Making the Most of Your Money Now

 

By Jon Flynn

 

Jimmy worked hard over the years at the machine shop he started years ago.  It wasn’t a big operation, but it paid the bills.  Most of what he made went to taking care of his family, but he was a saver at heart.  So every week he sacrificed so he could put some money away for retirement.  He was proud of his sacrifice, but he kept that to himself.  He knew saving money was the right thing, even if he saw his buddies blowing their check at the track or the pub week in and week out. 

 

When the time came a few years ago for him to pack it in and retire, he felt he would be fine.  After all he felt he saved “enough” money. Needless to say, the crisis on Wall Street last year took its toll on Jimmy’s finances.  What can he do to right the ship?

 

Here are a couple ideas that in combination or on their own may help.

 

Immediate Annuities.   Using a portion of your savings to purchase an Immediate Annuity can be a good idea.  I’m not the biggest fan of many of the types of annuities that insurance companies promote but I do find that this type of an annuity can work really well for older seniors.  Immediate Annuities are a contract with an insurance company.  In exchange for giving the insurance company a lump sum they promise to pay you a fixed amount of annual income for life or a for a specific term. The insurance company must meet this obligation even if you break the record for longest living person in history.  Because principal may not be returned when the term you agreed upon ends, payments can be higher than you’d get from investments that return only interest. 

 

Income guarantees are available as an optional rider which carries additional fees. Guarantees are based in the claims-paying ability of the issuer and are subject to the terms and conditions of the contract. Withdrawal prior to age 59 ½ may be subject to a 10% federal tax penalty.

 

 

Reverse Mortgages.  Reverse Mortgages are becoming quite popular in America.  Essentially a loan in reverse, they can be a terrific solution for many retirees. They can allow retirees over age 62 the ability to generate a substantial amount of tax-advantaged income by tapping into one of their largest assets – the equity in their home.   You can receive free information about Reverse Mortgages by calling AARP at: 800-209-8085.

 

Investing Proceeds from Loan or Lines of Credit: Registered Representatives may not assist clients in obtaining a loan or recommend a loan if the purpose of the loan is to purchase, carry or trade securities or life insurance products. Additionally, Registered Representatives may not recommend a reverse mortgage to a client.

 

Downsizing.  It’s not uncommon to feel attached to your home.  However, if you’re willing to move to a less expensive home, many benefits can be realized.  Perhaps the kids are gone now and a big home is no longer required.  With a smaller home you may spend less on things like utilities, taxes, and maintenance.   In addition, you might also gain some non-financial benefits as well.  Smaller homes can be easier to take care of and to get around in.

 

Everybody’s situation is different and arriving at solutions can get complicated.  So always consult with financial, legal, and tax professionals before making any decisions.

 

Income guarantees are available as an optional rider which carries additional fees. Guarantees are based in the claims-paying ability of the issuer and are subject to the terms and conditions of the contract. Withdrawal prior to age 59 ½ may be subject to a 10% federal tax penalty.

 

 

 

 

Jon Flynn is a Certified Financial Planner ^TM and owner of Flynn Financial in Eynon. He is a Representative of Securities America, Inc., Member FINRA/SIPC and of Securities America Advisors, Inc. Flynn Financial and Securities America companies are unaffiliated.   Mr. Flynn can be reached at 570-876-5000.