Presented by David Corwin
Clients at older ages need to start deciding on what sums of money will be “Leave on” or the money that they will “Live on”. Let’s look at choices that clients have to contend with.
Leave on. Let’s talk about Mutual Funds, CDs, stocks and other non-real estate type investments. These types of investments (if not held in an IRA form) will generally be extremely difficult to leave on to your loved ones. The reason is that there are no beneficiary arrangements on these types of accounts, thus the ugly word “probate” comes into play here. Still within the “Leave on” subject, annuities are beneficial in that there are beneficiary arrangements that allow the money to pass to your loved ones very easily (unless of course you don’t think that three weeks is easy), and they avoid the probate.
Live on. In the same order, I will cover Mutual Funds, CDs and stock investments. When you want to start living on Mutual Funds and stocks, it becomes problematic due to the possible long or short term capital gains you will face. Now, I will say that to get access to stocks and Mutual Funds is pretty easy due to the fact that you can just sell them to get the necessary money to live on. How long the income will last depends upon market fluctuations. Same thing with CDs, the access isn’t the problem here (unless you don’t mind waiting in long lines at the bank). You will undoubtedly out live your money; it’s a fact. Annuities, if structured properly, are the best bet for “living on”. You can annuitize, take withdrawals, or exercise the income rider.
What we have covered here is really just the tip of the iceberg and each individual has their own needs and objectives. There are certain benefits that may or may not out weigh the features of another and should be explored in depth.