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Legislative Birthdays

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  1. Legislative Birthdays A Doorway to Annuity Client Relationship Building

  2. Imagine your client as a house. Most of the times, all the doors and windows are locked. It is very difficult to get inside to build a relationship, identify needs and recommend solutions. But, every once in a while, something comes about that will cause a door to open. Something happens where a client needs to make a financial decision. If you know when that door is going to open, you can walk in and help them identify their need and present your solutions.

  3. Legislative Birthdays • Legislative Birthdays are milestones in an individual’s life where legislation has opened a door to a financial decision. • This presentation will describe those milestones and the financial decision and opportunities presented to these individuals.

  4. Legislative Milestone Birthdays • Age 50 • Age 55 • Age 59 ½ • Age 62 • Age 65 • Age 70 , 70 1/2

  5. Age 50 : Legislative Event • Can make Catch-Up contributions to IRAs and Qualified plans • 2017 Limits: • $6,000 for 401(k), 403(b), and 457 plans • $3,000 for SIMPLE IRA or 401(k) • $1,000 for Traditional or Roth IRA Catch-Up Contributions

  6. Age 50 : Life Stage • Reaching Peak Earning Years • Children in or finished with college • Well into home ownership • Sharper focus on retirement • Need to maximize savings • Age 50 – 60 is ideal for Long Term Care • May be sandwiched between children and aging parents

  7. Age 50: Opportunities • Retirement Income Planning • Asset Consolidation • May have old 401(k) plans • Maximize qualified plan savings • Non-Qualified Savings • Long Term Care • Estate Planning – Asset transfers from parents • Referral to parents

  8. Age 55: Legislative Event • If separated from service and age 55, may distribute retirement plan assets without incurring the 72(t) 10% premature distribution tax penalty. • Federal taxes (and maybe state) still apply Age 55 and Separated from Service

  9. Age 55: Life Stage • Peak Earning Years • Children in or finished with college • Well into home ownership • Sharper focus on retirement • Need to maximize savings • Age 50 – 60 is ideal for Long Term Care • May be sandwiched between children and aging parents

  10. Age 55: Opportunities • Retirement Income Planning • Asset Consolidation • May have old 401(k) plans • Maximize qualified plan savings • Non-Qualified Savings • Long Term Care • Insurance conversions at retirement • Estate Planning – Asset transfers from parents • Referral to parents

  11. Age 59 ½: Legislative Event • The 72(t) 10% penalty from annuities and qualified retirement plans no longer exists No 10% Pre-59 ½ penalty

  12. Age 59 ½: Life Stage • Retirement Approaching • Income needs to be estimated and adjusted • Subject to sequence of returns risk • Long Term Care pricing increases • Now or never for retirement savings • Estate Planning begins to become a priority • Parents may begin to need assisted living

  13. Age 59 ½ : Opportunities • Maximize qualified plan savings and supplement with non-qualified • Asset Consolidation • Retirement Income Planning • Begin structuring retirement income stream • Begin the Social Security Discussion – When to begin • May have old 401(k) plans • Long Term Care • Group Life conversion if retiring • Estate Planning • May begin RMD Spend down

  14. Age 62: Legislative Event Can begin taking Social Security • At age 62 Individuals that qualify for Social Security can begin taking a reduced income payment.

  15. Age 62: Life Stage • The Social Security decision leads to a bigger focus on retirement income planning • Income modeling and sequence of returns risk looms • Long term care pricing is increasing • If working – now or never for retirement saving • Estate planning becoming more important • Parents may be needing assisted living

  16. Age 62: Opportunities • Asset Consolidation • Pension Max if working with a Defined Benefit plan • Social Security Bridge to delay payment • Estate Planning • Group life conversion from employer • Long term care • RMD spend down

  17. Age 65: Legislative Event Eligible to begin Medicare • At age 65, individuals are eligible begin Medicare • In addition between age 66 and 68 most individuals will hit their full retirement age for Social Security

  18. Age 65: Life Stage • Generally retired • Concern to maximize income • Subject to sequence of returns and inflation risk • Estate Planning is critical • Last chance to purchase Long term Care before cost is prohibitive

  19. Age 65: Opportunities • Asset Consolidation • FIAs to address sequence of returns risk and potentially inflation risk • Pension Max if a defined benefit plan exists • Estate Planning • Long Term Care • RMD Spend down

  20. Age 70, 70 1/2 RMDs and Social Security • Age 70 is the latest you can delay Social Security • Each year Social Security is postponed, it represents an 8% increase in growth of assets • At age 70 ½, in general you must begin receiving Required Minimum Distributions from qualified plans and IRAs • Failure to take sufficient assets can result in a 50% tax penalty on any withdrawal shortfall • Some plans – 401(k), 403(b) or other defined contribution plans may allow the RMD to be postponed until April 1 of the year following the year the participant retires

  21. Age 70, 70 ½: Life Stage • Focus will be on not outliving assets and estate planning and asset transfer. • May begin to need some type of assisted living

  22. Age 70, 70 ½: Opportunities • Focus on lifetime income guarantees of income annuities • Estate Planning • Charitable giving • Asset Consolidation, prepare for asset transfer • Meet with next generation to begin relationship building

  23. More Door Openers Legislative Birthdays are the only milestones that may open the door to an individual needing to make a financial decision. Here are some more events that you can X-Date: • CDs • Auto Insurance • Homeowner’s Insurance • Mortgage Paid off • Student Loans paid off • Annual or quarterly bonus • Children out of college • Annuity “Step-Up” Dates • Bonds Maturing • End of Surrender Charges • Annuities • Mutual funds • Retirement • Birth of child or grandchild • End of day care • Term Conversion dates • Life Insurance additional purchase options

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