In 2016, pre-retirees age 50 and older can contribute up to $18,000 PLUS up to $6,000 in catch-up contributions (if allowed by employer) to their 401(k) plans. Key consideration: In addition to saving more, clients may need to reposition assets in order to protect what they’ve worked hard to build. With retirement now on the horizon, they may be willing to trade some upside growth potential for reduced exposure in down markets. A fixed indexed annuity may be an ideal solution. It provides the opportunity for impressive tax-deferred accumulation based, in part, on the upward movement of a market index. And their principal is protected from market losses.
At age 55 or older, clients are permitted to take distributions from their 401(k) or other employer-sponsored retirement plan without incurring the 10% federal tax penalty on early withdrawals. Keep in mind that they will still owe income tax on these distributions. Key consideration: At this point, clients who retire early may want to allocate a portion of their retirement savings to an income vehicle they can tap into further down the road. A deferred annuity with an income rider can help clients manage risk, preserve liquidity and provide a reliable source of guaranteed income in the later stages of retirement.
To learn more about annuities for retirement planning, call 800.960.1371 and ask for Nick or Brandon.