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The Clarendon Enterprise
Clarendon, Texas
December 15, 1994     The Clarendon Enterprise
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December 15, 1994

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199! rnS sw ,d i s h0 ysu ati04 ed t4 .co ,ati t 8 a.ln. I ona renO ty e riatd e as,} :illo. ! andt harl am" I =rig- i for Labl lad- sys- neW 1COt, 1 b i ;5.00 ; the mc nu! sio ;cuS- ps d i ipat 1 ten i ,the! andi g. 8 Thursday, December 15, 1994 A Closer Look at Fixed Investing for Retircmcm By: Edward Herring One of the most important and challenging financial decisions you will make is selecting the fight investments to protect and grow your retirement nest egg. Considering that you may spend over one-third of your life in retirement, the investment choices you make today could have a dramatic impact on your life-style in your golden years. Tbe fixed rate annuity has maintained its popularity as a retirement planning vehicle over the years. Competitive returns and the tax advantages and guarantees offered by fixed annuities have become especially attractive to investors in light of the rise in interest rates. Fixed Rate Investment Options Fixed annuities offer a wide range of investment options. Many fixed annuities provide a choice of interest rate guamatee periods, usually with rates that follow the yield curve and maturities that range from one to ten years. This flexibility allows you to develop a program to meet your specific financial goals and to adjust investment maturities as your goals change. For example, if you were to invest $10,000 in a five-year guarantee period, earning a hypothetical 6% rate of nmh-n, your investment would grow to $13,382 at the end of five years on a tax- deferred basis. If your investment horizon is longer-term, you might choose to invest in a ten-year guarantee period, earning a hypothetical rate of 6.50%. In this case, $10,000 would grow to $18,771 at the end often years on a tax-deferred basis. When your investment matures, you can choose to assemble any variety of available guarantee periods you wish through a process known as laddering maturities. Laddering Strategies Many investors express caution about investing in fixed rate guarantee periods because they are unsure about the direction of interest rates. However, many fixed annuities now offer investors the flexibility to ladder maturities, a strategy that can help ease the concerns of choosing guarantee periods. Laddering maturities generally provides an average return higher than that from investing in short-term guarantee periods alone. By allocating your investment between multiple guarantee periods of a fixed annuity (for example, 20% in each of five guarantee periods, with the fifth year earning the highest rate of return), a portion of your investment should always be earning longer-term rates and, hence, a higher blended yield than an investment in shorter-term guarantee periods. When each portion of your ladder reaches maturity, you will have the opportunity to reinvest your proceeds to take advantage of future interest rate shifts. Tax Control In addition to guaranteed returns, fixed annuities provide tax advantages. Every penny of your money goes to work for you earning interest free from current tax until withdrawn. Tax advantages can play a significant role in your long- term savings strategy. Keep in mind, however, that withdrawals from the interest portion of a tax- deferred annuity will result in taxable income and, if you are under age 59 1/2, may be subject to a 10/0 tax penalty. Fixed annuities can also minimize and potentially eliminate the taxes you may pay on your social security benefits. Through tax deferral, you may be able to minimize your current taxable income and keep your taxable earnings below the threshold where you would begin to pay tax on your social security benefits. Clarendon Uons Club Bingo Will Be Closed Dec. 24th & Dec. 31st gb (lattnben Jttes Liquidity Options In addition, fixed annuities also provide you with the liquidity to gain access to your investment prior to the end of each guarantee period. Should you need extra cash for an unforeseen reason, fixed annuities allow you to receive a portion of your funds without being subject to a withdrawal charge or market value adjustment. Usually, you will be allowed to withdraw up to 10% from each purchase payment without a withdrawal charge or market value adjustment. (however, withdrawals are subject to ordinary income tax and, if you are under age 59 1/2, may be subject to a 10% tax penalty.) Principal Guarantee Perhaps the most important benefit most fixed annuities offer investors is a 100% guarantee of principal. With a fixed annuity that contains a principal guarantee feature, as long as no withdrawals are made, you will never receive back less than the amount you originally invest. In a highly volatile market, this feature can provide investors with the security they are looking for in an investment. Dean WiRer is not a tax advisor. investors should consult their personal tax advisors before making any tax-related investment decisions. Information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed a solicitation on Dean Witter's part with respect to the purchase or sale of securities or commodities. If you would like more information about fixed investing for retirement, please write to me in care of this publication. BEFORE YOU PRESS HERE Page 7 SLIM SIDES DOUBLE S TV & VCR REPAIR P.O. Box 750 Clarendon, "Ix. 79226 Ph. (806) 874-5081 PRESS HERE I In an emergency, helpisnl on the way unless someone calls. So before you press on their chest, breathe in their moutheven checktheir pulse, call 9-1-| or your local emergency number. 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