Everyone is watching their retirement funds disappear rapidly and panic is beginning to set in for many. What happens if they disappear entirely? What will I live on in my retirement years if everything I’ve saved for that time of life is gone? Many years of hard work and sacrifice are resulting in poverty for older people. They certainly won’t be able to get jobs, as unemployment is at a record high and many more skilled workers are available.

One suggestion that is being made is to take advantage of the current market situation and consider transferring your investment to a Roth Individual Retirement Account (Roth IRA). It is true that you will have to pay taxes on this withdrawal, but you will not have to pay a penalty if you roll your funds over into a Roth IRA. The advantage is that you will be paying taxes on the current very low balance of your account, instead of the high numbers that would have applied a year or so ago. This will greatly reduce your tax liability and free up your money to where you will never again have to pay taxes on the original amount deposited, or on the gains that hopefully will return in the future.

If you follow this suggestion and make this transfer while balances are very low, you will pay taxes now, but all deposits and gains will be tax-free in the future.

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People today are outliving their savings and are extremely worried about their future. Since no one knows how long they will live, it’s difficult to determine how long your savings will support you. What do you do when you run out of money? There are a few ways to prepare for the later years, but each has a negative side.

For many years people have been supplementing their retirement funds by owning an annuity. A fixed annuity will provide a specific amount of money to you for as long as you live. If you choose a different option, it will continue to support both you and your spouse for the remainder of your years. The negative side, however, is that when you and your spouse pass away, there will be no inheritance for your family. The insurance company keeps the remaining funds in your account.

A new product being introduced by the mutual-fund industry is “managed payout” funds. These are designed to provide a steady income flow but allow your assets to go to your heirs after death. You keep control over your money and fees are generally low. Some offer the option to choose a specific time period over which you would receive payments. They do, however, have more risk as there are no guarantees how long your monthly income will last or whether or not the amount will remain the same.

Many large mutual-fund companies are today advising investors to purchase both of the above plans. One will guarantee a specific income for life, while the other will supplement that income and still return, upon death, your fund balance to your heirs.

Popularity: 4% [?]