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Financial Independence Now

Financial Independence Now

By: Randy Luebke
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 Today's retirement is about obtaining financial independence; when the assets you have provide the income you need to live the life you want, and work is no longer a requirement it's an option. Financial Independence Now provides you with strategies to help you to achieve your financial independence in a better, smarter, safer way.2023 Career Success Economics Personal Finance
Episodes
  • 0013. The 7 Benefits of 3rd Generation Annuities

    0013. The 7 Benefits of 3rd Generation Annuities
    Aug 9 2024
    In this episode, I continue my deep dive into annuities, focusing on the transformative benefits of 3rd generation annuities. These modern financial tools offer a balanced and secure approach to planning your financial future. I explore 7 key benefits—flexibility, safety, liquidity, growth, tax deferral, low to no fees, and longevity protection—and discuss how these features can empower you to achieve your financial goals. Tune in to discover how 3rd generation annuities can be a cornerstone in your journey toward financial independence. If you missed our previous episode, I highly recommend starting there to gain a comprehensive understanding of the evolution from 1st, 2nd and 3rd generation annuities and how each generation differs. This foundation will enrich your understanding of the powerful benefits I discuss today. Episode Highlights and Takeaways: Annuity - A private, portable pension plan, of which there are 3 types: 1st Generation Annuity (Fixed Annuity/FA) - Similar to a certificate of deposit (CD), where all elements of this type of annuity are protected and guaranteed. Like the CD, both the principal and earnings are protected from losses. Unlike a CD, where interest is taxed as earned, the earnings of the 1st Generation Annuity are tax-deferred until distributed. The primary method of distribution is called "annuitization". Annuitization surrenders the principle and earnings in exchange for ongoing payments/distributions. The payments are made to the annuitant for a guaranteed period of time, ranging from a specific number of years to the lifetime of the annuitant. Once annuitized, the distributions generally cannot be changed or stopped and, the principle is no longer available for lump-sum withdrawals. 2nd Generation Annuity (Variable Annuity/VA) - An annuity that primarily invests in stocks, bonds or mutual funds to provide the opportunity for higher earnings and growth. Just like a 1st Generation Annuity, the earnings of a 2nd Generation annuity are deferred from taxes until distributed and the primary method of distribution is "annuitization". However, the 2nd Generation Annuity has no guarantees to protect the principal from potential losses. In addition, the 2nd Generation Annuity is often subject to higher fees than other types of annuities. 3rd Generation Annuity (3GA/Fixed Indexed Annuity/FIA) - The 3GA is a hybrid that combines the safety, security and guarantees of a 1st Generation Annuity with some of the upside earnings potential of a 2nd Generation Annuity. The 3GA is a safe, flexible and liquid annuity, that can be designed with low or even no fees. A 3GA can be annuitized to provide income, however, most often the annuitant will choose to exercise the more flexible "Income Rider" option instead. Similar to annuitization, the Income Rider is a private, personal and portable pension-like plan that provides a guaranteed ongoing distribution of money that one can never outlive. The significant difference between the income rider and annuitization is that the principle is never surrendered, making it possible to receive lump-sum withdrawals of money as needed. Additionally, the distributions can be increased, decreased or stopped altogether. The 7 Primary Benefits of the 3GA - Flexibility, Safety, Liquidity, Growth, Tax Deferral, No/Low Fees and Longevity Protection Flexibility - The 3GA generally combines multiple earnings strategies, a variety of low/no-fee strategies, as well as a number of liquidity/distribution options to address your goals and needs today. It can also be modified if your situation changes in the future. Safety - A 3GA protects both principal and earnings from losses by eliminating drawdown risk* during the accumulation phase and, by eliminating the sequence of withdrawal risk* during the decumulation phase. With the addition of an income rider, the 3GA protects against tail-risk* as well. Liquidity - A 3GA provides ongoing penalty-free access to some of your principal at all times. If serious health issues develop, then larger amounts of penalty-free withdrawals become available as well. For example, 100% penalty-free withdrawals are always available after a specified period of time or, immediately, upon the death of the annuitant. Growth - The 3GA provides a number of crediting methods to grow your account's value, all with no market risk to the principal and earnings. Tax Deferral - Earnings are deferred from income taxes until those earnings are withdrawn. No/Low Fees - A 3GA generally has no trading costs, no M&E (mortality & expense) charges or management fees. Only optional rider fees may apply, if elected. Longevity Protection - The 3GA's income rider option is a flexible, private, personal and portable, pension-like plan, that eliminates tail-risk, the risk of running out of money, by providing guaranteed ongoing income you will never outlive.
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    24 mins
  • 0012. The 3 Generations of Annuities

    0012. The 3 Generations of Annuities
    Jul 25 2024

    In Episode 12 of the Financial Independence Now podcast, host Randy Luebke, discusses the topic of annuities, clearing up many common misunderstandings surrounding them. He compares annuities to familiar financial instruments like Social Security and company pensions, emphasizing their importance of considering the use of annuities in retirement planning.

    The episode details 3 Generations of Annuities:

    The First Generation Annuities (Gen1), or Fixed Indexed Annuities, are likened to certificates of deposit (CDs), where the investment is tied-up for a specific period of time. The interest paid is guaranteed and the principal is 100% protected from loss of value. The difference between the CD and the Gen1 Annuity is the Gen1 Annuity also provides tax-deferred earnings.

    The Second Generation Annuities (Gen2), known as Variable Annuities, invest in stocks, bonds, or mutual funds. Gen2 Annuities offer the potential of higher earnings but they generally do not offer guaranteed earnings of principal protection. Also, Gen2 Annuities almost always come with higher fees.

    The Third Generation Annuities (Gen3), also referred to as Fixed Indexed Annuities, combine the safety and guarantees of Gen1 Annuities, along with the growth potential of Gen2 Annuities. Gen3 Annuities are flexible. They offer low to no fees, as well as income rider options. The income riders provide a guaranteed amount of income distribution, generally for life. However, the principal is never surrendered, providing access to lump-sum distributions as well.

    The episode underscores the importance of understanding the different types of annuities, Gen1, Gen2, and Gen3, and the importance of evaluating their suitability based on individual financial goals and risk tolerance and utilizing available resources to make informed financial decisions.
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    13 mins
  • 0011. Budgeting for Dummies

    0011. Budgeting for Dummies
    Jul 2 2024

    In this episode of Financial Independence Now, host Randy Luebke dives into one of the most crucial yet challenging aspects of financial planning – budgeting. Randy introduces a practical strategy to simplify the process, the "false scarcity" method and categorizing expenses into essentials and lifestyle.

    Listen in as Randy breaks down essential expenses into six categories: food, shelter, clothing, healthcare, transportation, and taxes, and explains how to track and manage these effectively. He also shares insights on setting aside savings and managing payroll taxes, making budgeting manageable even for those who find it daunting.

    Whether you're struggling to keep your finances in check or looking for ways to optimize your spending and savings, this episode offers valuable tips and a straightforward approach to help you gain control over your budget and move closer to financial independence.

    Highlights:

    • The challenges of budgeting and how to overcome them
    • The "false scarcity" method explained
    • Differentiating between essential and lifestyle expenses
    • Practical steps to start budgeting effectively
    • The 20-30-50 rule for savings, taxes, and spending

    Tune in and take the first step towards a more organized and stress-free financial life.

    Links from the episode:

    Webpage with details and downloads

    The 4x4 Financial Independence Plan ℠

    The Smart 3-Tiered Cash-Reserve System ℠

    The Business Owner's Guide to Financial Freedom: What Wall Street Isn't Telling You

    The Financial Independence Toolkit ℠

    More podcast content

    Questions:

    If you have any comments or questions about this episode, we would love to hear from you. Email us at info@LifetimeParadigm.com or connect with us on Facebook https://www.facebook.com/groups/financialindependencenowpodcast

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    19 mins
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