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Roundup of Bank Reviews from 2022
Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners. In 2022, there are more banks â or financial institutions that act like banks but technically arenât â than ever. Brick-and-mortar banks where you can [â¦]
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What Is Extrinsic Value?
Extrinsic value is the difference between an optionâs market price, known as the premium, and its intrinsic value. Extrinsic value reflects the factors outside of the price of the underlying asset. This value changes over time based on the time to expiration and the volatility of the underlying asset. Read on to learn how extrinsic […]
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Solving the Income Challenge
For many people, one of the most daunting financial challenges in life is figuring out how to pivot into retirement. Itâs quite a leap to move from making a regular paycheck to being responsible for generating your own stream of income and regulating how to spend down your savings.Â
A recent Schwab study found that nearly three out of four people (72%) within five years of retirement are worried theyâll outlive their savings, and nearly six in 10 (57%) feel overwhelmed about determining how much they can spend in retirement.
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This uncertainty can be paralyzing. The average retiree still has 80% of their savings after 20 years of retirement, according to research. In one way that shows impressive discipline. In another it could show that fear is driving decision-making during a period of life when people should be enjoying what theyâve worked hard to earn.
With a retirement income plan, the challenge is how to get it right, and the good news is thereâs no shortage of products, tools and resources to help. Many providers â including Schwab â offer a range of income-focused solutions to meet different clientsâ needs and preferences. Some deliver guaranteed income, such as annuities. Others, such as bonds and managed accounts, can be utilized within a plan to generate income streams. There are also digital tools that automate the process and offer a flexible, low-cost way to generate income from a portfolio.
Itâs most important to recognize that this is not an either/or decision. In fact, sometimes a combination of these solutions is optimal, depending on your unique financial picture. Letâs break down a few options, as well as how they can work together.
If you like certainty and are comfortable handing over the reinsâ¦
Annuities can be a good starting point for your retirement income plan. There are many types of annuity products, but at their core they take the guesswork out of things by guaranteeing an income stream either over a specified period or a lifetime. That often comes at the cost of giving up control of your assets and turning everything over to an insurance company, which backs these products and their guarantees.
Thereâs a lot to like about annuities. They can provide you with confidence that you have a guaranteed income for the rest of your life or a period you choose. Depending on the type of annuity you choose, you can take payments immediately or defer them to a date down the road, and you donât have to worry about things like the stock market dropping at the wrong time.
As far as some cons to consider, the current or potential costs for annuities tend to run higher than some other options, and they generally require long-term commitments, which can make them less flexible if your retirement circumstances change. For some annuities, there can be general fees, as well as other costs associated with optional annuity riders. There may be additional charges for making early withdrawals. For income annuities that have no fees, the opportunity cost of what you could have earned if you invested elsewhere or donât live as long as the average retiree can be substantial. However, the guarantees that annuities provide can be worth it for many people.Â
If you want greater flexibility and are most comfortable having controlâ¦
Consider an automated income solution. Automated income solutions use technology to provide an easy way to pay yourself from your investment portfolio, typically at a low cost. One example is Schwab Intelligent Income®, a feature available with Schwab Intelligent Portfolios®. An automated solution can help you answer hard questions, such as how much to withdraw, how to invest based on individual goals and time horizons, and how to withdraw from a combination of taxable, non-taxable and Roth accounts in a tax-smart and efficient way.
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People like automated income tools for a range of reasons. Generally, theyâre inexpensive and allow you to retain control over your money and portfolio. With Schwab Intelligent Income, for example, you can start, stop or change the withdrawal amount, frequency and deposit location however you want. You can stay in the market, so your capital has the potential to continue to appreciate and choose an asset allocation that aligns with your risk tolerance. While not guaranteed, we believe the flexibility of the withdrawal rate that you get with Schwab Intelligent Income (which leverages a Lifetime Adjustable Income approach), positions you to help achieve your income in average or better markets. The advanced technology behind the offering also provides ongoing monitoring and alerts guiding investors to make updates if needed (such as reviewing your withdrawal rate). Additionally, the offering is designed to help manage your tax liability.
Automated income tools donât come with guarantees, however, and they can be considered mainly for clients who are comfortable with technology and a degree of automation.
Itâs also worth noting that for those who like automated income tools, these tools can often be used for income needs other than retirement too â for example, if you want to help satisfy an income need to support an aging parent or a child at college.
When a combination is optimal
The range of income solutions available today is great news for investors. In reviewing your choices, you may find that a combination of both annuities and an automated income solution might make the most sense. So how do you get started?
When it comes to the annuity portion of the equation, most investors generally have at least one type of âannuityâ providing predictable income as part of their retirement tool set already â Social Security. Adding additional forms of predictable or guaranteed income, such as a relatively efficient single premium immediate annuity (SPIA), in addition to a portfolio can provide both income flexibility for a portion of savings, and a floor of guaranteed income. In this scenario, the guaranteed income from annuities or predictable income from Social Security could be used to cover ongoing core expenses, such as medical costs, housing and utilities.
One important thing to know about SPIAs is that most donât provide payments that increase with inflation, depending on the payment option you choose. This is another reason an investor might consider adding a solution like Schwab Intelligent Income to their retirement income plan, as the offering is designed to consider inflation as it evaluates withdrawal rates, while providing flexibility for the investor to increase or decrease withdrawals if needed or desired.
By adding an automated income solution (such as Schwab Intelligent Income) to the mix, investors have the additional benefit of flexible, adjustable income from a portfolio. A good way to use this is for supplemental income for more discretionary expenses a retiree may have, including travel or entertainment. During strong markets, an investor might want to increase withdrawals from Schwab Intelligent Income to enjoy more leisure or travel expenses. When the markets decline, they have the flexibility to reduce income from Schwab Intelligent Income along with reducing these discretionary expenses. Additionally, Schwab Intelligent Incomeâs ongoing monitoring and alerts can help guide these decisions in real-time.
By combining annuities with an automated income solution, such as Schwab Intelligent Income, investors can balance income and expenses in multiple ways, and update that balance as their situation changes. Of course, it’s often a good idea to speak with a financial professional who can help talk through the options and trade-offs within any diversified retirement income plan.
The choice is yours
Solving the income challenge is complicated, but there is an array of solutions that can help. Whether you prefer the guaranteed income offered by an annuity or the flexibility of leaning on an automated solution (or a combination of both), there is a choice thatâs right for you. And remember that human advisers can play an important role too, especially for more complex needs and circumstances.
Please read the Schwab Intelligent Portfolios Solutions⢠disclosure brochures for important information, pricing and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs. Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® are made available through Charles Schwab & Co. Inc. (âSchwabâ), a dually registered investment advisor and broker dealer.
Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. (“CSIA”). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation.
Schwab Intelligent Income® is an optional feature for clients to receive recurring automated withdrawals from their accounts. Schwab does not guarantee the amount or duration of withdrawals, nor does it guarantee meeting Required Minimum Distributions. You may incur IRS penalties for early withdrawal of funds depending on the account type.
Annuity guarantees are subject to the financial strength and claimsâpaying ability of the issuing insurance company.
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15 Easy Ways to Reduce Dust In Your Apartment
The key is to clean and clean often.
The post 15 Easy Ways to Reduce Dust In Your Apartment appeared first on Apartment Living Tips – Apartment Tips from ApartmentGuide.com.
How to Gift a Stock
Stocks are a unique gift that have the potential to keep on giving over time. They can be given to family members, friends, charities, and others. Gifting stock is easy to do and can have benefits for both the giver and the receiverâthough itâs worth noting there can be tax implications for the receiver. Table […]
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The Best Personal Loans for Bad Credit of 2022
The Highest-Paying Jobs in Every State
Itâs no surprise that where you live can greatly impact your salary. But if youâre looking to increase your pay and donât want to leave your state, a career change may be a better option. In fact, so many Americans started leaving their jobs halfway through 2021 that analysts started dubbing this period of mass […]
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