing Taxes in Retirement” with our list of states most densely populated with retirees, we find that only one state makes both lists.

The Sunshine State offers favorable taxes, pleasant climate, and reasonable cost of living.

The Bottom Line

Wherever your retirement dreams take you, it’s important to keep the above in mind and make the right decision for your financial situation.

A financial professional can help you consider not only the tax implications of a move, but also other factors specific to your situation.

Not sure where to start? Summerlin Benefits Consulting can help. We have been helping clients across Northern Florida and Southeast Georgia since 2012. We would love to know what is important to you in retirement!

Financial Planning Steps to Take Before Retirement

Tue, 18 Oct 2022 17:07:14 GMT

The decade leading up to your retirement is one of the most critical periods for retirement planning. There are a number of financial planning issues to consider during this time period to help ensure a financially secure retirement.

1. Prepare a retirement spending plan

This is the time to take a hard look at how you plan to spend your time in retirement and how much your desired retirement lifestyle will cost. This can encompass a lot of things including your housing. Will you stay in your current house or perhaps downsize? Will you relocate to another part of the country?

You should also consider the types of activities you will be doing in retirement. Perhaps you will be doing a lot of traveling. This is the time to look at what you think you will be spending in retirement and to equate that to a monthly spending budget.  

2. Focus on Safety, as well as a reasonable rate of return over time

You might think this step is easier said than done with the state of the stock market these days, but believe it or not, there are investment options that protect the investor’s principal during market declines and offer a reasonable rate of return during market upswings. Summerlin Benefits Consulting specializes in “safe money strategies”, and we help our clients maintain safety of their existing nest eggs while still achieving growth over the rest of their lifetime.

3. Review your Social Security record

This is an ideal time to review your Social Security earnings record. It’s important to ensure that it is accurate and that nothing is omitted. The top 35 years of your earnings record are used in the calculation of your benefit. If you have less than 35 years’ worth of earnings then those missing years are added in as zero earnings, reducing your benefits.

The next 10 years’ worth of earnings will likely help increase your benefit levels. This is also a good time to begin thinking about when you will claim your Social Security benefit.

4. Plan for your retirement healthcare needs

One of the biggest expenses for retirees is the cost of healthcare. In their most recent estimate, Fidelity Investments indicated that a couple aged 65 in 2022 will need $315,000 to cover their healthcare costs in retirement. This does not include long-term care costs.

For most people Medicare will be their prime source of healthcare coverage in retirement. As you get closer to Medicare eligibility it is important to learn all that you can about how the various parts work.

While you are working, consider contributing to a health savings account (HSA) if you have access to one. These are medical savings accounts associated with a high deductible health insurance plan. Contributions to an HSA are made on a pretax basis, meaning earnings on the money grows tax-free. Withdrawals for qualified medical expenses are tax-free as well.

The beauty of an HSA for retirement is that the money in the account can be carried over from year-to-year if the money is not used. Money in the account can often be invested. The money can be used in retirement to cover the cost of Medicare premiums, any deductibles and a host of other healthcare expenses in retirement.

5. Inventory all sources of retirement income

It’s important to get a handle on all potential sources of retirement income before retirement. These may vary somewhat based on your individual situation. The list often includes IRAs, pensions, social security, real estate holdings, and annuities, just to name a few.

With annuities specifically, it’s a good idea to have a financial professional help you analyze the policy you have in force in order to clarify exactly what the income benefits are and how they will pay throughout retirement. Some annuities only offer a shorter periods that might not be long enough if you have longevity on your side. Some annuities have hidden fees, which can eat away at your earnings and future income availability.

Summerlin Benefits Consulting specializes in this field and can help you ensure you have the right annuity for you to achieve your income goals during retirement. When set up correctly, your annuity will serve as a good supplement to other sources of lifetime income, like social security and pensions.

6. Run retirement projections

As you calculate your retirement spending and review all of the resources that could be turned into income during retirement, this is a good time to begin running some retirement projections to see where you stand. There are a number of online retirement calculators that will let you run projections to see if your various sources of retirement income are enough to support your projected level of spending for your life expectancy.

If the projection indicates that the likelihood of outliving your retirement assets is low, that’s great. If the outcome is unfavorable, then it’s time to rethink your retirement planning a bit. Perhaps you will need to consider engaging the services of a financial professional, such as Summerlin Benefits Consulting, to help with this stage of your retirement planning.

This projection should be run at least annually as you approach retirement and begin to enter retirement. Things can change over time, and you want to stay on top of the potential impact on your retirement. If the results come up as unfavorable you may still have time to make some adjustments in your retirement planning strategy or consult your financial professional.

7. Formulate a retirement withdrawal strategy

As you head into retirement, it’s important to take all of the information you’ve gleaned from the steps outlined above to formulate an initial withdrawal strategy to fund your retirement spending needs. Which accounts will be tapped first? Your withdrawal strategy will depend upon a number of things including your tax situation, whether or not you have reached age 59 ½, and when you decide to claim Social Security.

Your retirement withdrawal strategy will evolve over time as you move through retirement and it’s important to revisit your withdrawal strategy on a regular basis in retirement. This is also something that your financial professional can assist with.

The decade leading up to retirement is prime time to get your planning in order as you move into retirement. But, if you are on the brink of retirement and are only in the beginning stages of your planning, do not fret. Summerlin Benefits Consulting helps clients through every step of their financial path leading up to and during retirement. Give us a call today and we can help you find the path that is right for you!

Interest rates have gone up again. Many are wondering how to protect their future.

Mon, 26 Sep 2022 16:57:36 GMT

For the third time in a row, the Federal Reserve said on Wednesday, September 21st it would raise the benchmark federal-funds rate – this time, by a 0.75 percentage point so that it hovers between 3% to 3.25% . Officials suggested this would not be the last time this year, and to expect the rate to jump to around 4.4% by the end of 2022.

The news may seem especially unsettling for retirees, as many are living on fixed incomes. Increasing the federal-funds rate is the Federal Reserve’s attempt to combat inflation, but many Americans are trying to do that themselves – while also handling the stresses of market volatility. In recent years the economic environment has felt unnerving at times for retirees, as well as retirement savers: market volatility has pushed 401(k) and IRA balances down, which has depleted many retirees’ “nest eggs”. Additionally, rising inflation has made everyday expenses such as groceries and gas much costlier.

The Federal Reserve said higher interest rates will also affect Americans in other ways, including a slowing economy and a rise in the unemployment rate.

Watch Your Spending

“The first thing to watch out for is spending”, said Kelly LaVigne, Vice President of Advanced Markets and solutions at Allianz Life. “Companies have tried to catch up by producing a lot of inventory and a slowing economy might make them competitive to sell their products with tempting prices,” he said – “those sales may be alluring, but retirees and retirement savers alike should be protective and curb any bad spending habits.”

When there is a downward trend in U.S. stock indexes, especially after the Federal Reserve’s latest announcement of increases, retirees should be saving all they can, but it’s hard because retirees savings is also at risk.

Americans may also want to take this time, if they can, to try to tackle any credit card debt as the rate hike will affect higher-interest debts.  Spending only cash when making essential purchases is a way to prevent credit card debt from getting even further out of hand during turbulent times.

Diversify Your Portfolio

Stock market volatility can be hard to stomach, especially for someone whose nest egg is tied up in at-risk investments, but retirees and near-retirees are often told to stay the course. We don’t want to have a knee jerk reaction, but in reality, we need to protect ourselves and our future. That includes developing and restructuring a retirement plan when it makes sense to do so. This usually includes balancing risk tolerance as we age and our time horizon lessens.

The “Rule of 100” is one good way to determine a healthy amount of risk in your portfolio: Subtract your age from 100 to determine the percentage of your portfolio that can be left in riskier areas, such as stocks and equities. For example, if you are 60 years old, it is a good rule of thumb to not have more than 40% of your investments at risk. The other 60% should be placed in a safe environment.

Take a Look at Your Retirement Income Streams

Now is the time for anyone in or near retirement to consider multiple streams of income if they haven’t already. For some Americans, that may simply be a retirement portfolio and Social Security benefits. For others, it could be a pension, or an annuity, alongside personal retirement savings.

Fixed index annuities (FIAs) are an ideal option, as they can provide a guaranteed income for life. An FIA is what we at Summerlin Benefits Consulting like to call a “safe money vehicle”, as it allows you to grow an asset (some portion of your overall retirement strategies) for the purpose of turning on income in the future, without risking it to grow it. It allows you to create your own future fund, with a defined monthly income benefit which can supplement social security and other retirement income sources.

While many retirees have re-entered the labor market as a way to bring in extra cash and preserve their investments, income planning can sometimes help prevent this “un-retirement” from occurring.

Seek Help from a Financial Professional

Retirees should take stock of how they’re feeling right now with the latest rate hike and keep it in mind if the Federal Reserve increases the rate again later this year. Look at where you are right now, remember what this feels like, and try to plan ahead. If you are not sure where to start, a financial professional can help you evaluate your goals to make sure you are on the right path. Retirees and other more mature investors, however, may want to utilize a professional who specializes in “Safe Money” strategies, so that they can ensure the advice they get relates to their current circumstances and needs.

At Summerlin Benefits Consulting we are Safe Money Experts. We believe that helping clients protect the money they already have will go a long way to helping them protect their futures as well. If you’d like help reviewing your options for retirement income protection and/or to discuss how to best plan your financial future, please feel free to call today for a no-obligation meeting.

Don’t let a volatile market burst your retirement bubble. Here are 5 useful tips!

Mon, 19 Sep 2022 16:52:09 GMT

Retiring is usually accompanied by celebration, but recent market volatility is adding a measure of doubt for those nearing or at the start of their retirement. That volatility, coupled with factors such as rising interest rates and high inflation, has many investors worried about their retirement funds and what they can do to weather the storm.

Over the past year, an estimated  1.5 million retirees  have re-entered the U.S. labor market due to such factors as more flexible work arrangements, rising costs and the inability to keep up while on a fixed income. Additionally, according to the BMO Real Financial Progress Index, 25% of Americans feel they have to delay their retirement plans, primarily due to disrupted savings resulting from increased prices and market instability.

During this period of extreme uncertainty, near-retirees may be second-guessing if now’s the right time to stop working. But a down market shouldn’t cause interference with or delay retirement. By following the tips outlined below, impending retirees can stay on track with their plans, retire with more confidence and reduce the effect of a down market on their retirement portfolio.

1. Re-evaluate your risk tolerance

Early in one’s career, there are opportunities to take relatively more risk—for instance, investing more heavily in stocks with higher growth potential and risk, or investing in high-yield bonds. In a well-diversified portfolio, risk should primarily be measured by volatility rather than its most intuitive definition—permanent loss.

If a diversified portfolio is tailored to individual needs and objectives, its riskier portions should be diversified to minimize the risk of total loss and the negative impacts of volatility. Generally, as individuals get closer to retirement, their portfolio’s makeup may change to ensure they’re able to recover if the market goes south.

At Summerlin Benefits Consulting, we like to use the “Rule of 100”: Subtract your age from 100 to determine the percentage of your portfolio that should be placed in risk-prone areas such as stocks or bonds. For example, if you are 65 years old, it is a good rule of thumb to keep only 35% of your portfolio at risk and place the other 65% in safer areas.

“Easier said than done,” you might be thinking. But, stay with me! There are investment vehicles, such as Fixed Index Annuities (FIA) that are designed to offer a reasonable rate of return during market upswings and protect your money during market downturns.

These “safe money strategies,” as we fondly call them at Summerlin Benefits Consulting, create a healthy balance between protecting what you’ve already accumulated while allowing room for future growth. Given the market’s current condition, it’s important to talk with a financial professional to determine how to adjust your portfolio to lower risk, or to simply ask questions if you’re unsure where to start.

2. Don’t put all your eggs in one basket

Unfortunately, no one can predict what’s going to happen in the market, certainly in the short run, regardless of your level of expertise. Volatile times provide individuals the opportunity to revisit and re-evaluate their portfolios.

Spreading your money out across several different types of assets can lessen the impact of a market downturn, since different assets usually respond differently to market shifts. When doing so, it’s important to ensure your portfolio includes diversified holdings across asset classes and styles of investing, investments that generate income and hedging strategies to provide downside protection. In other words, it’s ok to keep some of your holdings in brokerage accounts, while placing the rest in an FIA for example. That way, you achieve “True Diversification”.

3. Review your cash reserves

Uneasiness in markets can cause individuals to be uneasy about their overall finances. As such, individuals should assess how much cash they feel comfortable having on hand to meet basic needs and unexpected expenses in order to feel more confident when markets are uncooperative. Creating a budget system that tracks monthly expenses can help.

It is also beneficial to have investments that offer liquidity should you need extra cash in a hurry. With an FIA, for example, they typically allow for a free 10% withdrawal each year, which gives added security by having access to your funds. Your financial professional can help you calculate your liquidity in order to help ensure you are maintaining an adequate emergency fund throughout retirement.

4. Try not to be influenced by your emotions

Market volatility creates a stressful environment for anyone with money in the stock market. For those on the verge of retirement, emotions lead many to sell when the market turns down in an attempt to avoid losses and then buy again after the market recovers and they feel optimistic. But getting the timing of those two decisions right to avoid missing a net gain along the way can be difficult.

If you look at market trends for the last several years, you will see overall gains until just recently. Even though it’s best not to jump the gun and sell everything the moment the market turns sour, it may still be a good idea to move some of your market holdings into safer, less risky areas before losing any more money.

If you are nearing or in the middle of your retirement, it could be detrimental to lose any portion of your nest egg, as you won’t have time to make it back up. And, quite frankly, it makes good logical sense to have some of your money safe from declines regardless of the current market climate.

5. Plan, plan, plan—but be flexible to adjust when appropriate

From the start of one’s retirement journey until the end, having long-term goals and a solid plan can help ease stress to a degree and keep you on course. If you’re unsure what to do next, or if you don’t yet have a solid plan, consider talking with a financial professional. Closer to retirement, there may be appropriate changes you’ll need to make to your portfolio to reduce risk, but don’t worry, the financial professional can help walk you through this to determine the best course of action for your individual situation.

The road to your retirement may not be as smooth as you once anticipated. It’s important to remember that there are many ways to protect your nest egg. Summerlin Benefits Consulting believes in making things simple for our clients so as to ease some of the stress of retirement planning. With safe options, providing features like guaranteed lifetime income and long term care benefits, we help you find the path that is right for you so that you can focus on putting the celebration back into your retirement decisions.

How to be Prepared for Retirement With Less Than $500,000 in Savings

Mon, 12 Sep 2022 16:50:47 GMT

Let’s discuss retirement planning for the “average Joe”.

As an example, today we’ll use a 61-year-old teacher who plans to work 4 more years before retiring. With her teacher’s pension and her husband she can expect between $5,200-$6,000 per month in lifetime pension benefits. Let’s assume her husband is about the same age and between the two of them they have $300,000 in IRAs, Roth IRAs and her 403B as well as a small investment account and about $60,000 in cash. Combined they will also have around $3,000 per month in social security income (SSI).

Does this seem like enough? How prepared is this couple for retirement?

So, let’s also say they will have their house paid off in 3 years ad it’s worth about $275,000. Cars are paid off and they currently have very little debt. But other things to consider are perhaps the husband may not be able to work in his current job much longer due to health issues. He might actually need to retire before 65. The couple estimates that they will need about $45,000-$50,000 per year for retirement. They may also have to take care of one parent who is in their 90s.

These are all things that today’s “average Joe” might be facing as they enter retirement, right?

It’s easy to understand the concern they would feel about their security as they get closer to retirement, but at least this couple has a secret tool so many Americans wish they had: a pension outside of social security.

In this case, they have income sources and having that pension on top of social security is powerful. Quite frankly, the average wealth adviser would tell this couple they seem to be on track. But the next two to four years will be pivotal for them.

There are four contributing factors that greatly affect one’s retirement security- longevity, because the longer you live, the longer you need your money to last: the return rate on your investments, hard losses during market declines, and your spending. It’s pretty important, as you approach retirement that you take charge of your situation and take steps to help you live comfortably for the rest of your life. In short, take steps to make your money last.

So, how does someone do that? First, make sure you have gone over your spending and your estimated expenses again and again before you quit. List out every cost you think you’ll have in retirement, and pore over your current spending, such as analyzing your last few credit card statements.

You’ve mentioned how much you think you will need annually in retirement, but does that include taxes? Or healthcare, which only gets more expensive the older you get? In this example, if it is truly $45,000-$50,000 a year you’ll need, that’s great, but they must be sure of that before entering retirement, so they aren’t spending so much time worrying about paying bills.

It would also be smart to set aside some cash savings for emergencies, because unexpected things happen whether you’re retired or not. If you are only a few years from retirement like this couple, you should also consider increasing your contributions to your retirement accounts if you can.

Inflation is a big point to consider these days, and everyone should account for it in the decades to come. Social Security has a cost-of-living adjustment, although not everyone agrees it is as well-aligned with inflation of the goods and services older Americans spend their money on, but it still counts for something. If you have a pension, you should also check if it is inflation-adjusted, and if not, factor that into your future spending needs when estimating your expenses for retirement every year.

A financial professional can help you with this. Not everyone wants to work on a monthly or annual basis with a financial professional, but firms like Summerlin Benefits Consulting can go over these concerns with you and try to help you plan for the future. One thing Summerlin Benefits Consulting specializes in is fixed index annuities, which can be a great tool to establish supplemental income, prevent loss, and make your money last for life. These accounts can even help prepare you for future expenses like long term care.

Now, there is no right answer for when to claim Social Security, but it is important to consider all of the options. Waiting until you are older to collect can be a fantastic goal, but if it has to be taken a bit sooner, that would be OK too.

Longevity plays a huge factor in Social Security claiming strategies- people who don’t live much longer past 70 don’t get to enjoy the benefits they paid into all this time. Others use benefits from Social Security and fixed index annuities as a way to avoid tapping into their retirement savings, so that the money can continue to grow in an investment portfolio. Plenty of couples talk through strategies so that they’re maximizing their benefits for their personal situations.

Another good step is to try to estimate what you think your tax situation will be like in retirement versus now so you’re making the best decisions for yourself. Understanding what taxable income you’ll have from your retirement income sources will help with long term planning. For example, you don’t put money in a Roth if you expect to take it out in a relatively short period of time because it just doesn’t provide the same tax benefits to you. It’s often better to save your tax-free income for later down the road if you can.

Additionally, Indexed Universal Life Insurance is a great way to leave behind inheritance for loved ones and can also provide another tax-free income source that you can draw against in the form of a loan from its cash value.

At Summerlin Benefits Consulting, we specialize in safe money strategies that not only help retirees protect their money, but also make their money last for life.

5 Blunders to Avoid When Investing for Retirement

Fri, 02 Sep 2022 16:49:11 GMT

Blunder #1: Placing “Big Bets”

Few people would go to Las Vegas, put a big portion of their life savings on the table and make only one roll of the dice. While the reward for winning that bet might be huge, the probability of winning simply isn’t worth the risk of losing and the pain that would bring. Yet time and again, take the gamble, albeit not in such dramatic fashion.

The most common “big bet” often isn’t viewed as a bet at all. That bet is holding a large portion of your retirement savings in stock. Sure, you might like to play the market and think its prospects are good. But that may mean making investment decisions based on emotion, and that is likely not best.

Betting with your retirement savings can be tempting, especially if you feel the need to catch up on your retirement savings or if the person giving you the tip is someone you respect. But that is again mixing emotion and financial decisions, a potential recipe for regret.

Blunder #2: Not Knowing When to be Conservative

The phrase “conservative investing” implies a prudent and cautious approach with low risk and less volatility. It conjures up images of predictable income streams, the protection of principal and peace of mind. Many conservative investments can provide that and, in fact, might be the right decision for some investors or for a portion of their portfolio.

But “conservative investing” may not always be as safe and prudent as it sounds. For example, many investors associate bonds with safety. In the short term, bonds have been less volatile than stocks. But, you might be surprised to learn that over a long time horizon- 30 years or more- bonds actually have a higher volatility. This is because bonds have many risks.

One such risk is that their value can fall dramatically if interest rates go up. This is because bond prices and interest rates have an inverse relationship. For example, if you need access to your bond investments to pay for a wedding, help an adult child make a down payment on a home, deal with unanticipated home or medical expenses or if you simply want access to cash now, you could be faced with selling a bond below the price you paid for it.

With interest rates recently near historic lows, you should ask yourself: Do you believe interest rates are more likely to go up or down in the next few years? If you believe “up”, then you’ve just proven to yourself that bonds are not as low-risk as they appear to be.

A better alternative would be a fixed index annuity (FIA). We at Summerlin Benefits like to call FIAs “Safe Money Strategies,” because they protect your money during steep market declines and allow for growth during market increases. You get to have your cake and eat it too! Retirees also find value in the fact that FIA provide just enough access to their cash to ensure liquidity needs are met when they need it most. In other words, they have the freedom to help pay for that wedding or down payment!

Blunder #3: Falling for a Ponzi Scheme

Remember the Bernie Madoff scandal? Madoff masterminded one of the largest financial frauds in history, cheating the wealthy, charities, and everyone else he could. One of the reasons he got away with it for so long was that his firm was both the money manager AND the custodian of funds. His firm controlled the supposed “investments” he was making. There’s nothing wrong with that. It’s called a managed account and it’s what most wealth managers do as well.

However, many money-management firms don’t take the actual custody of the funds, but instead use highly respected third-party firms like large banks. That means the custodian maintains custody of your investments and is independent from your advisor. This helps protect you from fraud. So, while not all money-management firms that take custody of your funds are crooked, virtually all Ponzi schemes rely on controlling custody of your funds.

Do yourself a big favor right now: if your investments are managed by anyone other than yourself, make sure you know who your custodian is and that they are an independent, distinct, and separate entity from your money manager, whose control is limited to helping you make decisions. (That is often the case with brokers who use their firm as the custodian. Just be sure there’s separation.) Having a custodian won’t prevent your money manager from making blunders or mistakes, but it will restrict the money manager’s ability to make transfers and loot your account.

Blunder #4: Paying Excessive Fees

Many retirees end up paying excessive fees, often times without even being aware of it. This makes it less likely that they can achieve their own long-term goals. Fees can cost you hundreds of thousands of dollars over your lifetime. In addition to the obvious, out-of-pocket costs, the money unnecessarily spent on fees also loses the power of compounding returns, which can add up to significant amounts over a lifetime of investing.

Even seemingly small differences in fees can make a huge difference in the amount of money you end up with. For example, let’s assume you invest $1,000,000 in two mutual funds over twenty years without taking any distributions. Additionally, let’s assume they have an average annual return of 10%, but one has annual fees and expenses of 1.5% and the other, 2.4% (both are assessed at the end of each year.) All things being equal except fees, the one with the lower fees will put over $800,000 more in your pocket over time.

Blunder #5 Ignoring the Insidious Effects of Inflation

Right now, the United States is in an inflation spike. But, why does this matter to you as an individual? First, your personal inflation rate might be much higher. Let’s say you have a spouse who requires long-term care and you have three grandchildren who will be starting college over the next few years. You have promised to pay their tuition and fees. Because the cost of these services has risen much faster than other goods and services in the economy today, these expenses could have a large impact on your retirement nest egg. Second, even a small increase in inflation barely perceptible in our weekly or monthly spending can make a huge difference in spending power over time, even if not necessarily visible today.

So, whether inflation becomes an even more dramatic problem or is simply an ongoing, steady erosion of your purchasing power, you should prepare. A conservative, fixed-income investment strategy may result in slow and steady growth rates, but that’s not necessarily a bad thing; these investments will prevent you from experiencing the losses that put you far behind inflation.

Summerlin Benefits Consulting, Inc. helps people identify and combat these 5 potential blunders every day. We focus on safety in retirement planning and help our clients find the best strategies to match the financial goals that are most important to them.

Why cash is an important part of your retirement plan

Fri, 19 Aug 2022 16:46:47 GMT

Retirement savers are often told they’ll see a greater return in their retirement assets if they invest it – and that may be true – but it’s important to prioritize some cash in a retirement plan as well.

For those close to retirement, consider keeping a portion of your retirement plan in cash – whether that be in the portfolio itself, in the bank, or in another safe retirement account like a fixed index annuity.

Bank and money market accounts do not typically generate the same type of returns as investments, though when the stock market is in decline, some investors may argue that safe money with low returns is better than losing money. Investing in equities can be an important piece of the puzzle while you are younger and planning for future retirement income, as stocks and equity funds create large returns sometimes over time.

But there are instances – like right now – when more mature investors, especially those that are already retired, could really benefit from having some of their money placed safely AWAY from the volatility of equities, stocks, mutual funds, etc. In fact, some more mature investors find that Fixed Index Annuities, especially those with lifetime income benefits, can serve as a very good middle ground since they tend to grow at a more reasonable rate of return than a bank account or money market account, during years when the stock market is doing well but they do not lose value during market declines.

As the saying goes, “cash is king.” That’s not always true when it comes to preparing for retirement, but having some cash on hand does allow retirees the opportunity to avoid tapping into their portfolio during market volatility. Retirement savers often find value in the fact that accounts like Fixed Index Annuities can sometimes provide just enough access to their cash (typically allowing a 10% free withdraw yearly) to ensure liquidity needs are met when they need it most. Retirees may also be stressed to see their investment balances dropping week after week as major indices and sectors across the US stock market suffer from the current volatility and an FIA can alleviate that stress as well, since it will not lose value, even in times of investment strife.

Since taking money out of an investment portfolio and converting it to cash when it’s on the decline can provoke the “sequence of returns risk,” an FIA can provide a better way to liquidate for safety while still maintaining some market growth. This means, when investors are suffering from deficits in their portfolio, they can still maintain a reasonable rate of return over time on some of their money using an FIA. Of course, people who do need cash in retirement should withdraw from their portfolios- albeit conservatively. Having cash on hand in the bank, or receiving a cash payout or income benefit from your Fixed Index Annuity, can help avoid excessive withdrawals from other investments.

If the thought of riding out a down market sounds daunting, safe money strategies, like a fixed index annuity can really help. They can provide cash access and can also be an ideal tool to supplement other income sources like social security income and pensions.

There’s no one set amount of money that should be kept in cash – the answer depends on individuals’ personal circumstances and comfort level. One rule of thumb is to keep about a year’s worth of living expenses in cash, which could be drawn against when portfolios are riding a rollercoaster investment market. During these times, for many people, cash can be kept safe, achieve growth, and last a lifetime with the help of a fixed index annuity through Summerlin Benefits Consulting.

Summerlin Benefits Consulting has helped many people determine what type of strategy makes sense for them and their families and we can help you too!

Can you guess how much the average working boomer has saved for retirement?

Fri, 12 Aug 2022 16:46:01 GMT

It is no secret that there is a retirement crisis facing Americans.

In a recen t  survey conducted on behalf of home financing and real estate website “Anytime Estimate,” Ameri cans were surveyed on how much, or little, they have saved for retirement, and the results were not pretty.

Less than half of those surveyed have saved $100,000. The median income in retirement is $40,000, so this savings is not even close to being enough. One out of every six have saved absolutely nothing. One out of three are currently making no contributions at all. One might discount these statistics by saying, “it must be young people who are contributing to these numbers," but that is not the case. And if it were, at least young people have decades to make up the ground. Boomers do not.

Respondents who are still working, with a median age of 60, have average savings of around $112,000. One quarter of those surveyed, and 30% of millennials, said they were planning to rely on “cryptocurrencies” to finance some of their golden years.

Good luck with that! This may be hard to do if the crypto bubble continues to deflate at its current rate.

Probably the saddest part of the survey was that around 80% of people expect their standard of living to decline in retirement, while 10% feared they wouldn’t be able to retire at all. What is sad is that these people are obviously well aware of the problems they face but may not know the right steps to take.

Financial professionals, like those at Summerlin Benefits Consulting, help people determine how they can combat this retirement crisis, regardless of their age. It is never too early or late to get help.

For those who are young, the obvious answers are to save more, save earlier, and invest better- which usually means investing in long-term assets like stocks and keeping your costs low. But we all know how volatile the stock market can be, so even time is not always a guarantee of a healthy retirement.

Those who are older don’t have the luxury of time at all, and in most cases, they will need to rely on Social Security providing the bulk of their retirement income.

The Social Security dollars forcibly extracted from your paycheck have been poured so far this year into bonds paying interest between 1.625% and 3%. This, at a time when consumer price inflation is running at nearly 9%.

Las year FICA dollars were blown on bonds paying just 1.4% interest, and in 2020 less than 1%. So, large chunks of that money have already gone out the window.

No wonder Social Security is in a deepening financial crisis. The fund is invested early in low-paying U.S. Treasury bonds. Since the early 2000s, the fund has earned an average return of 3.8% per year, enough to increase an investment by only 80%. This is minimal compared to the return that other countries are seeing from their social security or “future” funds.

If you’re thinking that sounds like an unwise investment policy, you’d be right. But it seems like Washington won’t be making moves to change the policy any time soon.

Social Security is a “defined benefit” rather than a “defined contribution” retirement plan, so your benefits aren’t directly tied to the investment returns from the underlying assets. Instead, your benefits are set by law- but are supposed to be financed by underlying assets. The poor investment returns mean those assets are running out. This is why many people are talking about cutting Social Security benefits.

Heaven forbid they should improve the returns.

This is why many Baby Boomers have utilized products like Fixed Index Annuities (FIAs), which provide guaranteed income for life. An FIA is a safe money vehicle, where you can grow an asset (some portion of your overall retirement strategies) for the purpose of turning on income in the future. It allows you to create your own future fund, with a defined monthly income benefit that will work kind of like a pension, which can supplement social security and other retirement income sources. Boomers who haven’t set aside a huge amount of liquid savings can at least use some of what they have saved for this purpose, and it is a really good way to fill that void.

At Summerlin Benefits Consulting we are Safe Money Experts. We believe that helping clients protect the money they do have will go a long way to helping them protect their futures as well. If you’d like help reviewing your options for retirement income protection and/or to discuss how to best plan your financial future, please feel free to call today for a no-obligation meeting.

Bond Alternatives May Be a Good Idea Right About Now

Fri, 05 Aug 2022 16:44:57 GMT

Most people think bonds are safe, but in today’s volatile climate, they are not. Interest rates are poised to rise even further, which is bad news for bonds. Investors seeking a measure of safety along with the possibility of a return have a few choice alternatives to consider instead.

In the not-too-distant past, bonds were portrayed as a secure part of a portfolio – a safer investment than stocks. Investors looked to government bonds as the bedrock of a stable retirement income. But bond yields are extremely low these days, prompting some investors to seek alternatives. This has sparked renewed interest in various investments that can generate passive income and stability.

Most people don’t remember what a bad bond market looks like because we haven’t seen one for 30-plus years! We’ve had steadily declining interest rates since the mid-1980s. Bond prices move in the opposite direction of interest rates. If interest rates rise, bond prices fall, and vice versa. The Federal Reserve has raised interest rates in 2022 and is slowing its purchase of bonds, so the climate is likely to be less favorable for long-term bonds going forward. And with bonds paying historically low interest rates, long-term bonds falling in price could mean a low-yield investment for years.

The problem with bond mutual funds

Bonds issue at par value of $1,000, and you are in effect loaning a corporation or some form of government your $1,000. There is a length of time you have to leave it there, until it reaches what is known as its maturity date, which can range from one year to 40-plus years. There will be a set interest rate for that length of time. So, as interest rates rise and bond prices fall, you can hold until maturity and get your $1,000 back.

A huge issue is that most people don't hold their bonds directly anymore; rather, their bonds are in mutual funds. And within mutual funds, there are two problems: There is no set interest rate, and there is no maturity date. So when interest rates rise and your bond prices fall, there is no date in time when you will get your $1,000 back.

Three other investments to consider instead

To avoid getting trapped while the outlook on bonds is not all that bright, here are some alternatives that can provide more security and a decent rate of return:

Fixed annuities and fixed index annuities

Fixed annuities , sold by insurance companies, offer long-term tax-deferred savings and monthly income for life. They involve an upfront payment by the owner, will grow annually at a fixed rate, and can provide either a lump sum pay out to the policy owner at the end of the policy term or a series of guaranteed income distributions from the insurance company. The insurer guarantees the owner the fixed interest rate on their contributions for a specific period of time. The value of the owner’s principal will grow based on interest applied each year.

You can also choose a fixed index annuity, where your principal is protected and the return is tied to a market index, like the S&P 500. If the market is down, the worst you can do is zero (zero is your hero!), and it will have a participation rate on the upside. So as an example, if we have a 80% participation rate and the S&P 500 is up 10%, then 8% would be credited to your account on your anniversary date and that new value is locked in and won’t drop below that value because of a market decline. In other words, your principal and your gains are protected each and every year.

We at Summerlin Benefits Consulting help our clients use fixed and fixed index annuities as “safe money strategies” because of the manner in which they can help reduce risk by protecting consumers’ savings and growth against down markets, while still achieving a reasonable rate of return over time.

Annuities can also generate more income than bonds of similar maturity purchased at the same time. And because annuities aren’t priced daily in an open market as bonds are, they can be better than bonds at holding their value while generating a more predictable cash flow.

Buffered or defined-outcome ETFs

Buffered or defined-outcome exchange traded funds (ETFs) offer investors protection from severe dips in the stock market. They are seen as solid alternatives to bonds because they allow more access to various investment products. In many portfolios, bonds traditionally served as a ballast, helping offset the risk of equities. But with interest rates so low, buffered/defined outcome ETFs are replacing bonds in some portfolios.

These ETFs set an exact percentage in losses – 9%, 10%, 15%, 20% or 30% – that shareholders are protected from over a 12-month period. In exchange for limiting an investor’s downside, some of the gains are capped at 10%, 15% or 20%.

Most buffered/defined outcome ETFs are linked to the S&P 500 Index and use flexible exchange options (FLEX), which allow both the contract writer and the purchaser to negotiate different terms.

Real estate investment trusts

This is the best-known bond alternative, created in the 1960s to provide investors with a way to invest in funds that own, manage and/or finance income-generating real estate. The REIT investment space is enormous; investors can target specific real estate segments and diversify across different segments. They get 90% of the profits.

REITs are tax-advantaged as dividends and trade like stocks. And unlike bonds, which pay a fixed amount of interest and have a set maturity date, REITs are productive assets that can increase in value indefinitely. Many REITs have dividend yields between 5% and 10%. Be careful though – many REITs are not liquid if you need access to your money in the short term. If you are looking for a strategy that allows you to have access to your money, fixed index annuities may be the better route to go.

Alternatives to bonds do offer higher yield potential. But remember – that comes with risk. It’s wise to work with a financial professional to go over your options as you assess your portfolio, differentiate between safe and risky assets, and help you structure your portfolio in a way that makes the most sense for you. We at Summerlin Benefits do this day in and day out with our clients. Call us today and we'd be happy to go over your options with you!

Millennials have been conditioned to think that stocks only go up

Fri, 08 Jul 2022 16:40:48 GMT

Here’s a puzzler for you.

What are the odds that you’ll be better off over the next 10 years if you hold your retirement portfolio in boring Treasury bills, money-market funds or certificates of deposit rather than if you hold it in a diversified, low-cost U.S. stock index fund?

If you think “no chance,” or “that’s crazy,” sorry, but you have to stay after school.

If you think “1 chance in 50” or “1 chance in 20,” ditto.

Based on the historical record the correct figure is about 1 in 6. At least, that’s how often deposits have beaten stocks over any given 10-year period since the 1920s. Deposits won more than 15% of the time. (With no volatility, either). And if you just look at 5-year periods the odds deposits rise still further. They were a better investment than stocks in more than 23% of 5-year periods. Nearly 1 time in 4.

Yikes.

Oh, and this is looking at the S&P 500 index. Even low-cost index funds will underperform the actual index because of costs, and nearly every large U.S. stock fund with an actual manager will do even worse than that.

The goal here is not to panic anyone, nor to get people to sell their stock funds, nor to predict doom and gloom for the U.S. market. This is simply the historical record and one that should be taken seriously, since history does tend to repeat itself over time.

According to the ancient Greek philosopher Heraclitus, “no one can walk through the same river twice, because the second time it’s not the same river and you’re not the same person.” Boy, has this ever been more true than when applying it to financial history and today’s US stock market trends?

Sometimes, especially for more mature investors, it may feel a little bit like de ja vu. For younger investors, we just don’t know how far the next 5 or 10 years will resemble the past, but we do know that equities, stocks, and other securities can lose value- powerfully and swiftly. So, it makes sense to practice some safety in your portfolio no matter what your age.

Let’s call this a dose of realism to younger investors saving for their retirement who haven’t yet experienced a major market decline in their adult lives. Many of today’s investors have been subconsciously conditioned by decades of Federal Reserve manipulation to think that when it comes to stocks the only way is up. And that is just not true.

These thoughts were provoked by a staggering new survey from money management firm Natixis. Dave Goodsell, executive director of the Natixis Center for Investor Insight, says the median U.S. millennial investor EXPECTS their investments to earn 20% a year, on average, over the long term.[1]

No, really. And those aren’t even “nominal” returns. Those are actual returns that the millennial generation really expects to receive on top of inflation.

And across all age cohorts, he adds, the median U.S. investor expects average returns of 15% a year. Again, on top of inflation.

The actual historical average? Over the past century or so, large U.S. stocks have beaten inflation by less than 7% a year a year—over the long term. To put that in context, it means that over a 20-year period, today’s young investors are overestimating their total returns—thanks to compounding—by a factor of 10.

Goodsell stated in a recent interview that barely one-third of investors in their survey expect real returns averaging less than 10% a year over the long term. Among millennials it’s barely one in 5.

No wonder, when millennials were asked to define financial “risk” in the survey, hardly any considered “losing wealth” (12%) or “not meeting financial goals” (13%). It is true that more than twice as many identified “volatility” as risk, but that contradicts their performance expectations for stocks and other similar investments, and this requires a reality check because if volatility doesn’t actually lead to a loss of wealth, or a failure to meet financial goals, do they truly see it as a “real” risk?

OK, so it’s just a survey. But even if these figures are directionally correct, vast numbers of retirement savers in their late 20s and their 30s are living in somewhat of a La-La land. In fact, the survey was conducted across more than 8,000 individuals in 24 countries.

So, what can millennials do differently with a more direct approach to tackling “real” risk?

Well, one strategy that millennials may not be considering but could benefit from, is a fixed index annuity. These fall into the category that we at Summerlin Benefits Consulting fondly call, “safe money strategies”. Fixed index annuities (FIAs for short) can help reduce risk by protecting the consumer’s savings and growth against down markets while still growing their money at a reasonable rate of return during up markets. Many people may believe the myth that fixed index annuities are only for seniors, however they can be beneficial to younger investors too!

Even though some millennials may want to pursue a more aggressive or riskier method of investing, some level of safety makes sense at all ages. And another benefit to a fixed index annuity is that it provides a set-it and forget-it approach. This can be an enticing factor, especially for millennials or more risk-adverse investors.

The good news, according to Natixis, is that growing numbers of young people are seeking out actual human advice and expertise in this area. About 70% of the millennials in the survey have tapped a human as their financial professional and only 6% relied solely on a “robo adviser.” In fact, only half of millennials surveyed are willing to place their trust in “algorithms,” which may be the best news of all!

Financial Professionals who specialize in safe money strategies for the younger generation will provide a great service for millennials who are seeking to truly diversify their portfolio and take a more realistic approach to plan for their future.

Summerlin Benefits Consulting serves all age groups. We focus on safety in retirement planning and help our clients find the best strategy for them in their current stage of life.

How to Help Recession-Proof Your Retirement Savings

Wed, 18 May 2022 16:35:40 GMT

After the rollercoaster we've experienced these past couple of years, and the down market we’re experiencing thus far in 2022, it’s natural to wonder if you’re doing as much as you can to protect your retirement nest egg from stock market volatility.

Even when the market falls during economic turbulence, you have more power than you realize. You just need to "Take Action" which frankly, is the opposite of "Stay the Course". Let's face it. Most people reach a point in their lives when the course no longer makes sense. So how do we effectively make changes in our financial plan? These five steps can help to keep you on track during uncertain economic times.

1. TRANSITION SOME SAVINGS OUT OF THE MARKET

Investing in the stock market always comes with a measure of risk. In exchange, over time you’re typically rewarded with higher returns than those you’d get from savings accounts, CDs, and other comparable accounts. But sometimes the market dips and your portfolio takes a hit.

The question many people have is, "should I get out when the market begins to decline?" Not always and not everyone, but for a more mature investor- Yes. Absolutely. It is a very good move for you to make at least some of your money safe before and especially during a market decline.

If you are over-invested and carrying too much risk for your age, this could mean that you might not have enough time to recover from a major market decline before you need to use your savings. For example, what would happen if a recession depleted a big chunk of your savings and then it took almost 10 years to recover as it did during The Great Recession of 2008?

The Great Recession stands as a cautionary tale about risk, investing in only what you know, and the dangers of “staying the course”. While the specific causes are still debated today, the culprits behind that economic collapse were a combination of several occurrences like:

the subprime mortgage market
a swift increase in interest rates by the Federal Reserve
a credit crunch and the significant drop in bank lending
risky Wall Street behavior
toxic securities, packaged and repackaged, causing the value of the investments to nosedive

Unfortunately, in 2022 we are experiencing several of these occurrences again this year and without properly protecting your assets now, many of today’s retirees could find themselves in trouble. A solid financial plan during market decline includes true diversification; as in, having some of your savings in a place where you absolutely can not lose it no matter how far the market falls.

2. MAKE SURE YOU’RE REBALANCING

Throughout your life, you’ll want a mix of riskier assets for growth and safer assets for stability. The closer you get to retirement, the less risky you usually want to be. And, completely eliminating risk from at least some of your portfolio, is critical to today's retirees.

A good rule of thumb to follow, which is used throughout the financial industry is called The Rule of 100. Take 100 and subtract your age. Whatever is leftover, is the amount of your portfolio that you could reasonably have at risk based on where you are at in your lifetime. (Ex. For a 60-year-old, you wouldn’t want to have more than 40% of your assets tied up in stocks, bonds, mutual funds, and other securities products which could lose value during market volatility.)

In addition to setting your mix of risky and safe assets and changing it as you get closer to retirement, you should also rebalance your At-Risk investments regularly. A long run of stock market returns can actually leave you taking more risk than you should if it isn't managed regularly.

3. GUARANTEE SOME PART OF YOUR RETIREMENT INCOME

Utilizing guaranteed income sources, which are not impacted by market volatility, like a lifetime income annuity can be a smart way to ride out a recession without serious losses. With this strategy, you will have a paycheck that you can count on each and every month, for the rest of your life, that won’t be impacted by the market.

Pensions and Social Security are also examples of stable sources of retirement income. If you’re on the verge of retirement, consider keeping enough cash in a risk-free location — like a savings account — to cover a couple of years’ worth of expenses. Cash value in permanent life insurance, like an Indexed Universal Life policy, this can be another tool for you to use to fund a cash reserve. In a low-performing market, you’ll be able to tap that cash supply instead of selling investments at a loss. As an extra plus in this environment, it will also grow tax-free.

4. DIVERSIFY, DIVERSIFY, DIVERSIFY

Without “True Diversification” the market risk to your portfolio is going to be way too high; especially for a retiree.

The goal of diversification within your investments is to keep your portfolio healthy, regardless of what the market is doing. True Diversification however, involves placing a portion of your money in a place where you absolutely cannot lose it during times of poor performance but where it will still grow at a reasonable rate of return during times that the market is doing well.

A good tool for achieving True Diversification would be a Fixed Index Annuity. These accounts grow based on certain indexes within the stock market, so you can experience the upswing of a positive market. But, they also lock in to protect your money during times of market decline so that you won’t lose money along the way. It’s a safe vehicle for your savings to accumulate at a reasonable rate of return over time with no risk.

It is important to work with a Fixed Index Annuity specialist and not an investment advisor when trying to add this product to your portfolio. This will help to ensure you are receiving the right information and that your annuity is structured correctly to meet your needs.

5. WORK WITH AN EXPERT, OR TWO!

Facing an uncertain market — especially as you close in on retirement — comes with high stakes.

A great financial advisor who specializes in securities and investments, will understand your financial goals and can guide you to investment options that help you build your savings over time. But, if making more of your portfolio safe makes sense to you for the phase of life you are in, a securities and investment advisor won’t be as effective for you, since they specialize in balancing risk as you grow your nest egg.

Especially if you are a more mature investor, you may need to seek the advice of a different kind of expert- a Safe Money Expert. This would be someone who specializes in helping more mature clients transition from At-Risk strategies to strategies that will not only protect the savings you’ve already established but will help you utilize them to meet your future income needs as well.

After all, a strong financial plan must include True Diversification if you are to properly prepare for the ups and downs of the market. That is how you safely weather a recession so that you can focus on what’s important; enjoying your retirement.

At Summerlin Benefits Consulting, we are Safe Money Experts. We specialize in Fixed Index Annuities and other strategies to help more mature investors protect their assets during a time in your life when it makes the most sense to do so. Call Today. Now is definitely the time to Take Action.