This Often-Overlooked Way to Fund Your Roth IRA Has Many Advantages

A Roth IRA is a uniquely powerful retirement savings tool, because you won’t pay taxes on the money you withdraw during retirement. An annuity is a way of generating guaranteed income. Put them together, and you have a powerful retirement protection tool that can provide guaranteed income for life, with a big plus: It’s completely tax-free.

Anyone may roll over part or all of an existing Roth to a Roth annuity.  You may transfer all or part of the funds in an ordinary Roth to a Roth annuity. While there are income and contribution limits for new money going into a Roth IRA, they don’t apply to rollovers — including rollovers to a Roth annuity.

Different types of annuities accomplish different things and have distinct pros and cons — like the Swiss army knife of personal finance. Since they’re so varied, one type or another can work well for a Roth IRA.  Investment choices, fees and contract provisions vary, so work with an annuity agent who will educate you about your choices and clearly lay out the pros and cons.

What kind of annuity works for a Roth? It depends on which stage of your financial life you’re in. In the accumulation stage, you’re building wealth for retirement. In your decumulation stage, you’re retired and receiving income from your savings.

Here’s how Roth annuities can work in each stage.

Building wealth for those approaching retirement

One attractive option is a fixed indexed annuity. With the stock market continuing to break records, it may be vulnerable to a major long-term downturn. When you’re young, you can ride out the ups and downs. But if you’re in your 50s or 60s, you may want to get growth potential without taking the risk of losing Roth money you’ll need during retirement. If so, an indexed annuity might be a good choice for you.

It pays interest based on an underlying market index, such as the S&P 500 or the Dow Jones Industrial Average. While the interest earnings are locked in, up to a stated cap (you may not get all of the upside) each year, you’ll never lose money when the index declines.

While indexed annuities are linked to one or more underlying market indexes, their value does not vary from day to day. Instead, they pay a varying amount of interest that is credited and locked in each year on the anniversary date of the contract. Since equity markets can be volatile, indexed annuities are designed to be held long-term, whether yoked to a Roth IRA or not.

A fixed-rate annuity — also called a multi-year guarantee annuity, or MYGA — is a more conservative choice. It works like a bank CD, paying a set interest rate for a set period. Fixed-rate annuities these days pay much more than CDs of the same term. As of April 2021, you can earn up to 2.90% a year on a five-year fixed-rate annuity and up to 2.25% on a three-year contract, according to AnnuityAdvantage’s online rate database. The top rate for a five-year CD is 1.25% and 1.05% for a three-year CD, according to Bankrate. 

Fixed-rate annuities can play a key role in asset allocation. Let’s say you decide to split your Roth assets up 50-50 between equities and fixed income. A fixed-rate annuity can give you a much higher rate of interest than you’d get today with safe fixed-income alternatives, such as CDs and Treasury bonds.

For current annuity rates, see this online annuity database. Interest is paid and compounded annually.

How to get tax-free lifetime income during retirement

Other than a traditional employer pension or Social Security, an income annuity is about the only vehicle that can guarantee an income for as long as you live. And by combining an income annuity with a Roth, that income is tax-free.

If you need income from your Roth very soon, consider an immediate income annuity. You can open a Roth annuity with a single payment (such as a tax-free rollover from an existing Roth IRA) to an insurance company. The insurer in turn guarantees you a stream of income. You can choose how long the payments will last — for instance, 15 years. Most people, however, choose lifetime payments as “longevity insurance.”

You can receive your first monthly income payment a month after your annuity contract is issued.

If you’re married, consider the joint-income option. With it, your spouse will receive regular monthly income payments for the remainder of his or her life too. Payments to a surviving spouse are always tax-free.

If you don’t need income right now, consider a deferred income annuity. Here, your income stream will begin at a future date you choose. By deferring payments, you let the insurer credit more interest over the years on your behalf, and you’ll ultimately get more monthly income. For instance, by delaying lifetime annuity payments from age 65 to 75, you’ll get about 85% to 90% more each month. On the other hand, you and/or your spouse won’t receive the deferred payments as long.

Another option is an indexed annuity with an income rider. The rider guarantees a certain income regardless of the performance of the annuity. It provides income like a deferred income annuity, plus the potential upside of an indexed annuity. It’s sometimes called a “hybrid” annuity.

The downside is cost. The rider typically costs about 1% of the annuity value annually. The insurer deducts this amount from your policy.

The advantage is retaining your money. Unlike an income annuity, which typically has no cash surrender value, an indexed annuity with an income rider lets you keep your money while guaranteeing lifetime income, starting on a date you choose.  You thus have flexibility. If you need the money, it will be there for you to withdraw or annuitize. (Wait until the surrender period is over to avoid any penalties.)  If you don’t need the money, you can pass on any remaining value to your heirs.

Is the extra cost worth it?  It all depends on your situation and goals and your desire to leave money to your heirs.

Whether you’re saving for future retirement or are currently retired or soon will be, annuities offer a range of often-overlooked strategies for the Roth IRA and amplify its advantage of tax-free retirement income.

A free quote comparison service with interest rates from dozens of insurers is available at or by calling (800) 239-0356.

CEO / Founder, AnnuityAdvantage

Retirement-income expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed and immediate-income annuities. It provides a free quote comparison service. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities.


Stock Market Today: Markets Settle Down, But Backdrop Remains Rosy

Monday’s blowout session that sent the Dow Jones Industrial Average and S&P 500 to new heights was followed by much calmer, more horizontal, trading on Tuesday.

But it wasn’t for a lack of additional positive ammunition following Friday’s blockbuster jobs report.

This morning’s Job Openings and Labor Turnover Survey (JOLTS) was another window into an improving employment situation, showing that U.S. job openings hit a two-year high in February. Also, the International Monetary Fund (IMF) upgraded its 2021 outlook for both U.S. economic growth (from 5.1% to 6.4%), and global economic expansion (from 5.5% to 6.0%).

Still, the major indices spent Tuesday digesting the prior session’s gains; the Dow slipped 0.3% to 33,430, the S&P 500 was off 0.1% to 4,073, and the Nasdaq Composite was marginally off to 13,698.

Recovery-oriented stocks were among the day’s individual winners, especially those in the restaurant industry. Yum Brands (YUM, +3.1%), Domino’s Pizza (DPZ, +2.4%) and Chipotle Mexican Grill (CMG, +2.4%) all finished solidly in the black.

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Other action in the stock market today:

  • The small-cap Russell 2000 declined by 0.3% to 2,259.
  • U.S. crude oil futures improved by 1.2% to $59.33 per barrel.
  • Gold futures also were higher, by 0.8%, to $1,743 per ounce.
  • Bitcoin prices closed 1.3% lower to $58,242. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
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E-Commerce Can Still Get It Done

As great as “reopening plays” have been of late, don’t fall into the trap of thinking that all of 2020’s COVID-assisted trends are duds.

Take e-commerce, for instance.

While you might imagine a vaccinated America abandoning its keyboards for the malls, the smart money recognizes that COVID only further entrenched the already growing digital-spending trend, and they see further promise even as more people get ready to go out.

“The convenience offered by eCommerce will continue to be an important consideration to consumers as they return to travel and social activities, and those people who tried shopping online for the first time during COVID are likely to continue using these services with greater frequency moving forward,” says a team of Canaccord Genuity analysts.

Many of the best individual plays are the very same stocks that enjoyed a COVID lift, and some are considered among the market’s most innovative companies — an important quality that can drive outsized long-term returns.

But if you’re hesitant to put all your chips on one or two individual names that could get choppy over the short term, we don’t blame you, and we have a solution: e-commerce funds. Read on as we highlight nine e-commerce ETFs that leverage the growth in digital spending in a variety of ways, and explain how each one might suit different individual investors’ tastes.


Stock Market Today: Stocks (and the Fed) Stay the Course

The market flipped between minor gains and losses throughout a fairly mundane Wednesday that the Federal Reserve failed to spice up.

This afternoon, the Fed released its minutes from the Federal Open Market Committee meeting in March, and officials expressed patience in keeping its easy monetary policy in place, believing it will be “some time” until its economic and price-stability goals are met.

“Without doubt, the March FOMC meeting minutes point to a desire to maintain a highly accommodative stance of monetary policy for the foreseeable future,” says Bob Miller, BlackRock’s head of Americas Fundamental Fixed Income. But he adds that “the March meeting also saw seven of 18 participants who did not think keeping the target policy range unchanged for three more years was appropriate.

“That’s now becoming too many voices to squelch. … We think this debate will unfold further as the economy (and inflation) strengthen in the coming months.”

There were individual pockets of motion across today’s market – larger tech-related stocks such as Twitter (TWTR, +3.0%) and Nvidia (NVDA, +2.0%) headed higher, as did recovery plays such as retailer L Brands (LB, +3.6%) and cruise line operator Carnival (CCL, +1.4%).

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But the broader indexes hardly moved. The Dow improved marginally to 33,446.26. The S&P 500 gained just 0.2% to 4,079, but that was enough to mark a new all-time high.

Other action in the stock market today:

  • The Nasdaq Composite was off marginally to 13,688.
  • The small-cap Russell 2000 had a much rougher go at things, dropping 1.6% to 2,223.
  • U.S. crude oil futures headed higher again, up a modest 0.4% to $59.55 per barrel.
  • Gold futures slipped a mere 0.1% to $1,741.60 per ounce.
  • Bitcoin prices took a tumble, falling 3.6% to $56,136. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
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Which Stocks Should You Watch? Here’s What a Machine Had to Say.

Over the past few years, we’ve frequently touted the potential of artificial intelligence (AI). This technology’s ability to revolutionize everything, from industrial logistics to toasting your bread, has made the companies who enable artificial intelligence, or best utilize it, into many of the market’s top returners.

Several AI-focused funds have come to life as a result, and some of today’s most innovative companies have AI flowing through their business.

But artificial intelligence can do more than power profitable stocks – apparently, it can pick ’em, too.

Near the start of 2021, we explored an AI-powered analytics platform and some of its selections, and, since then, those stocks have clobbered the market. Naturally, we’re curious whether this “robo-picker” can continue to outperform, so we’ve taken a fresh (and expanded) look at this system’s top stocks to watch right now. You should, too.

Kyle Woodley was long NVDA as of this writing.


The Best Investors Are Dead — Here’s What to Learn from Them

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He’s not dead.
Have you thought about how your family would manage without your income after you’re gone? How will they pay the bills? Send the kids through school? Now’s a good time to start planning for the future.
Apparently it’s a Wall Street urban legend. But hey, that doesn’t mean the point doesn’t still stand. As most people will tell you, the biggest things working on any investor’s side are time and patience. Trying to time the market, panic-selling or buying due to FOMO will almost never beat the returns of long-held investments.
In other words, dead people do better in the stock market than living people, and it’s because dead people aren’t always fiddling with their investment accounts the way living people do.
We asked Robin Hartill for some stock market advice. She’s a certified financial planner and financial advice columnist for The Penny Hoarder. She recommends budgeting a certain amount of money to invest each month, no matter what.
“The timing of your investment matters much less than how much time you have to invest,” Hartill says. “The cost of waiting for the perfect time to invest is high. You’re missing out on long-term growth.”

1. Buy and Hold

Hartill’s advice: The stock market will make you money if you give it time, so you might as well get started sooner rather than later.
Ready to stop worrying about money?
*For Securities priced over ,000, purchase of fractional shares starts at Dead investors are great at not overthinking things. They just plug right along and do their thing without any fuss. That’s why their investment portfolios perform so well.

2. Don’t Try to Time the Market

**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.
Dead people know better than anyone: The passage of time is what matters most. That’s true when it comes to investing, too.
When it comes to investing, be like dead people. Don’t overthink things.
There are two kinds of dead investors: Dead people who had life insurance policies to help out the loved ones they left behind; and dead people who wish they’d had life insurance policies.

3. Get Life Insurance; Rates Start at Just $16/Month

Not sure where to start? It’s easy to set up auto-transfers so you can regularly invest with an app called Stash. It lets you choose from hundreds of stocks and funds to build your own investment portfolio. It makes it simple by breaking them down into categories based on your personal goals.
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All the more reason to sign up with Stash, where you can get started with as little as .*
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4. Don’t Overthink Things

So, real or not, these dead investors are onto something. Here are four things dead people can teach us about investing:

Now, the only problem with this cool story is there’s no evidence it ever really happened. Google results turn up plenty of stories about this supposed “study” — but no actual study.
If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.
You see, there’s this funny story that gets passed around on Wall Street. The way this story goes, one day, the chief bean counters at the financial giant Fidelity did this big study on what kinds of investors performed the best. And what they found out was, the accounts with the highest returns were classified as “dead or inactive.”
“The S&P 500 has delivered inflation-adjusted returns of about 7% per year on average for the past 50 years,” she said.
In other words, don’t try to time the market. It’s a fool’s errand to try to anticipate the various booms and crashes that the stock market will inevitably go through. Instead, start investing as early as possible, and focus on the long term.
When it comes to investing your money, dead people have the right idea.
Dead investors are the ultimate “buy and hold” investors — in this case, we mean that they just stay consistent. Dead people, as a rule, are really consistent in their behavior. <!–


You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to million with a company called Bestow.

Turning 60? Ask Yourself These 4 Important Questions

The average American plans to retire in their late 60s. If you’re within five to 10 years of your target retirement age, it’s important you take planning seriously.

There are key questions to ask yourself as you enter this milestone decade of life. Answering honestly will help you avoid costly mistakes and allow you to make any necessary changes to your retirement plan while you’re still earning an income.

1 of 4

Do I have enough money saved?

A selection of many piggy banks in different sizes, shapes and colors.A selection of many piggy banks in different sizes, shapes and colors.

One of the biggest fears I hear from people approaching retirement is outliving their savings. A general rule of thumb is to have eight times your annual income saved by age 60, however, a financial adviser can help you refine that number and set savings goals unique to your situation.

Consider your lifestyle expectations in retirement when determining how much you need to save. While $1 million might be more than enough for some to retire and live the life they want, it might not be enough for others who plan to spend more in their golden years.

You’ll also want to determine exactly when you want to retire and how long you expect to live in retirement. It’s important to consider your current health and family history when predicting your life expectancy. It’s essential to budget for different scenarios, including unexpected health care expenses, to calculate whether you have enough saved or if you need to play catch-up.

2 of 4

Will my income fluctuate?

Stacks of coins on top of rolled up dollar bills.Stacks of coins on top of rolled up dollar bills.

Yes, it most likely will, so you’ll need to be prepared for that. To tell how much of your income might be subject to fluctuations, first determine your income sources in retirement. These include 401(k)s, traditional and Roth IRAs, annuities and any savings or investment accounts. Then figure out what percentage of your retirement income will stay the same as you grow older, such as pensions or Social Security. Compare that to the income that may ebb and flow as you take money out of different retirement accounts.

For example, if most of your retirement money is in tax-deferred accounts, it’s possible your tax bracket will change over time. In turn, your nest egg could be impacted. Your retirement savings may also be impacted by stock market swings if you have money invested in the market. This is why it’s important to evaluate your portfolio and dial back on risk as you get older and closer to retirement.

3 of 4

When should I collect Social Security?

Social Security cards next to a table of numbers.Social Security cards next to a table of numbers.

You can start collecting Social Security benefits as soon as you turn 62, but for many, it might be worth it to wait until full retirement age, which is 67 for those born in 1960 or later. If you decide to tap into Social Security before your full retirement age, your benefit could be permanently reduced by as much as 30%. If you can wait until age 70, you will receive 100% of your benefit plus an additional 32%.

Another way to increase your Social Security checks is by adding more high-earning years to your work record. Social Security is calculated based on the 35 years of your career where you earned the most money. If you work more than 35 years, you can drop your lowest earning years and receive a bigger benefit in the future.

It’s important to talk through claiming strategies with your financial adviser when you turn 60. Having a plan for your benefits and claiming at the right time typically means more money in your monthly check.

4 of 4

Is my family protected?

A young mom snuggles her baby.A young mom snuggles her baby.

The financial strain of caring for a loved one is staggering. On average, family caregivers spend 20% of their income on caregiving costs. Long-term care insurance helps cover the costs of nursing home care and home health care. It can also help families pay for chronic medical conditions, like Alzheimer’s or dementia. If you are eligible and in good health, the best time to examine your long-term care options is between the ages of 60 and 65.

You also want to take a look at your estate plan as you enter your 60s. If you haven’t created an estate plan yet, meet with an estate planning attorney to get your documents in order. If you have a plan already, make sure your family knows who your attorney is and that they have copies of the legal documents they need. Review your will or trust to make sure your beneficiaries are updated.

These four important questions will help you create a retirement budget and income plan and ensure your family is taken care of. If you haven’t met with a financial adviser before your 60th birthday to put a comprehensive plan in place, gift yourself with a meeting and peace of mind as you enter a new decade.

Founder & CEO, Drake and Associates

Tony Drake is a CERTIFIED FINANCIAL PLANNER™and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.


Is the Stock Market Closed on Good Friday and Easter 2021?

Most investors will get to enjoy a holiday-shortened week. The stock market is closed on Good Friday, April 2, 2020, ahead of the Easter Sunday holiday, which falls on April 4.

As a result, no major earnings are scheduled for Friday.

But while Friday is a stock market holiday, it’s only a partial holiday for bond traders. The bond markets will shut down early, at 2 p.m., on Friday, which is a deviation from 2020: Last year, the bond market was not only fully closed on Good Friday, but also for Maundy Thursday.

Stock and bond trading resume at their normal hours on Monday, the day after Easter.

The following is a schedule of all stock market and bond market holidays for 2021. Note that regular trading hours for the New York Stock Exchange (NYSE) and Nasdaq Stock Market are 9:30 a.m. to 4 p.m. Eastern on weekdays. The stock markets close at 1 p.m. on early-closure days; bond markets close early at 2 p.m.

2021 Market Holidays

Date Holiday NYSE Nasdaq Bond Markets*
Friday, Jan. 1 New Year’s Day Closed Closed Closed
Monday, Jan. 18 Martin Luther King Jr. Day Closed Closed Closed
Monday, Feb. 15 Presidents’ Day/Washington’s Birthday Closed Closed Closed
Friday, April 2 Good Friday Closed Closed Early close
Friday, May 28 Friday Before Memorial Day Open Open Early close
(2 p.m.)
Monday, May 31 Memorial Day Closed Closed Closed
Friday, July 2 Friday Before Independence Day Open Open Early close
(2 p.m.)
Monday, July 5 Independence Day (Observed) Closed Closed Closed
Monday, Sept. 6 Labor Day Closed Closed Closed
Monday, Oct. 11 Columbus Day Open Open Closed
Thursday, Nov. 11 Veterans Day Open Open Closed
Thursday, Nov. 25 Thanksgiving Day Closed Closed Closed
Friday, Nov. 26 Day After Thanksgiving Early close
(1 p.m.)
Early close
(1 p.m.)
Early close
(2 p.m.)
Thursday, Dec. 23 Day Before Christmas Eve Open Open Early close
(2 p.m.)
Friday, Dec. 24 Christmas Eve (Christmas Day Observed) Closed Closed Closed
Friday, Dec. 31 New Year’s Eve Open Open Early close
(2 p.m.)

* This is the recommended bond market holiday schedule from the Securities Industry and Financial Markets Association (SIFMA). This schedule is subject to change.

Market Holiday Observations

When it comes to the stock and bond markets alike, if a holiday falls on a weekend, market closures are dictated by two rules:

  • If the holiday falls on a Saturday, the market will close on the preceding Friday.
  • If the holiday falls on a Sunday, the market will close on the subsequent Monday.

Stock and Bond Market Hours

The “core trading” stock market hours for the NYSE and Nasdaq are 9:30 a.m. to 4 p.m. on weekdays. However, both exchanges offer premarket trading hours between 4 and 9:30 a.m., as well as late trading hours between 4 and 8 p.m.

Bond markets typically trade between 8 a.m. and 5 p.m.

The stock markets close at 1 p.m. on early-closure days; bond markets close early at 2 p.m.