Planned Assets Planning Blog

If you were struck with a Critical Illness, Heart Attack, Cancer or Stroke and couldn’t work for six months or more, how would you meet the cost of living, pay your bill and medical cost?

Did you know?

1.3 Million Americans will be diagnosed with Cancer each year?

1 out of 2 men and 1 out of every 3 women in America will be diagnosed with Cancer sometime in their lifetime?

77% of All Cancer diagnosis will be over the age of 55?

865,000 Americans will suffer a major Heart Attack each year?

700,000 Americans will suffer a Stroke each year?

It’s not pleasant to think about what could happen to your family if you were to become seriously ill or otherwise disabled for an extended period of time.  The reluctance to confront that risk may be one of the reasons why 69% of private sector employees have no long-term disability insurance.  If you consider small business and self employed, the percentages are even higher.

If you are 55 and hit with a critical illness and can’t work, what will it do to your retirement plans?  We all are actual cognizance of the risk but still we ignore the possibilities, why is this? 

For most small business and all medium to large business long and short term disability protection is normally available at very low cost, generally at very low cost to the business or employee.  For the business not to provide it and the employee not to accept it is irresponsible, but for the very small business or the self employed it just may not be available often because of cost.  While group short and long term disability is relative affordable with very low cost this may not be the case with individual disability coverage, but there are alternatives.

If you have not explored protecting your family and yourself from a situation that most probably will ruin all of your future plans, now should be the time.

Is now the time to have a conversation concerning your plans to protect yourself, your family and your retirement from disability?  We know how to help you cover this very important problem at less cost than you may think.  Time is not on your side concerning your risk of a disabling episode; regardless of what plans you have for retirement and it will get here before you know it, a disabling episode could ruin them.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Monday’s Wall Street Journal included The Journal Report: Big Issues. Within this section was a discussion concerning Variable Annuities vs. equity investments such as bonds, stocks and mutual funds. As a financial consultant of 30 years and former Registered Rep, working with clients trying to build effective retirement incomes, I find these discussions disingenuous.

During the past 12 years we have seen the equities market plunge twice and although the DJIA and S&P are back up the recovery is shaky at best and really has no bearing on the smaller individual investor. The Dow is an index of 30 selected companies that are (stock) price weighted; a better index is the S&P 500 or the Russell 2000 Index. However, most small investors, whether investing individually or through mutual funds, recoup major losses within an effective time period effectively improving their retirement income position. As one of my clients said quoting Will Rogers, “if I had had it in a tin can, at least I would still have my money”. But what does this have to do with Variable Annuities (VA)?

In my opinion, a VA is another way for brokers to be continually paid for managing your money with the appearance of Safety. During the last equities melt down VAs took a heck of a hit, sells dropped to an astounding low and Registered Reps, brokers (to sell a VA you must be registered to sell securities) and insurance companies were losing money. Why did this happen?  If you don’t know you should find out VAs have not really changed.  Insurance companies then reinvented VAs adding what investors perceive as making VAs a safe investment. Unfortunately the proof is in extensive small print which small investor don’t read or understand if they do and Registered Reps or brokers don’t clearly explain. Regardless of the smoke and mirrors during the sales process VAs are not much different when it comes to being a safe investment than equities and often more expensive.

The really unfortunate problem is because a VA is an annuity Fixed and Equity Indexed Annuities (EIA) are painted with the same brush. Fixed and Equity Indexed Annuities are truly safe investments. Over a 20 year period an Equity Indexed Annuity will beat actual income returns from stocks bonds, mutual funds or VAs. With Fixed or EIAs you truly cannot lose money. Fixed annuities earn interest similar to CDs only better. EIAs earn interest based on indexes such as the S&P 500 but are not invested in the market. Each year interest earned is reset and becomes part of principal and principal is guaranteed. In years were we have a down market interest may, other than a guaranteed minimum, not be paid but nothing is lost and this is why over a period of years EIAs will beat the market or VAs.

Many VAs now provide guaranteed income based “only” on amount invested but require the annuity to be annuitize. {Annuitized, means the insurance company pays you a life income, but only for life, when you die the insurance company keeps any residual money in the annuity.} On the other hand Fixed or EIAs provide a rider that has an increasing income value higher than the accumulated value of the annuity and pays out any residual money within the annuity when you die.  Many VAs include or have available a death benefit or coverage, Fixed or EIAs also have availability of a death benefit, but with higher coverage.

Is VAs a safe investment? In my opinion, a VA is no safer than an equity, bond or mutual fund investment and over time can cost more. For real safety, return of and return on your money VAs, equities, bonds or mutual funds will not out perform fixed annuities or EIAs. For guaranteed retirement income why would you put your money at risk with a VA?

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement income you can count on? Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it. A conversation with us today could save tomorrow. Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

If you ask ten different people about the rules, penalties, and tax consequences of an IRA distribution, you’re likely to get 11 different answers.  The fact is a wrong move could cost you dearly.

1^st IRAs are not the same as employer sponsored plans such as 401(k) plans, so they don’t play by the same rules.  

2^nd There are two types of IRAs; Traditional and Roth and both have different rules.

3^rd With the exception of Roth IRAs and 401(k)s distributions generally require payment of income tax.

4^th Distribution rules are governed by your age as to when distributions can be safely taken and how they may be taken.  Understanding these rules can mean the difference between tax savings and a potential tax liability as high as 50%.

With a traditional IRA contributions may be or have been tax deductible, but distributions, at the time they are taken, may be taxable as income.  Your age is the determining factor as to the cost of getting your money.  If you begin taking distribution prior to age 59.5, but if you don’t take enough at 70.5 (Required Minimum Distribution (RMD)) you pay a penalty.  Generally, money taken from an IRA prior to age 59.5 elicits a 10% penalty as well as standard income tax. (If only a portion of your contributions were deductible at the time they were made, that portion plus interest is only taxable.)  Miss taking the proper RMD and it could cost you up to 50% of what you did not take in penalty tax.

As with most things the government does there are a number of exceptions to the rules:

1.     By your beneficiaries at your death.

2.     If you become disabled.

3.     If the money is used to pay qualifying medical expenses [when they exceed 7.5% of your adjusted gross income]

4.     If you are unemployed, to pay the costs of health insurance.

5.     If the money is withdrawn to pay for “higher education” cost for yourself, your spouse, children or grandchildren.

6.     If you use the money [up to $10,000] for the first time purchase of a home for yourself.

7.     If you made an excess contribution, you can take out that amount on or before the due date, including extensions, of your federal income tax return (If you leave it in, you will be subject to a 6% excise tax.).  However, if you withdraw the net income attributable to the excess contribution, it will be included in income and subjected to the 10% penalty.

8.     At any age, under what is known as the Substantially Equal Payments Exception, if payments (at least annually) are spread out over your projected life expectancy.

This is a brief review dealing with traditional IRAs only, many factors can affect you IRA distributions and this is only information not tax advice.  I recommend you consult with your financial of tax professional for more specific information.  

According to studies by the government, AARP, Americans for Long Term Care Security and many others, 50% or more of Americans over the age of 60 will require some form of Long Term Care during their life.  While the predominance of long term care recipients may face less than 3 to 5 years of care even this limited amount of care can break or ruin retirement plans for the average couple, even the moderate wealthy.   As cost for Long Term Care Insurance (LTCI) continues to increase only the very wealthy can afford to self-insure their care expenses, but these are the very people insuring against the possibility of this need. 

Over the past several years we have seen LTCI increase in cost, recently companies have ask for permission to increase rates on issued policies by as much as 90% and now we are seeing companies leave the market.

Since the advent of LTCI most Americans have been adverse in obtaining it, thinking they will never need it.  In truth LTCI appears to be a bad bet:

Traditional LTCI policies have been intended for long term care needs and nothing else.  Basically a use it or lose it policy.  Even with the advent of more flexible policies providing not only nursing home care but home health and community care the use it or lose it principle still cause’s limited acceptance of these policies. 

Insurance companies, understanding the reluctance of the public to obtain LTCI because of the principal of use it or lose it added a return of principal rider to these policies. Thus, if the policy is never used a portion or all of the premium is returned, but this rider is usually too expensive and has not increased sales of the product.  Now with LTCI in apparent disarray what are the options for this necessary product? 

One such option is Life Insurance. Over the past several years people are relearning that life insurance has a place in retirement.  Life insurance may provide tax efficient income, family protection and estate cost funding.  Life insurance allows a couple to spend more of their retirement assets because the life insurance policy will replace them. Life Insurance has always been an excellent, flexible, misunderstood and maligned product.  Life insurance long term care (LTC) riders add to the flexibility of the product and eliminate the “use it or lose it” principle of LTCI.

Those people who need life insurance or desire a product providing guaranteed income, other than an annuity, and desire some form of LTCI can obtain a LTC rider to meet this need.

The life insurance LTC rider makes a portion of the death benefit available for long term care needs.  If you have a $1,000,000 policy it’s possible to have up to $500,000 available for care needs and if never used the only cost has been the rider, because the full $1,000,000 is then paid on death.

There are two types of LTC riders that can be added to cash value life insurance policies: Acceleration riders and extension riders.  The acceleration rider allows the insured to take an advance from the death benefit if long term care becomes necessary; but then the death benefit is reduced by the amount used.  The extension rider increases the insured’s LTC coverage without detracting from the death benefit.  This form is rarely used because of cost.

For all of us the need for long term care planning is a requirement of good retirement planning.  If your plan does not acknowledge this possibility and provide for it, your plan and retirement is at risk.

Is now the time to have a conversation concerning your plans for retirement and how you can develop a retirement you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Last Wednesday evening I was having dinner as usual at church with a group of older men when the conversation turned to savings, certificates of deposit and U.S. Savings bonds.  As conversation progressed several of my friends started bragging about the number and amount of U.S. Savings bonds they had amassed over their working years.  Here we are not talking about just a few dollars, but amounts from $50,000 to $200,000 perhaps more. When I ask what they were going to do with the bonds, the general answer was hold them and pass them on to the children.  When I ask why, the general answer was tax.

This conversation presented a question as to how much did the government owe to people like my friends and how much did my friends make in interest each year on these bonds.  With just a little research I had some unbelievable information.

1.     Seniors are holding around $19 billion in expired U.S. government bonds.

2.     These bonds once expired cease to earn interest.  In other words if you hold a bond that has expired (reached it maximum value) you are loaning money to the government for free.

Why would people hold bonds that have ceased to bear interest?  People, like my friends, think that they still earn interest.  These bonds were purchased years ago and the government never sends annual reports or statements.  And, when the bonds mature and/or expire, the government notifies no one—not even heirs.   

I work with my client identifying transferred wealth, wealth being transferred out of family assets unknowingly and unnecessarily.  Generally, it is more profitable in stopping these transfers than earning higher returns on accumulated assets and with a lot less risk. 

When you stop and consider the situation how much money is being lost and how much more will be lost when tax rates increase.  This is a perfect example of a wealth transfer and one I could never make up.  The unfortunate fact is when a dollar is lost or paid that did not have to be paid, it is not just the dollar you lose but all the dollars that dollar could have made.

Is now the time to have a conversation concerning possible wealth transfers in your family assets and how you can stop the loss and redirect it to your accumulated assets or standard of living?  Time is not on your side concerning wealth transfers; money once lost is gone forever.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

1.     The most common mistake future and retired retirees make is going it alone or even worse not preparing a written retirement plan. 

a.     Because it is always about the money, anyone planning for or currently retired must plan a budget.  This budget will change from month to month, year to year, but you must know how much guaranteed income* will be or is available each year by month as far out into the future as possible.   

b.     Break down known living expense by month and subtracting it from your guaranteed income.  If this is a negative and you’re not retired yet you may have time to readjust your retirement plans.  If retired you now know the problem and may be able to make adjustments.

*Guaranteed Income is money you can actually count on each month.  This is money not at risk such as Social Security, Annuities, Insurance, Cash, even CD’s.

c.      Retirement planning is not a do it yourself task.  Finding then working with a financial a professional you like and trust is a major step in the right direction and often at no expense. There is a lot more to retirement planning than the money and how do you know if you have covered all of the basis if you don’t know what you don’t know?

2.     Retiring With Too Much Debt:  If possible you should dispose of all your debt prior to retirement.  Mortgage debt may be considered good debt, in fact paying it off may be the worst thing you can do to your financial plan, especially if you can write a portion off but this is an item most individuals must discuss with their financial professional.

3.     Lack of Insurance: Even though you have Medicare, there are still future healthcare costs not covered by Medicare, such as long term care.  Life insurance is still the least expensive way to pay final expenses, taxes and probate cost.  With life insurance you can create a tax effective income fund and insure your family is taken care of after your death.  Life insurance will allow you to spend more of your available assets and many policies will also provide help with as a form of Long Term Care Insurance.

4.     Ignoring Inflation: Inflation is a fact of life in our time.  Inflation will always erode savings, but with proper planning can be mitigated.  This type of planning is best done with the help of financial professionals using safe investment products.

5.     Relying Too Heavily on One Income Source:  Having all your eggs in one basket is never good advice and having diversified streams of income is good advice.  Even safe sources of income can fail; retirees can avoid losing all their income if one source loses value.

6.      Not Protecting Savings: Reaffirm item 5 above.  Although the stock market or other risk investment may be doing very well, as you look toward retirement you must use prudence with saved money.  Moving at least moving minimum necessary money into safe investments is effective planning.

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement plan you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

“Understanding risks you face in retirement has never been more important.”

Planning for a successful retirement requires a written retirement plan based on several foundational retirement planning foundational principals and is not a do it yourself project.  A good financial plan will cover many subjects but the one we are always concerned with most is financial.  While focusing on the financial aspects of retirement planning will not assure us of a successful retirement, not focusing on them will guarantee failure.

Following are several basic financial requirements to prepare to develop the financial part of your retirement plan:

1.     Determine how much money you must have in retirement to cover basic expenses.

a.     Develop a budget based on current “required” expenses.

b.     Develop a budget base on expected future needed expenses

c.      Outline and prioritize expenses for future plans.

2.     Identify income sources and assets available to help fund your retirement.

a.     First understand options you have with drawing Social Security benefits before you do.

b.     Identify your risk tolerance.

c.      Review the risk your assets are at and if this risk makes sense to you for the long term.

d.     Assemble all of your financial information in one place, including 3 years of tax returns.

e.      Financial information will include other assets such as property or possible inheritances

3.     Create an outline as you first see it for turning assets into cash flow during retirement.

Creating an effective financial plan is not a do it yourself project, but by the same token you must remember that your impute is the key part of any financial plan for you.   It is your job to have a good idea of what your retirement will look like, what it will cost and what functions you want your team to take.  Remember your financial team is there to advise, recommend, and provide technical expertise, it I your job to accept or reject this advice.

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement income you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

“Understanding risks you face in retirement has never been more important.”

Once we reach a certain age, we spend a lot of time thinking about retirement and as the time of retirement grows closer part of this thinking turns to worry.  Most often this worry concerns the financial aspects of retirement.  There is a lot we want to accomplish in retirement and retirement now is not the same as it was for our parents.  But with a weak economy, worry about our investments, the future of health care and inflation the question is will our finances last as long as we do?  Well worry never accomplished anything and the only way to have any chance of a successful retirement is developing an effective financial plan and then keeping it updated.

During your working years, your focus was on saving for retirement but a lot of things got in the way, college for the kids, vacations, a new house and so on, but somehow you were able save quite a bit or you still have a few years to double down on savings.  However, to be effective your plan must include more than return on investment and future income.  In fact the best retirement income plans funded by outstanding financial performance does not guarantee successful financial retirement.  Planning for a successful retirement requires a mindset encompassing more than just future income or return on investment.

The financial part of any retirement plan has many parts but in general they can be brought down to 5 key aspects.  If you understand and plan for these aspects you are on your way to developing a successful plan:

1.      Longevity; you are going to live longer than you think.  Generally most retirement plans are based on too short of a lifespan.  According to the CDC average life spans are increasing with current average into the 80s and expectations that many will reach their 90s and beyond. So the first principal is plan long.

2.     Market performance; yes, we have had a poor or worse market for several years and the market has now been on a rise for several months, but over investing with risk can have an even more significant impact on how long your savings will last.  If you can’t afford to lose it, then it should not be invested at risk.

3.     Withdrawal rate; the financial press talks about the withdrawal rate from your investment all the time, but in truth no one knows how much you should withdraw to not run out of money.  Actually withdrawal rate is not the first problem, most people lose up to 20% of income because of the way they set up distribution from Social Security, cash and retirement plans.  Loss is further increased by maintain assets in non safe investments.

4.     Inflation; there is nothing you can do about inflation, but you cannot ignore it.  At a rate of 3% inflation, $100,000 today is only worth $70,000 in 10 years and you are going to live a lot longer than ten years.

5.     Healthcare; as we all know healthcare cost is at best a moving target even for those that remain healthy.  What are your plans if your health does not go as planned?  

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement income you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

The major concern of retired individuals or those planning to retire is “out living my assets”!  The second major concern is “to not be a burden on my children”!  Of course retirees have many other objectives but these are the most important.

Factors most affecting “out living my assets” considered savings and return on investment.  Over the last several years’ retirement assets have taken multiple hits and real damage has been inflicted.  While these negative factors have, are and will continue to affect retirement, health factors are the most destructive to retirement income and assets.  Failure to consider possible health issues after retirement is not an option.

2009 the CDC projected those turning 65 and in good health could expect to live into their 80’s with the average reaching 85 and no reason not to expect even longer life.  However longer life will bring more health related issues at even greater expense, with nearly 50% of this group requiring long term care at some point in their life.  The good news; 50% of claims will last less than 1 year, 85% less than 4 years and 90% less than 5 years.

With the daily increase of retirees the average cost of nursing home care, assisted living facilities and home health care will continue to increase, with assisted living and home health care rising more quickly than nursing home care.  With these increases, rising cost of long term care insurance and companies leaving the market the percentage of retirees not obtaining or having long term care insurance is growing.  The question is how will retires meet the cost of long term care without running out of money?

From 2010-2011 the average annual cost for a private one-bedroom unit in an assisted living facility rose 7 percent now averaging $32,294.  Average hourly rate for home health aide in home care has hit $25.32 per hour and growing.  The average annual cost for a private room in a nursing home rose by a modest 2 percent last year to $70,912.

American retirees must seriously evaluate how and if they will be able to maintain their lifestyles as we live well into our 80’s, 90’s and beyond.  Although rising increase of nursing home care cost has slowed down what can we expect when the 77 million baby boomers start reaching their 80’ and 90’s?  How many will be able to afford a nursing home at $87,000 a year in just 10 short years at 2 percent inflation?

The fact is event if you only spend a year in a nursing home the impact on retirement assets can and will be overwhelming for most.  At these levels will Medicare be a solution, will it survive?      

Having no plan or waiting too long to take action is the recipe for disaster; Medicare provides limited long term care and Medicaid is not an option for those with higher incomes.  But aid from Medicaid is not just based on income, current assets will affect availability.  Even protected assets are available for recovery of Medicaid expense after death.

Is your retirement plan ready for future high medical cost? Is now the time to have a conversation concerning your plans for retirement, how you can develop a retirement plan you can count on and how you can keep from running out of money?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Are you in control of your medical care?  Those of us looking at 60 in the rear view mirror find we spend a lot more time with the doctor and have a have a lot more doctors than in our younger years but are we in control?  Why do seniors or for that matter anyone put up with doctors that are continuously late for appointments?  Why do seniors allow doctors to prescribe medication or treatment without discussing it with them and reviewing the impact of a new prescription on current prescriptions or for that matter explaining why the senior should remain on the old prescription? 

Too often seniors are treated as a group and not as an individual; we allow the doctor to make us feel it is an honor for the doctor, taking time from his busy, to see us and in reply to a question tells us we just have to expect the problem because of our age.  We are being stereotyped by age and while none of us wants to be stereotyped by age, we let the doctor get away with it.

Dr. Mark Lachs, physician and gerontologist author of the book; Treat Me Not My Age, in an interview with Maureen Mackey (AARP Bulletin, 2011) laid out why this is unacceptable treatment and why you should not accept it.

“None of us wants to be stereotyped by age, yet all too often in the world of medicine, we are defined and labeled by our years of the planet—and treated according to preconceived notions about age.  Because of this, we can potentially miss out on the unique and individualized care we need for maximum health and well-being.

Lachs asserts that none of us ages in exactly the same way.  This is especially critical, he says, “Because when we’re looking at a tremendous increase in longevity among the population, we’re also looking at more chronic illness among older people.” We need to know what is at stake.

Ageism can start early and subtly – in our 40s, 50s, 60s, Lachs says. …”You might go to the doctor for pain, and without a complete evaluation or an exam, the doctor may say, ‘You should expect that. You’re getting older.’ And that’s just crazy.”

…Patients should feel that their doctor is leaving no stone unturned, that complaints are being fairly adjudicated, and that someone is really thinking about their issues.  No ailment should ever be written off as an old age ailment.  Treating patients based on their age means you can miss very significant, treatable situations.”

Q. What can patients do about it?

A. “Among other things, outline your goals for any doctor’s visit before you arrive.  Then, try saying ‘Doctor, today I’d like to cover three things --…”

This interview is well worth full consideration and can be found at www.aarp.org. [click on entertainment, books, author speaks, and then read at Lachs]  For even more read his book “Treat Me Not My Age”.

The majority of failed retirements are due to two reasons; medical problems and debt.  While medical problems may generally be unavoidable control of debt is often, not always, self inflicted.  Control of debt is critical to any plan for retirement and a good retirement plan can help you avoid debt.

Getting into debt has always been easier than getting out, credit card balances are way up as is their interest and fees.  Investing for retirement is critical but if you’re only making minimum payment on those 10 and 15% interest credit cards is not an effective solution. Paying off high interest debt is one of the best investments you might make.  Where else can you obtain a guaranteed 10, 15 even 20% return on your money?

Getting into debt did not require a plan but getting out of debt will and the sooner you have the plan in place the faster you can move and get back on track.  Getting out of debt may even require cutting back on your 401(k) contribution or other company retirement plans but if your employer matches contributions, contribute enough to obtain maximum matching contributions.  If your retirement plan allows borrowing, doing so may be an effective plan but do not leave without paying it back first and do not violate other pay back rules, to do so may have expensive IRS penalties. Making the decision to back off on investing for retirement requires prioritizing and then staying the course.  Having a “written plan”, Budget, Focus and staying the course is the biggest problem in getting out of debt.  Living on a budget can be difficult especially if you are accountable only to yourself.  Holding yourself accountable to someone else is a proven an effective factor in success.    

Failure to pay back borrowed money such as through bankruptcy or loan forgiveness may involve hidden income tax, even penalties.  The best advice is to obtain help from one of the many agencies working with others just like you, but here again care is the watch word.  Most reputable agencies do not charge an upfront fee, before committing to any agency you must do your homework.  A financial planner cannot be as effective or obtain reduction of interest rates, fees and penalties as a credit agency is, but there are advantages in using a financial professional along with one of the credit agencies.

Is now the time to have a conversation concerning your plans for retirement, obtaining control of your debt and developing a retirement plan you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

With mortgage rate at one of the lowest rates in history, now is a good time to consider refinancing if you mortgage is over 5% interest, but which mortgage is best 15 year or 30 year.

Most people think the quicker you pay your home off the less you have to pay so those that can afford a 15 year mortgage so choose.  Those who can’t afford a 15 mortgage send in extra premiums to get the principal down and pay off the mortgage as soon as possible.  The common belief is paying your mortgage off as soon as possible will save you money.  We were all raised to believe this; it’s possibly in our DNA.  But will you really save more money paying off your mortgage?   If you are disciplined, the answer is NO!

The answer is based on a number of factors but the two most important are arbitrage and opportunity cost.  The first factor that must be understood is that there is math and there is money and using straight math the answer favors a shorter term mortgage while the math of money does not.  Consider if I have a mortgage of $250,000 at 4% for 15 years my premium is $1,849.22 per month $9,018 per year more than a 30 year note.  Over the 15 year period I have paid $82,859 in interest with a 30 year mortgage at the 15^th year I still owe $151,954, using safe investments, if I invest my money not spent on the 15 year mortgage over this period I could have earned $203,825 at 6%.  With this amount it is my choice to pay off the house or maintain control of the money for other opportunities and a higher return at the end of 30 years.

If I complete a 15 year mortgage and then invest the after tax house payment at 6% for 15 years I will have $410,632, but continuing to use the 30 year mortgage concept I will have $665,123.  More importantly I will have maintained control of my money for other opportunities of higher return.  What impact would an extra $254,491 have on your retirement income?

Is now the time to have a conversation concerning your plans for wealth management, how you can stop wealth transfers and develop a retirement income you can count on?  When you lose a dollar you did not have to lose, you not only lose the dollar but the future return that dollar could have earned. Time is not on your side concerning wealth transfers.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

A cold hard fact in retirement is health care cost.  The problem is most retirees and preretirees have no idea concerning future health care cost, fail to consider the impact of futur health care cost even for healthy retirees and will not consider the possibility of over whelming cost during retirement.  A 2011 study by the Transamerica, the Insurance company, center for Retirement Studies found that more than 40% of Americans do not have a strategy to reach their retirement goals.  Of those who do have a strategy, only 50% have considered and planned for healthcare cost, but less than one-fifth of these factored in long-term care insurance.

The truth is we refuse to consider the subject, we believe it won't happen to us.  We have Medicare with Part B and D or an Advantage plan and think that should be enough, but the truth is they do not provide full coverage.  50% of individual over 60 will spend time in a nursing home from a few day to months even years.  Medicare and Advantage plans provide very limited nursing home care. For most of us Medicaid is not an option or one we do not want to consider or qualify to receive.

When it comes to long term retirement planning most, including advisors, have a serious misconception about the cost of future health care.  When ask to estimate most guess around $5,261 a year.  However, a 2010 study found that a 65 year old health couple who retire today and lived for 20 years could spend as much as $10,750 in today’s dollars annually.  This is $15,862 in the 10^th year and $22,592 in the 20^th year at medical inflation of 3.6% and this is for health seniors.

Regardless of how well you plan investments, income or asset accumulation, failure to plan for health care cost can leave you depending on Social Security, children or family, not a place you want to go.  Today, the biggest concern of those planning for their retirement or now in retirement is running out of money yet less than 35% of retirees have an organized written plan and less than half of these have kept it up to date with periodic reviews and updates. As a wise man once said, failing to plan is planning to fail.

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement income you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Prior to the 90’s generally accepted principals were; retiring individual would have adequate income with replace ratios of 50 to 70% of earned income prior to retirement. (Lower income individuals require higher ratios)

During the 90’s these figures were bumped to 85%. A 1993 study by the American Society of Pension Professionals and Actuaries, “National Retirement Income Policy” projected income replacement ratios for those above $50,000 income as 76-73% and under $50,000 income 85-78%. 

Developing a static replacement ratio for any group is unrealistic.  Required income is individualistic and must be developed depending on health, longevity expatiation, expenditure patterns, inflation and a host of other influencing parameters.   Unfortunately even considering best guess, the amount required is almost always underestimated.  Major factors for underestimating are numerous but considering the last 20 years perhaps the most serious is; inflation (3.2% for seniors) inflation has been listed as low by the government over the past two year, but does cost for food, clothing, medication and gas really support their numbers?

Is it really wise to base adequate income on a current 50-85% need?  $50,000 at 3.20% over 30 years is $143,862.  This means it will take $143,862 to buy in 2045 what $50,000 will buy today.  Medical cost has risen even faster at a rate of 3.6 to 3.9% the last 20 years for seniors and during the past few years there has been no indication it is going to slow down.  At 3.6 in 20 years what cost a $1,000 today will cost $1,424 and long term care is rising even faster today.

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement income you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

The unified gift and estate tax credit is the lifetime federal credit available to each taxpayer to reduce the tax on taxable transfers that he or she makes during life and at death.

Prior to 2011 the gif tax credit schedule and estate tax credit schedule were not unified from 2004 through 2010.  That is, the maximum gift before taxes were imposed was $1,000,000 which was only a part of the estate tax exclusion during that period.  In 2011 the two were united and you could gift the full amount of the estate tax exclusion but only for 2011 and 2012. 

The unified gift and estate tax exclusion for 2012 is $5.12 million (adjusted for inflation) or $10.24 million for couples.  Taxable assets gifted or passed above these thresholds will be taxed at 35% if you die this year.  By having a unified gift and estate tax exclusion you do not have to wait until death to use the exemption.  This year an individual could gift $5.12 million and a couple $10.24 million without incurring the 35% gift tax, but you still must file the correct forms to notify IRS.

This gifting is often confused with the annual gift-tax exclusion which in 2012 is $13,000 for an individual and $26,000 for couples.  To add to the confusion, the annual gift-tax exclusion is per gift and is not a total. That is, I can give as many gifts of $13,000 to as many individual as I desire or my wife and I could give as many gifts of $26,000 as we desire, as long as they are to separate individuals.

Admittedly not many of us have $5.12 million or $10.26 million estates and with land values at current reduced levels you might think only large farms and ranches may reach this number, but even a farm or ranch of 40 to 50 acres could reach the $5.12 million level fairly easy as well as many medium to large family businesses. Next year, the estate and gift tax exemption is set to return to $1 million ($2 million for couples) and the tax for taxable property over that amount increased to 55%.  Will it, most likely not, but the one thing we can count on is the unified gift and tax exclusion will not remain at $5.12 million and most likely will not remain unified.

Numbers often mentioned is an estate tax exclusion of $3.5 million and gift tax exclusion of $1 million.  This means that for purposes of transferring property 2012 is a window about to be shut.  Assuming you don’t plan to die this year, we are talking about gifting of property.

The problem for small business is most families have no idea how much the family business is worth or how much it may be worth in the future.  Then there is the problem of control and an inability to turn loose of control.  But there are ways to transfer ownership without giving up control or losing income.  The other question is does the next generation of family members want to be involve in the business or even have the ability to take control and survive?  Extending ownership of a family business is a very difficult question and one without an answer sometimes until the very last moment, but the prudent business owner will not let this opportunity pass without significant investigation. 

Family farms and ranches are usually somewhat more stable in selecting future ownership and why 2012 is an important benchmark.  If future ownership can be qualified 2012 is the last year ownership may be transferred tax effectively.  Again it is not always necessary to give up full control or income making the transfer, but any family with farm or ranch of 40 acres or more should consider now how much it might cost to pass ownership at death in the future.

Unlike standard businesses, most of the money available to the farm & ranch businesses is tied up in land, equipment, the next crop or all three.  Estate tax is due within 9 months, and although there are delaying alternatives all are expensive.  If you have not obtained enough life insurance and do not have enough cash on hand how will you meet the tax and do you really want to give up the cash?  Starting the transition now may allow the farm to remain within the family rather than most or some of it remaining in the family.

Whether a nonagricultural family business, farm or ranch the window will shut December 31^st, not considering your alternatives only available for the rest of 2012 is not a viable option for any family business.

Is now the time to have a conversation concerning your estate plans and how you may tax effectively maintain the family business, farm or ranch within the family.  Time is not on your side, 2012 will be over before you realize, and we are not likely to see these tax rates again in our life time. A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Older Americans (those over 65) spent 12.9% of their total expenditures on health (2009), more than twice the proportion spent by all consumers. (Retirement Weekly March 18, 2011)

Retirement Weekly’s March 18, 2011 edition has put together an interesting insight concerning use of health care by older Americans of retirement age.  The report is taken from statistics provided at www.aoa.gov/AoARoot/Aging_Statistics/Profile?2010/14.aspx. Statistics are based on information through 2010 covering 2006-2009 and are exceedingly important to developing a retirement plan.

In 2007, about 12.9 million persons age 65 and over [3,395 for every 10,000 persons age 65+] were discharged after a short stay in the hospital, average stay was 5.6 days.  “In 2009 older consumers (65+) averaged out-of–pocket health-care expenditures of $4,846, an increase of 61% since 1999.”  As reported, Americans 65+ spent an average 12.9% of their total expenditures on health, while the general population spent less than 6.4%. “Health cost incurred on average by older consumers in 2009 consisted of $3,027 (63%) for insurance, $821 (17%) for medical services, $828 (17%) for drugs, and $179 (3.5%) for medical supplies.”

Above statistics is an average over a very large population for the period of 2006-2008.  Since then cost of Medicare part B increased to $115 per month through 2011 for many of us now somewhat lower for others much higher, but on average Medicare part B has increase 20% since 2008.  Another report from www.gao.gov/products/GAO-11-306R reports “a basket of brand-name prescription drugs increased at an average annual rate of 8.3% as typical prices for a basket of 45 generic drugs fell at an average annual rate of 2.6%.” [Retirement Weekly 3.18.2011 Health Watch]

Covering the cost of health care has always been a significant factor in designing any retirement plan, but a factor always demanding consideration.  Average inflation from 1988-2009 was about 3% annually.  However, seniors averaged 3.2% and 3.9% for health care.  Core inflation (as reported by the government) has been quite low, although real consumer inflation (which includes energy and food) has not.  Nor has or is health care inflation slowing down, the numbers are not out for health care inflation 2009-2011, but no doubt we will see an increase.  

Although these increases could be considered minor they are just a small part of health care cost for seniors, and like part B medical inflation has not slowed down even during these economic troubling times. Are you aware of the impact potential health events may have on your retirement plans?  What are your options and alternative courses of action?  Last minute planning for these events is not an option you want to consider

Is now the time to have a conversation concerning your plans for retirement and how you can develop a retirement plan you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

If you don’t have a retirement [written] plan, how do you know you don’t have a problem?  Many of us put things off until the last minute and planning for retirement is not an exception to this inclination. Federal income tax is due Monday the 17^th, yet many will spend all weekend working on income tax.  Many will miss deductions costing hundreds of dollars, because they did not plan ahead.  Yes, they can submit a corrected tax return later, but that in itself has additional cost, lost time or both.

When it comes to retirement planning, failing to plan is always expensive and very often not open to correction.  Recently, an example of this involved a new client and Social Security.  By failing to plan ahead, Social Security income was lost based on the spouse’s work history; income never to be recovered.  A little planning would have provided additional significant income for a number of years.  Now, income will never be drawn from this account.

Best retirement planning begins well in advance of any actual retirement.  As retirement draws near plans are reviewed, improved or modified to reflect changing situations or to take advantage of opportunity never before recognized or available.  Planning not started early or even after retirement commenced is no reason to not plan now, it’s more of a reason.  Contingencies unrecognized are impossible to value until they are upon you, and unfortunately, they can make a financial or retirement plan nearly worthless if they remain unrecognized or ignored.  Over the past 20 year’s inflation for seniors averaged 3.2% per year, medical inflation 3.6% per year.  Do you know what 3.2% inflation does to a fixed income over 10 years, are you ready for it? [Multiply 1.032 times any amount for as many times as number of year.)

Difficulty seeing or forecasting the twists and turns life will take after retirement is not unlike planning a car trip.  Most people spend more time planning a car trip of a few hundred miles than planning for retirement lasting 20 to 30 years or longer. 

Much in life changes slowly, plans put together today can identify concerns and objectives over much of the future.  At the very minimum, early planning may provide an approximation of actual retirement needs.  Working with current standard of living cost, less certain current expenses, times a selected long term factor can provide a close estimate of future cost and where you stand.  From this estimation you may be able to determine if you are on course to retire when you expected or need to work a little longer. Planning allows for consideration of possible obstacles and inflations that can hurt or hinder your retirement.  Making small adjusting now may prevent large problems later. 

Less than 35% of seniors have completed any type of long term or retirement plan.  Of this group, most have failed to review and update.  Economic change of the last 5 years has disrupted most retirement income concepts or plans.  However, planning is not just income, not having a durable power of attorney or medical power of attorney may cost you more than you ever thought possible, not to mention a will or trust.  May I mention Long Term Care?  I know it will not happen to you but what of your spouse? 

Is now the time to have a conversation concerning your plans for retirement and how you can develop a retirement plan you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Before and during retirement, you plan trips, different activities and hopefully a long and successful retirement.  A plan with more time for family and friends maybe even a second career, volunteer pursuits, or special interests.  Whatever your plans, mapping your route to retirement satisfaction requires ensuring your savings won’t run out before you reach your destination.

It’s no surprise, research shows that the road to retirement satisfaction is paved with good health and financial well being.  Retirees who guarantee their retirement income with annuities tend to maintain higher levels of satisfaction over time than those drawing income from liquid savings.  An annuity can help provide the fuel you need to make your income last for six reasons:

1.     Fixed Indexed Annuities Protect Your Assets:  Long-term fixed indexed annuities are issued by Life Insurance companies who have been in the business of protecting assets for centuries.  A fixed indexed annuity provides guaranteed protection of principal and interest potential you will not find with other sources of safe savings accounts such as certificates of deposit or savings bonds. In addition most fixed indexed annuities offers bonus up to an additional 10% at the inception of your contract jump starting your savings plan.

2.     Interest-Crediting: With most fixed indexed annuities you can choose up to five interest-crediting strategies. Each strategy credits interest to your annuity differently. You can elect more than one strategy, and re-elections of strategies are allowed during the 30 days following each contract anniversarywith each being guaranteeingnot to lose principal or earnings.
 
Interest-Crediting Strategies:
 
Fixed Rate Strategy: Premium placed in a Fixed Rate Strategy receives interest credited at a fixed rate that is declared at the beginning of each contract year by the company. This strategy may be ideal if you want to know at the beginning of the year how much interest will be credited to your contract during the upcoming year.
 
Choice of Four Index-Linked Interest-Crediting Strategies You also normally have the choice of up to four strategies where the interest credited to the contract is related* to the increase, if any, in one of the various indexes such as the the S&P 500® Index during the contract year. The S&P 500® Index is widely regarded as the premier benchmark for U.S. stock market performance. The index contains stocks from 500 large, leading companies in various industries. These four index-linked interest-crediting strategies may offer more interest-crediting potential than the Fixed Rate Strategy may in any given year, with the assurance that your interest credit can never be less than zero. With the index-linked interest-crediting strategies, interest is credited annually at the end of the contract year. The index credit is calculated over the contract year, NOT the calendar year. Since the interest credit is related, in part, to movements in the S&P 500® Index, the amount of interest your annuity will be credited at the end of the contract year cannot be known or predicted prior to the end of the contract year. Once interest is credited it becomes part of the principal and is then guaranteed.  {*Indexed annuities are only related to the index chosen to define interest to be credited if the index increases** over the chosen period. ** At the end of each period the policy index value is reset to the current value of the index.  If the value of the index goes down the value is reset, therefore if the index rises in the following period there is gain in the annuity.}

3.     Flexibility: Regardless of contract period selected most if not all indexed annuities allow access to at least 10% of the value of the annuity without penalty.  Allowance is made for RMDs and certain critical events in life providing penalty free access to your money.

4.     Income: Most annuities no longer have to be annuitize to obtain life income from your annuity.  Certain options or riders are available providing lifetime income, but in the event of an early death the residual annuity value is passed to your heirs.

5.     Inflation: Some annuities continue to increase your income even after the income period starts, thereby protecting your income from loss due to inflation.  

6.     Protection for Life: The biggestchallenge facing investors today is providing for adequate retirement income and income that cannot be outlived.  Fixed Indexed Annuities can make a guarantee to do just that, a guarantee no other product can provide.  

Is now the time to have a conversation concerning your plans for retirement income and how you can develop a retirement income you can count on?  Time is not on your side concerning retirement planning; regardless of when you plan for retirement it will get here before you know it.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

I have helped individuals and businesses obtain health insurance for over 25 years and am well aware of cost increase for this necessary insurance.  However, I remember 5 cent cokes and candy bars and as a kid I remember my dad buying a two story, 4 bedroom all brick house for $15,000.  All this to say the more money printed the more dollars required to meet costs.  $3.39 today will buy what $1.00 would buy in 84 considering inflation and all of us make a heck of a lot more in dollars per month than we made in 84.

Inflation is one reason Health Insurance is high in dollar cost another is the technological improvements keeping many alive and healthy. As Americans we complain about the high cost of health care, we will not accept limitation in accessing or availability of health care and realize Socialized Health Care is not the answer.  Our friends to the north and their health care system are often used as an example of good affordable coverage.  If it is so good then why do so many come south for health care, are we ready to accept the limitation, unsustainable cost and loss of technological advances?

On average, my clients pay $200 less for necessary health coverage.  This is complete major medical PPO coverage.  Why, it is all about design, actual projected used, related annual cost of optional benefits, understanding how to use the policy and what health insurance should be used for: 

1.     What optional benefits are actually used or needed and are they cost effective?

2.     Do I really understand how health insurance works and how to obtain maximum benefit and value for dollars spent?

3.     Is my agent more worried about commission than providing effective and affordable coverage?

The biggest problem I see with health insurance and the health insurance industry is the:

1.     Government

2.     Agents

3.     Insurance Companies

4.     Insured Clients

5.     Doctor’s

6.     Legal System

The government in a play for power wants to inflict a one payor system which is proven throughout the world as unaffordable, ineffective and life threading.  In 2009, according to the World Health Organization, the United Kingdom (England & Whales) had significant number of confirmed deaths due to sick people waiting for treatment by their National Health Care system and waiting times for certain necessary treatments can range from month to years.

Agents are compensated to sell the highest cost product and quickly.  Agents are not rewarded, initially, to spend time and make the effort to teach clients how to obtain and use health insurance more effectively.

Insurance companies no longer provide effective training for agents selling their product, encourage agents to sell the highest priced product and most have ceased providing effective low cost polices. 

Insured Clients do not take the effort to understand how insurance really works, how they can make their policy work better and do not hold the medical provider accountable to live up to their contract with the insurance company.  Refuse to take care of themselves and make poor decisions concerning life style.

Doctor’s, many but not all, concentrate on numbers not spending enough time with patients to help them make efficient decisions.  Require more test than necessary.  Do not police their ranks effectively, getting rid of poor and dangerous doctors causing liability insurance to reach ridiculous cost. 

The legal system is broke when it comes to health care.  Because of this, doctors’ practice defensive health treatment increasing requirements for unnessarly test and cost.  Patients with poor life style with the help of the legal system penalize doctors’ when results is not as desired even when it is due to life style. 

By making just a few changes health insurance could become more affordable.  My recommendations to start;

1.     All policies issued by a company should carry the same commission. 

2.     Policy commission should be based on policies not including doctors’ office copay benefits and increase of cost because deductible is above $2,500.

3.     Agents should not be allowed to sell health insurance without being trained under the supervision of the issuing company.

4.     Agents must have a better knowledge of how insurance works and how to teach clients to use negotiated rates.

5.     Clients must hold their agent more accountable to help them more effectively use their health insurance.

6.     Clients must hold their medical providers more accountable to meet the tenets of their contract with the insurance company.

Is now the time to have a conversation concerning your health insurance?  Time is not on your side if you are paying too much for coverage.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

It’s no joke the economy is still weak, layoffs and job loss are still prevalent, if you are employed perhaps you have been downgraded or have lower income, credit card interest charges and fees are up, no one is willing to provide a reasonable line of credit on the remaining equity in your home or your all tapped out.  But you need money and borrowing from your 401(k) looks like a good idea.  After all it’s your money and you are just borrowing from yourself.

However, your 401(k) is not that Life Insurance policy or Annuity you never took out so it doesn’t have the same advantages you get from borrowing from one of them.  Actually borrowing from your 401(k) can be more expensive than any bank or payday loan and can rate right up there with your local loan shark.  The only difference is you won’t get your legs broke when you can’t pay it back, but you will have to deal with your friends at the Internal Revenue Department. 

Borrowing from your 401(k) is not a good idea and should only be done with a great deal of fore thought and as a last recourse.  Your 40(k) is really not a bank and may very well cost you more than the money or loan is worth.  By the way I learned the hard way during the economic disaster of 2000.

Following are words of wisdom from the Financial Industry Regulatory Authority and issued as an investor alert as to considerations you need to be aware of before making the jump for a Loan or Hardship Withdrawal from your retirement savings, 401(k).

LOANS:

1.     The money you withdraw will not grow if it isn’t invested!

2.     Repayments are made with after-tax dollars that will be taxed again when you eventually withdraw them from your account!

3.      The fees you pay to arrange the loan may be higher than on a conventional loan!

4.     The interest is never deductible even if you use the money to buy or renovate your home!

5.     If you leave your job you generally must repay the entire balance within 90 days of your departure, otherwise the remaining loan balance may be considered a withdrawal.  Income taxes would be due on the full amount, and if you’re younger than 59.5, you may owe a 10% early withdrawal penalty, too!

HARDSHIP WITHDRAWALS:      

1.     Your employer’s plan must permit hardship withdrawals—not all do!

2.     The amount you withdraw cannot be repaid, and your future savings will be subject to a waiting period as well as 401(k) contribution limits!

3.     You’ll owe income taxes on the amount withdrawn, and your employer will likely deduct 20% up front!

4.     You could be subject to a 10% tax penalty if you withdraw before you are 59.5 years old!

5.     Your employer might require that you first exhaust all other available sources of funds, such as borrowing from your 401(k) or taking a commercial loan!

Is now the time to have a conversation concerning wealth accumulation and preservation?  Most individual are unaware of the money lost unnecessarily and unknowingly every month from family wealth.  Stopping the bleeding may be more effective and efficient than a 401(k) loan.  Time is not on your side concerning wealth transfers, money lost today is gone forever and the lost opportunity costs continue to accumulate. A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!