An annuity is a contract between you and an insurance company for a financial product that provides a steady income during retirement. The amount and duration of your payments are typically based on your life expectancy.   Types of Annuities The three main types of annuities include: Fixed:  A fixed annuity  provides a guaranteed payout regardless of market conditions. An investor desiring a predictable income during retirement favors this type of annuity. Variable:  A varia

A Roth IRA conversion transfers funds from a pretax retirement account, such as a traditional IRA or a 401(k), to a Roth Individual Retirement Account. The process requires paying taxes on the funds the year they’re transferred, but future growth and withdrawals are tax-free.   What Are the Pros and Cons of a Roth IRA Conversion? The following pros and cons of a Roth IRA conversion impact whether a conversion might be right for you:   Pros of a Roth IRA Conversion Investment

Dollar-cost averaging involves regularly investing a fixed dollar amount, regardless of the share price. For instance, you might invest $100 on the 1 st  and 15 th of every month.   Maintaining consistency is key to developing disciplined investing habits. Increasing investment efficiency can lower your average cost per share.   For instance, if you invest $200 every month, you will purchase fewer shares when the market is up and more shares when the market is down. Over tim

A variable annuity is a type of insurance contract that combines investment with retirement income protection. Because the contract is invested in subaccounts tied to underlying investments, such as stocks, bonds, and mutual funds, it can offer higher returns than fixed annuities.   A variable annuity might be a good option if you want to stay ahead of inflation and increase the value of your retirement savings. The following information can help determine whether one might b

An individual retirement account (IRA) is a personal savings plan with tax advantages for retirement: You can set up an IRA yourself or through a licensed financial professional at a bank, brokerage firm, mutual fund company, or other financial services company. You fill out an application and make an initial contribution. The company becomes the account custodian.   You must have earned income from a part-time or full-time job to open an IRA. You can contribute to an account

You have three options for your 401(k) account when you leave a job: Leave your account in your former employer’s plan Roll your account into your new employer’s plan Roll your account into an Individual Retirement Account (IRA)   Understanding your 401(k) account fees and investment options helps you decide whether to keep it where it is or roll it over. The following information can guide you.   What Is a 401(k) Rollover? A 401(k) rollover involves transferring funds from o

A variable annuity is a retirement account. The account owner can use the funds to provide a regular monthly income, subject to the fluctuations in the value of the investments chosen for the account.   The value of a variable annuity depends on the owner’s tax situation, investment and retirement objectives, and time horizon. Talking with a licensed financial professional can help determine whether a contract is right for you.   What Is a Variable Annuity? A variable annuity

An annuity is a contract purchased through an insurance company that guarantees income for a specific number of months or years. You receive a monthly income in an amount set when you fund the contract: An annuity can be purchased through a lump-sum payment or a series of payments to the issuer. The money grows tax-deferred through interest payments or investments in a market index or stock portfolio. You receive immediate or deferred payments, depending on the timeline selec

I’ve heard many people say they metaphorically throw a dart at a board when deciding which investments to choose for their 401(k) account. Because most people weren’t taught how to select investments that align with their retirement goals, the options they end up with might not be right for them.   Knowing your retirement goals and personal preferences helps you build an investment strategy. Understanding your investment options, selecting your 401(k) investments, and staying

Like most people, you might struggle with money. Because personal finance was not taught in schools until recently, most people lack an understanding of money and how it works.   I learned about money and financial planning while working as a licensed financial coach. Fortunately, you can improve your personal finance skills without working in the industry. The following strategies can help.   Develop a Spending Plan Your spending plan  directs where your monthly income goes,

Most employers offer a 401(k) plan as part of their employee benefits package. This defined contribution plan helps employees save for retirement.   Many employers offer matching 401(k) contributions up to a certain amount or percentage to encourage employees to save for retirement. The money employees have to live on in later years depends on the amount contributed and the performance of the underlying investments.   The following are the five main types of 401(k) plans.   1

A fixed annuity is a stable, long-term investment product offering guaranteed returns and predictable payouts. Insurance companies sell the contracts as stable options for retirement savings.   Tax-deferred growth and protection from market volatility are attractive features of a fixed annuity. However, the investment product lacks inflation protection unless riders are added, and the surrender charges for early withdrawals limit liquidity.   Learning about the pros and cons

If you are changing jobs or nearing retirement, understanding your options for your 401(k) account is essential. Controlling where your money is provides peace of mind.   Whether you withdraw your money or roll it into another retirement account impacts your financial goals and tax obligations. The following information can help guide your decision.   Option 1: Cash Out Your 401(k) Account Cashing out your 401(k) account typically is not recommended: You can ask your former e

Like most employees, you might have a 401(k) account through your employer. This retirement plan helps you save money for your later...

During my time as a licensed financial coach, I started my freelance writing business. I taught myself to write grant proposals,...

When I was in my 20s, I did not know much about investing. Fortunately, I met a licensed financial coach who educated me on financial...