REDUCE STRESS • INCREASE INCOME • CREATE YOUR IDEAL LIFESTYLE
GUIDE
®
THE ULTIMATE GUIDE TO ACHIEVING YOUR GOALS
5
STEPS TO READY YOURSELF TO RETIRE
WHY THE AVERAGE AMERICAN IS LIKELY TO RUN OUT OF MONEY
TOP
5RETIREMENT CITIES
P U B LI S H ER’S NOTE
TURNING CHALLENGES INTO OPPORTUNITIES
PUBLISHER
Jane Sinclair
Famed Intel Corporation founder Andy Grove once said, “So give me a turbulent world as opposed to a quiet world and I’ll take the turbulent one.” At Retire Now America, we say be careful what you wish for.
EDITOR-IN-CHIEF
Tara Grier
EDITOR
Events around the world have proved quite provocative and controversial over the past year. When you add in the recent election and a global move towards populism, it leaves many people wondering, what could be next?
Traci Dawn MANAGING EDITOR
Kelsey Kleinhen CONTRIBUTING WRITERS
Anirban Basu, Dan Benson, Mike Causey, Barbara Dagostino, Traci Dawn, Robin Saks Frankel, Gordon Haave, Katie Hocker, Nancy Hulsman, David Lewis, David Pessin, Emily Peterson, Byron Udell DESIGN DIRECTOR
Two additional challenges – the good news and the bad – come in the form of rising life expectancies for women and men (climbing to 81 and 76, respectfully), and falling pension funds. This past year saw a rash of drastic pension plans cuts in nearly every region of the country, requiring some who rely on pension income to adjust on the fly. It’s no wonder many Americans worry they may not have enough to retire and enjoy the leisurely lifestyle they expected.
Chris Iatesta COVER PHOTO
by Jennifer Eastman of Sweet Bespoke Photography STYLIST
Tara Grier
MAKEUP
Aida Matthews
HAIR STYLIST
U.S. economic data is revealing some startling numbers with a chasm growing between those that “have” versus those that “have not.” The fact that nearly five out of 10 Americans cannot afford to retire, meaning they have to work for the rest of their lives, simply cannot go unnoticed.
A Retire Now America study conducted before the election indicates a whopping 68 percent of those surveyed feel some entitlements – such as Social Security and Medicare – could be reduced in the next five to 10 years. Although everyone may not share the same sentiment, this exposes the underlying angst for both pre-retirees and retirees. “How will a strengthening dollar and rising interest rates affect my retirement living standard? Where is the best place to maximize our retirement savings?” So many important questions.
Marcus Johnson
Steve & Peggy Matters Severna Park, MD MODELS
ADVERTISING SALES
Tara Grier (877)337-5500 CORPORATE OFFICE
Retire Now America’s commitment is to provide the quality information in the pages of this guide so American families, their financial advisors, CPAs and estate attorneys can make sound and prudent decisions. In these turbulent times, we all must be vigilant about our finances.
Retire Now Amaerica P.O. Box 551 Palm Beach , FL 33480 (877)337-5500
® THE ULTIMATE GUIDE TO ACHIEVING YOUR GOALS
Jane Sinclair
Jane Sinclair, Publisher
DISCLAIMER: Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this guide, they make no representations or warranties with respect to the accuracy or completeness of the contents of this publication and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representative or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
TABLE O F C ON T E N T S
RETIREMENT PLANNING GUIDE 2017
INCOME MATTERS
PLAN AHEAD
4 It’s All about the Income
14 Considering a 55+ Community?
Solving the leading concern of most Americans
What to ask before making the move
8 Why the Average American Is Likely to Run
22 Taxation on Social Security Benefits
Out of Money
Find out how much you could be taxed
And what you can do about it!
32 Money Matters
Don’t fall for these common retirement myths
34 Getting Ready to Retire?
Ask yourself these important questions
38 The Invisible Pension Bubble Will it be the next to burst?
64 Create Up to 6 Streams of Income Tips for creating more cash flow
72 Top 10 Reasons to Buy Life Insurance
48 The 90-Second Financial Checkup
A snapshot of where you are now and your income for life
Life insurance has many benefits
76 Why Long-term Care Insurance Should Be
68 Crack the Retirement Nest Egg
in Your Portfolio
70 Don’t Be Caught Without a Plan
84 5 Steps to Ready Yourself
5 simple retirement income strategies
Understanding your retirement options
The potential pitfalls of going without Questions to ask yourself to prepare
88 Add More Dollars to Your Social Security Pension ®
How to beef-up your monthly income
90 Estate Failures of the Rich & Famous What not to do to protect your wealth
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RETIRE NOW AMERICA ®
TAB LE O F C O NT ENTS
HEALTHY LIFESTYLE 12 Five Ways to Monetize Your Assets Creatively boost your monthly income
18 Retire on Purpose Things to ponder on your new path
28 Top 5 Retirement Cities The most unique, vibrant cites to consider
36 Investing in Yourself
INSIDERS’ VIEW 16 Housing for Boomers When to make a move
24 Your New President And the economic outlook for 2017
42 Protect Your Wealth Three tiers of estate planning
The role of physical, mental health in quality of life
54 Why Wealthy Folks Buy Life Insurance
46 10 Terrific Discounts for 50+
The benefits of life insurance for the affluent
When age becomes an advantage…where & how much
60 Making Money In Retirement
56 Going Organic
What Wall Street hasn’t told you
Change your diet to feel better, live longer
66 What’s Up with Uber? Be a passenger or a driver...and reap the benefits
74 5 Ways Yoga Can Improve Your Life
THE FEDERAL CORNER 50 COLA Conspiracy?
Increase flexibility, reduce stress and find balance
How cost-of-living adjustments fall short
80 The Skinny on Juice
52 The New $40,00 Buyout
Fight wrinkles and glow with these recipes
Is a buyout increase in the cards?
RETIRE NOW AMERICA ®
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THE B I G P I CT U R E
IT’S ALL about the INCOME INCOME FOR LIFE AND HOW IT SOLVES A RETIREE’S BIGGEST CONCERN
I NC O ME MAT T ER S
W
hen the average person is working for a living, they often say it’s all about the income. So why should it be different in retirement? The answer lies in what these folks did with all that income while they were working. The statistics here are not good, meaning many people did not save enough, not nearly enough to support their preretirement lifestyle. When discussing a proper retirement income plan, it’s vital to find the right advisor or company that can project – down to the penny – what your income will look like when you do decide to call it a day. In addition, the same advisor or company must be able to demonstrate, preferably with software, what happens if he dies first or if she dies first? Also, they must be able to show you what happens if death occurs now and 5, 10, 15, 20, 25 and 30+ years from now.
RETIRE NOW AMERICA ®
WHY THE CONCERN? It’s often referred to as the income cliff. Nine times out of 10 there is a fairly dramatic drop in income that can be as large as 10 to 75 percent. The average drop for affluent clientele in the Washington, D.C., area ranges from 34 to 65 percent. That’s a lot of lost income. Especially if a death occurs several years before life expectancy. Not a pleasant topic to talk about, but it is essential in talking to a couple that loves one another and is no longer working. These discussions are quite thought-provoking. It’s here that the advisor learns just how important leaving the surviving spouse in a good financial position is to the individuals he is working with. It brings up memories of their childhood, parents and even their first jobs. Since the number-one concern of retirees is whether they will run out of money in their lifetime, everyone wants to see
this picture laid out clearly for both to see so they can make the right choices based on their values and lifestyle. Quite often consumers are alarmed at how quickly the income can go poof! And it’s gone. A lifetime of work can be reduced in some cases to zero in the blink of an eye. One visit to the doctor’s office can change your entire retirement picture because of the income cliff that will occur at death. Now, to be fair, we must classify retirees into two groups – those who have a pension and those who do not. Let’s discuss those that have a pension first. How big is the pension? What is the source of the pension? Is the pension properly funded? What is the likelihood that whomever is paying that pension will lower the payments in the future? Lots of questions here. Not to mention the survivor benefits and how safe they are. The survivorship equation is the
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IN COME MAT T E R S most important to understand for married retirees because studies show that an affluent couple at the age of 65 has nearly a 90 percent chance that one will make it to age 95.
WITH PENSION When designing an income plan, all sources of income are discussed starting with guaranteed income sources such as pension and Social Security. Again, it is important to work with an advisor that spends most of their time with retirees. Most income planners do not have younger clients unless they are the children of the parents they represent. After inputting the guaranteed income sources only, an analysis is completed showing the economic impact of death for each spouse separately and at different ages. Only here can the real issue of income be properly addressed. For example, a couple may desire $5,000 a month in “guaranteed” income, but the analysis shows they only have $3,500 between their pensions and Social Security, and that’s before someone passes. The income advisor will then see what other options are available to makeup the shortfall. Most income planners are fiduciaries, which means they must put your interest above their own and that they follow the prudent person rule, which is this: What would a prudent person do in this situation? Here an advisor may show two or three separate options
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that can address the income deficiency. The options will range from vehicles that are guaranteed to others that are not. Most astute advisors will shore-up the deficiency with guaranteed sources first before addressing the non-guaranteed avenues. It’s important to note that this is before the first death, and the income analysis may well show an even greater need for guaranteed income sources depending on who passes first and when. In this analysis, the planner must consider such issues as risk tolerance, suitability, diversification, and the health of the individual. Advisors that devote their entire practice to this can ascertain the problem and the solutions in two or three meetings if there are lingering questions or concerns.
WITHOUT PENSION Now we come to the second group that has no pension at all. Often their only source of guaranteed income is Social Security. This makes the initial income analysis easier – although a bit scarier – for some who haven’t faced this income equation before. Typically, those that don’t have a pension still have saved for retirement, but in a different form such as a 401(k), IRA or 403(b). Some even have deferred compensation through 457s. The point is that this money will be analyzed by the income advisor to see how much guaranteed income the couple wants.
As far as the additional income desired, some prefer dividendpaying stocks, others prefer bonds and some want the security of income annuity. The proper advisor will show you these options and perhaps more based on your risk tolerance. The same principles apply to the individual who never married, divorced or became widowed. It’s as important for the individual to map out their income for life for the very fact that they are on their own. The choices they make can be the difference of a lifetime of income – or literally running out of money. Research by nonpartisan think tank Employee Bipartisan Research Institute (EBRI) found that by age 75, nearly 70 percent of this group rely solely on Social Security, meaning all their other sources of income have been eroded, lost or spent down (www.ebri.org).
OTHER EXPENSES After income, the next issues to consider are healthcare costs, long-term care costs, life insurance, debt ratios, inheritance, parenting your parents, estate planning and taxes, according to EBRI. The income advisor that deals with nothing but retirees and preretirees will be able to cover these issues in subsequent meetings. The issues will most certainly be addressed while formulating the income plan, but some of the topics take a bit longer to process and implement. RETIRE NOW AMERICA ®
I NC O ME MAT T ER S H EALT H CARE
CA R ETAKI NG
Let’s talk about healthcare. It’s estimated the average American can spend up to $232,000 on healthcare cost in retirement, and that’s before we get into a long-term care discussion. Long- term care and healthcare costs can completely wipe-out a plan that does not have a proper foundation. Estimates for longterm care can be up to $300,000 or more per person.
Parenting your parents is a relatively new phenomenon born out of ever-increasing longevity. Fifty years ago when people retired, they were generally gone in a few years. Nowadays it’s not unusual to see parents outliving their children. Your advisor will ask you whether you are likely to have to pay for your parents’ care as they age
L IF E INS URAN CE Life insurance is the forgotten relative in the financial equation. Many people are under the belief that since they made it this far, there no longer exist the need for life insurance. In reality, the data suggests it may be the most essential time in your life to be insured. An income advisor is generally licensed as an insurance agent and can do a proper life insurance analysis as part of your overall plan.
I N COM E Debt-to-income ratios are important as well, as most retirees prefer having little to no debt, unless they amassed a big war chest. There are exceptions to this as some people just seem to want to live a bit beyond their means. Advisors are quick to check your debt ratio because it can lead to undue stress and financial hardship if not addressed. Most planners want their clients on sound financial footing, which translates to very little or no debt. RETIRE NOW AMERICA ®
Advisors are quick to check your debt-to-income ratio because it can lead to undue stress and financial hardship if not addressed. with time, money or both. If it’s time, that means that one spouse will be devoting a good portion of their day caring for an elderly parent. The number-one cause of absenteeism in the American workplace is workers caring for a parent. If it’s money, how much is it and is that likely to go up when the parent(s) have exhausted their funds? This may take the advisor back to the initial income plan so they can factor the right amount in side funds for future usage. Senior-living facilities that care for individuals for the rest of their lives, including long-term care, are gaining in popularity. Generally, you pay a sizeable amount, depending on where
you live. And, you’ll be charged a monthly fee, sort of like another mortgage. In some cases, your beneficiaries will receive whatever is left from your payments, less the cost to take care of you. One of the first questions asked is whether you have a long-term care benefit and what those terms are.
I NHERI TANCE When it comes to inheritance, it’s generally a “yes” or “no.” If it’s a yes, your advisor needs to be aware of the approximate amount, if known, and when you are scheduled to receive the distribution. Remember, just because you are supposed to receive an inheritance doesn’t mean you will live to see it happen. What happens if you don’t live to see it happen? Where does it go? Your advisor can likely give you some guidance because they are familiar with this event and generally work with estate planning attorneys as well.
TAXES Taxes are as important as anything else. Whenever appropriate steps can be taken to reduce or eliminate taxes, your advisor will work with your CPA or direct you to another specialist that can help you. Planning for retirement is like putting a jigsaw puzzle together – with many pieces to put in place – but the ability to frame-out the picture and make it whole begins and ends with a proper income plan. RNA
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IN COME MAT T E R S likely outcome is that most Americans, unfortunately, are running out of money.
WHY THE AVERAGE AMERICAN IS LIKELY TO RUN OUT OF MONEY New research indicates the average American has a whopping 65 percent chance of running out of money in their lifetime. How could this happen? What’s the cause of this startling fact?
T
his prediction is based on a study by Stanford University Center on Longevity that identified two key influencers affecting our wealth. First is the misconception among retirees that they can withdraw a much higher percentage from their nest egg (as much as 4 or 5 percent), which puts them in danger of running out of money. The other fact is that Americans are living longer – in fact, one of the fastest growing segments is retirees 85 and older. When you combine these key trends, the Failure Probabilities by Length of Time Since Retiring, for Inflation-Adjusted Withdrawal Strategies. Asset Allocation: 40% Stocks, 60% Bonds 100
Probability that Wealth is Gone
90 80 70 60
WR = 3% WR = 4% WR = 5% WR = 6% WR = 7% WR = 9% WR = 9%
50 40 30 20 10 0
0 5 10 15 20 25 30 35 40 45 50 55
Years Since Retiring
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For many years, retirees could count on a certain withdrawal rate from their retirement accounts and live happily ever after. Those days are over because of the ultra low interest rate environment we live in today. Back in 1994, financial advisor Bill Bengen came out with the 4 percent rule, which stated that retirees could expect to withdraw 4 percent of their retirement nest egg for the remainder of their lives. This replaced the 5 percent rule, which was used widely up until 1994. How bad is it? The Stanford Longevity study says that with a mixture of 50 percent stocks and 50 percent bonds, retirees who are withdrawing 5 percent from their portfolio have a 65 percent chance of running out of money. That’s stunning. If the retiree further reduces the withdrawal to 4 percent, they still have a 43 percent chance of running out of money. These days, 3 percent or less is what fiduciaries are instructing their clients to expect as a withdrawal rate. Is it likely to continue or get worse? No one really knows, but the financial experts seem comfortable with dialing down expectations, mainly due to low interest rates and increasing longevity. As Nobel Laureate economist William Sharpe told Money Watch: “One way to avoid running out of money before you die is to buy an annuity RETIRE NOW AMERICA ®
I NC O ME MAT T ER S
A stunning 57% of Americans say they are worried about their retirement income. RETIRE NOW AMERICA ® SURVEY*
Yesterday’s Retirement Breakdown
from an insurance company, which then guarantees you a monthly payment no matter how long you live and no matter what happens in the economy.” AARP weighed in on the longevity issue in its Retirement Survival Guide, saying, “Your other option is to have another person assume your longevity risk – someone who insures a large number of retirees against precisely this danger.”
WHY THE OLD 3-LEGGED STOOL IS BROKEN Decades after World War II, the retirement model was based on a three-legged stool made up of a pension from your employer, RETIRE NOW AMERICA ®
Pension From Employer
Personal Savings
Social Security
Retirement income sources used to be: 1/3 from personal savings 2/3 from employer and government
Social Security and personal savings. With the advent of the 401(k) and IRA, pensions went by the wayside and the burden of responsibility shifted from the employer to the employee. Add to this the fact
that many pensions plans are woefully underfunded. Some people counting on a pension that was promised to them are seeing significant cuts of 30 to 50 percent or more. So the very foundation of this plan is crumbling before our very eyes. (“Is the Pension Bubble about to Burst?” pg. 38). As for savings, Americans are much more likely to be leveraged with debt than have high balances in savings. In fact, the average baby-boomer has a whopping $58,000 balance in their defined contribution plan. A recent survey of affluent investors showed their average age is 58 and the size of their defined contribution plan is $385,000.
*Data based on Retire Now America® research using SurveyMonkey®.
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IN COME MAT T E R S Add to this the lack of savings in defined contribution plans and the fact that nearly 4 out of 10 Americans expect to receive 30 percent or more of their retirement income from employment, and they may never fully retire. That’s not what many people envisioned for their future retirement years. Throw in the fact that pensions have pretty much gone by the wayside and represent only 18 percent of the average retiree’s income.
Today’s Retirement Breakdown Pensions 18.5% Social Security 36.5%
Asset Income 12.7% Earnings 29.6%
Typical Income Sources for Current Retirees Source: Social Security Administration, 2010
Nearly 68 percent of those surveyed by Retire Now America say they expect Social Security and Medicare benefits to be cut in the next five to 10 years. As far back as 2010, Kiplinger’s reported, “When deciding how much to invest into an annuity, add up your expenses and subtract out your guaranteed income sources such as social security and pension income and buy an annuity to fill the gap.”
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We at Retire Now America find it interesting that top financial publications from The Wall Street Journal, Kiplinger’s, Barron’s and Harvard Business Review are recognizing that the discussion these days is monthly income, not net worth. The majority of retirees are most concerned about their ability to maintain their preretirement lifestyle. Anirban Basu, chairman & CEO of Sage Policy Group, Inc., agrees. “It may be time to give annuities a chance. Since roughly the mid-1990s, the conventional wisdom has been that retirees can take out as much as 4 percent of their savings during their initial year of retirement and then take out a similar amount during ensuing years (adjusted for inflation),” he says. “However, this formula presumed that retirees could generate income from their fixed-income investments. With interest rates often below 4 percent, taking 4 percent out of savings means cutting into principal.” Basu further explains, “With negative interest rates still pervasive in much of the advanced world, including Japan and Europe, and with key U.S. interest rates still below 2 percent, the old savings spenddown formulas are faltering. Retirees need new sources of income. While dividend-paying stocks represent an option that many retirees have migrated to, this leaves their nest eggs vulnerable to corrections and bear markets.”
The answer may be simpler than one might have thought, Basu concludes. “But imagine if a retiree could find an annuity that supplies a rate of return that allows for the traditional 4 percent drawdown formula to remain intact or better. Many of today’s annuities offer a 4 to 6 percent yield or guaranteed income payment with 100 percent survivor benefit. While The Wall Street Journal and other publications have printed articles suggesting that the 4 percent drawdown formula no longer works, annuities offering income riders have effectively become the new pensions – and at a time when retirees and near-retirees are more concerned than ever about outliving their savings. It’s time for advisors to give annuities another look.” A recent Legg Mason survey of affluent investors points out some compelling statistics. It indicates retirees will need an average of $2.5 million to maintain the same quality of life in retirement. The investors surveyed said they spend, on average, an hour and 20 minutes each day thinking or worrying about money. That amounts to more than nine hours a week, or 485 hours a year. One might say it’s become the new “hobby” for too many investors. Those that work in the retiree market have noticed this trend for years, that the world is indeed changing, and the need for proper planning for retirement has never been greater. The earlier you to start to examine this, the better. RNA RETIRE NOW AMERICA ®
5 WAYS
TO MONETIZE YOUR ASSETS by Robin Saks Frankel
YOU’VE WORKED HARD, SAVED HARD AND IN RETIREMENT YOU WANT TO PLAY HARD. VISIONS OF EXOTIC DESTINATIONS, ENDLESS GOLF GAMES AND SPOILING YOUR GRANDCHILDREN ARE ON YOUR MIND. BUT THESE PURSUITS, ALONG WITH OTHER RETIREMENT ASPIRATIONS, CAN BE COSTLY.MAYBE BETWEEN YOUR NEST EGG AND SOCIAL SECURITY PAYMENTS YOU HAVE ENOUGH TO LIVE COMFORTABLY, BUT NOT QUITE CHASE YOUR DREAMS. OR PERHAPS YOUR PENSION PLAN DIDN’T LIVE UP TO EXPECTATIONS. WHATEVER THE REASON, RETIREES LOOKING TO EARN EXTRA INCOME SHOULD CONSIDER USING AN ONLINE MARKETPLACE TO MONETIZE THEIR ASSETS. HERE ARE FIVE WAYS TO CREATE REVENUE IN RETIREMENT.
H EALT H Y LI FES T YL E
1 RENT YOUR HOME 2 RENT YOUR CAR 4 MR. FIX-IT
Travelers today, especially the younger generation, are more likely to jump online to price out a vacation than call a travel agent. Home-sharing sites, like AirBnb and HomeAway, have become increasingly popular choices for those seeking a good value or unique experience than what can typically be found at hotels. These sites are also a great way to earn extra income. Here’s how it works. Essentially, the sites are online marketplaces, connecting renters with homeowners. Whether you own a 2-bedroom condo in an urban high-rise or a ranch-style home in the suburbs, chances are someone will want to rent it. Some savvy owners even plan their vacations around renting out their home, earning money while they’re away. AirBnb, one of the more popular sites these days, is known for its fairly strict screening process for potential landlords or renters. All members must upload a government ID and photo, as well as provide some basic information about themselves. There’s an option to link to your social media profiles so the parties can get to know each other better and see if it’s a fit. For example, if your Facebook page is filled with photos of you and your shaggy dog, this can help those with allergies steer clear. Similarly, if you see questionable activities on someone’s social media, this may not be the right fit. RETIRE NOW AMERICA ®
Renting out your car to others can be a great way to turn a depreciating asset into a cash cow. If you plan on taking an extended vacation and don’t need your car, or don’t drive every day. Or, if you and your spouse have a second car, you may want to consider signing up for a service like Turo or RelayRides.
The services aim to remove the hassle of renting a car from a bricks-and-mortar store by connecting travelers directly with car owners. The company performs background checks on renters and offers up to a million dollars in liability and theft insurance without any fee to list your car. In return, they keep a percentage of the predetermined rental price and the rest gets deposited into your bank account.
3 FILL YOUR NEST
Once the kids have grown up and moved out, many retirees find themselves with extra space – bedrooms, closets, even garage space that can be turned into potential moneymakers. Companies like Roost have jumped on the space-sharing bandwagon, but instead of having strangers stay overnight in your home, you can earn money just by storing their stuff. As with other marketplaces, insurance and background checks are included to help ensure your safety.
Handy types can combine their tools and knowhow into lucrative side gigs. Do-it-yourselfers can register on TaskRabbit to help those who might be all thumbs or just need a pair of extra hands. Projects range from furniture assembly to hanging shelves to moving furniture. Even those who don’t know a Phillips from a flat head can pad their pockets getting paid to grocery shop, help pack for a move, or do some housekeeping.
5 BE A TOUR GUIDE
Are you an expert on local history, the best spots to eat, or the most scenic spots around your town? Share what you love about where you live by giving a curated tour on Vayable. Depending on where you live, you can offer a tasting tour of the local cuisine or a photography excursion examining the regional flora. Although this may not be as steady as some other income opportunities, it’s a terrific way to turn your passion into profits. You don’t need a lot of technical know-how to get started. Most of the established online marketplaces are so userfriendly that you can even access from a smartphone. With just a few clicks you can start earning extra money in no time. All the sites we mentioned have detailed help to get you started. Start boosting your income today! RNA
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IN COME MAT T E R S
CONSIDERING
A 55+ COMMUNITY? G etting older does not mean enjoying life less. Just look around. More people than ever are living longer and finding fulfilling ways to spend their senior years. From advances in healthcare to extensions in overall longevity, many factors can change the way we age and the way we want to live. In fact, you may have noticed 55+ communities springing up all around you. Some are townhouse communities and apartment complexes where seniors gather to enjoy the good life, without the need for constant upkeep,
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home repairs and lawn care. Others provide more space, with single-family houses, garages and other amenities. No matter which type of 55+ community appeals to you, there are some key questions you need to ask before signing up or moving in.
It is important to understand the ground rules regarding overnight visits and stays by those under the age range established by the community. Knowing the rules upfront is the best way to avoid problems and hard feelings after you move in.
CAN THE GRANDCHILDREN COME TO VISIT?
WHAT LEVELS OF CARE ARE AVAILABLE?
Few 55+ communities would have a problem with an occasional visit by your children and grandchildren, but some set strict limits on the number of overnight stays younger people can enjoy.
One of the biggest advantages of moving into a senior living community is the ability to age in place and have your needs met as the years tick by. You obviously hope you will never need nursing care or other RETIRE NOW AMERICA ÂŽ
P LAN AH E AD long-term care services, but it is important to be prepared. Ask the intake counselor or representative about the levels of care they offer and the costs associated with moving from one to the other. Some senior living communities provide a comprehensive list of services for a set price, while others ramp-up the charges as care needs increase.
ENTRANCE FEES: HOW MUCH ARE THEY AND ARE THEY REFUNDABLE? You will probably have to pay an entrance fee to move in, so be sure to ask how much it is and when it is due. Also be sure to ask if the fee is refundable; senior living communities are not for everyone, and you do not want to be stuck with a huge expense if you decide a 55+ community is not the right choice for you (or your spouse, if married). It’s a good idea to shop around local communities and compare entrance charges and monthly
RETIRE NOW AMERICA ®
fees. The cost of living in senior facilities vary greatly, and you want to get the best deal.
activities, from shopping excursions and plays to nature hikes and tennis tournaments.
MONTHLY FEE: HOW MUCH IS IT AND HOW OFTEN DOES IT INCREASE?
Seek a facility that matches your needs and desired lifestyle. If you love the outdoors, a 55+ community with hiking trails, fountains and gardens would be a great choice. If you are an art lover, a community with lots of trips to museums and cultural activities may be more appealing. RNA
The affordability of senior living communities varies a great deal, and it is important to choose one that meets your needs and your budget. Knowing the current monthly fee is not enough – you also will want to know how much and how quickly such costs have risen since the community was founded. Ask the facility’s representative for a history of fees. Controlling expenses is important, especially if you are retired and living on a fixed income.
WHAT KINDS OF ACTIVITIES ARE OFFERED? One of the main attractions of living in a 55+ community is the chance to mix and mingle with people your age. Many places offer a host of organized
TAKEAWAY IF YOU ARE READY TO RETIRE AND DOWNSIZE YOUR LIFE, MOVING TO A SENIOR LIVING FACILITY MAY BE A SMART IDEA. BUT TAKE YOUR TIME AND DO PLENTY OF RESEARCH REGARDING THIS IMPORTANT DECISION. KNOWING WHICH QUESTIONS TO ASK AND WHAT TO LOOK FOR WILL MAKE YOUR MOVE EVEN BETTER AND THE TRANSITION SMOOTHER.
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IN SI D E R S’ VI E W
HOUSING
FOR BOOMERS W H E N TO MAKE A MO V E…
by Nancy A. Hulsman, GRI
W
hen is the best time to right-size to a home that’s better suited to your needs? If you’re in the 60+ crowd, there are plenty of factors that can influence that decision. Maybe you are a fresh empty nester, or you want to get serious about retirement planning. Has the maintenance on your current home become too much to handle? Or perhaps you just
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want to be part of the latest housing trend and simplify your home life. No matter the scenario, this housing trend among baby boomers is going to stick around for a while. The U.S. Census Bureau predicts the number of Americans aged 65 and older will more than double by 2030, increasing from 35 million in 2010 to an estimated 72 million. According to the National
Association of Home Builders, home sizes have dropped since the building boom of 2006 – from 2,309 sq. ft. to 2,169. The trend towards smaller homes seems to be lasting longer than in previous recessions. Getting older doesn’t mean you have to slow down or compromise on the lifestyle you want. It just means you have to make informed, calculated decisions on how to best achieve it. This is especially true when it comes to home ownership. If you are thinking about downsizing, ask yourself some questions first. For example, “What kind of lifestyle do I want?” For some, it’s a matter RETIRE NOW AMERICA ®
I NS I DERS ’ V IEW
Getting older doesn’t mean you have to slow down or compromise on the lifestyle you want. of living a simpler life focused on family. Others may want to travel to dream destinations. Some might want a lowmaintenance community with high-end upgrades and social events. Deciding what you want to achieve first will help you narrow down your options. As an associate broker in the Maryland marketplace, I see this type of client making two different types of move choices. The first type is retirees looking to enjoy freedom. Often they seek an active adult community where they can meet likeminded people and easily form new relationships. The second type involves retirees who have enjoyed their freedom for a few years, but then decide to move closer to family in order to have the support and care they may need. Setting a budget ahead of time and planning will give you an edge on your investment. As you enter retirement, you’ll likely be on a fixed income. Downsizing will usually net you a decent profit, especially if the home you’re buying costs less than the one you’re selling. Consider other expenses such as medical, insurance, travel, estate planning, home maintenance, and taxes. Downsizing doesn’t mean you have to lower the quality of living. In fact, baby boomers are upsizing to luxury. Baby boomers continue to drive sales RETIRE NOW AMERICA ®
in the luxury real estate market, according to recent reports. They are choosing homes with higher finishing features and prestigious neighborhoods. Home builders are reacting and building more 55+ communities that satisfy this demand.
costs. That can be a mirage because many home expenses are hidden. Maintenance really adds up, especially when large items need to be replaced or upgraded such as roofs, furnaces, appliances and landscaping.
WHEN TO SELL
As retirees age, there are lifestyle issues and changes that come into play, such as the desire to be with older people with similar needs and interests. The comfort in knowing that they made this decision prior to their spouse’s death can ease their emotional burden, as well as ensure their family will be able to take care of the details when that time comes.
As a real estate agent, I am always asked when the time is right to sell a home. If you are thinking about selling, sooner is always better than later, so speak to a real estate agent for advice. For most, your home is one of your largest assets. It is also one of your biggest expenses. Unfortunately, when it comes to retirement planning, your house often is the last thing you think about. Most people wait well into their retirement before consulting with a real estate agent about planning where they will live, and what size home and features they want. Good planning can save you thousands. Many of my baby boomer real estate clients have benefited from selling sooner rather than later. The financial benefits may not seem huge at first, but over time they can make a meaningful difference in extending the life of a financial portfolio. Many think that trading a house with a paid-off mortgage for a condominium or retirement community with maintenance or associated fees will lead to higher monthly
Is deciding to downsize your home and your community a lifestyle or financial decision? In the end, it is a little of both. Changing your home and lifestyle can be an effective way to unlock your home equity and enjoy the next stage of life. Do your homework. Take opportunities to explore your choices and understand the trade-offs. The best place to start is to contact your real estate agent and your financial advisor. They will help make the best decisions for your individual life situation. RNA Nancy A. Hulsman, GRI, is an associated broker in the Maryland market area. She has practiced real estate since 1985 and is ranked in the top 1 percent of U.S. agents.
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RETIRE ON PURPOSE By Dan Benson
5 OVERLOOKED ESSENTIALS TO PLANNING
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H EALT H Y LI FES T YL E
I
f you’re like most people nearing retirement, your personal finances may be the sole emphasis of your retirement planning. But there’s a critical non-financial component you should include in your plan – essential elements that many almost-retired people overlook. Your answers to these five crucial questions will go a long way in determining the quality and fulfillment of your retirement years.
AM I READY? Without careful consideration of your emotional readiness, you could be like the millions of the recently retired who find they miss the daily challenge and camaraderie of the working life. The sudden cessation of the daily affirmations could leave you feeling lost and lonely with little sense of purpose. A helpful question to ask yourself is, “Do I want to quit work, or just this job?” If you’re truly ready to stop working, great. But if you’re just weary of your current job or its politics, perhaps another role, or a transition to part-time is the best course until you’re truly ready to pack it up for good.
WHAT DOES RETIREMENT MEAN TO ME? The majority of new retirees enter this phase of life with little idea of how they want their retirement to look. Some only dream of travel, time with grandkids, or chasing the small white ball along the fairways. RETIRE NOW AMERICA ®
Sure, you’ll want to enjoy all of the above. But remember that your retirement may last 20 to 30 years. You can’t travel every week or spoil the grandkids every day, and golf may fill a few days a week at most. So dig down to the next level and consider retiring “on purpose.” In your ideal, wellrounded retirement, how will you spend your days? What blend of activity and lifestyle will help make those years the best of your life?
WHAT IS MY NEW DREAM FOR THE REST OF MY LIFE? What dreams have you put off – people you’ve wanted to know, places you’ve wanted to go, knowledge you’ve wanted to gain, or sights you’ve wanted to see? Maybe you always wanted to take that course in American literature or auto mechanics, music appreciation or zoology. You may wish you had read more books or learned a new language or skill. If you find yourself thinking, I only wish I had tried…perhaps this is the very dream worthy of your time and energy in the years ahead. Actor John Barrymore said it well: “A man is not old until regrets take the place of dreams.” Identifying and pursuing a dream is key to staying young in your later years. What dream would you like to pursue?
HOW WILL I PAY IT FORWARD? All of us were created with the innate need for ongoing productivity and contribution. When you retire, if you suddenly cease producing and contributing, a big part of your gratification will be missing. Nothing will cause your spirit to sing more than giving back. How can you make a difference in retirement? Maybe these suggestions will spark some ideas: • Help build a home with Habitat for Humanity. • Volunteer at your local homeless shelter. • Visit and encourage assistedliving patients. • Help friends who need to get away by offering to house-sit or pet-sit. • Take a literacy-training course and teach someone to read. • Read to those who cannot. • Affirm and encourage a teen. • Make teddy bears for children at the local hospital. • Volunteer (and self-finance) a short-term mission trip. • Write notes of affirmation and encouragement to friends and acquaintances. The possibilities are endless. Giving back keeps endorphins flowing in your brain and puts a passion in your heart. How will you make a difference?
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HOW WILL I KEEP LEARNING AND GROWING?
• Attend a seminar on a topic that interests you at least every six months.
• Learn to play a musical instrument or brush up on one you played long ago.
If you’re not growing, you’re dying, right? As gerontologist George Sacher wrote, “The brain is the organ of longevity.” And it was an aging Michelangelo who said, “I am still learning.”
• Go after that undergraduate or graduate degree.
• Take advantage of adult education classes in photography, painting, stained glass, sculpture, woodwork or crafts.
You now have more time to explore, discover, experiment and create. Here are some ideas to help you continue to learn and grow during these years: • Expand your computer skills. • Research and write your family history. • Join Elderhostel, an organization that sponsors dozens of educational seminars and trips all around the world. • Design, plant and tend to a flower garden. • Learn a new language. • Become a “regular” at your local library. Read at least one book a month. • Learn fly-fishing or birdwatching.
• Memorize poetry, Scripture or great quotes. • Research a Civil War battle, then tour the battlefield. • Ask your professors, family and friends for their choices of the best books ever written. Compile a list of the top 100 and read at least five each year. • Take a hike. Take lots of hikes! Get a guidebook and learn the flora and fauna. • Get a good study Bible and read through it once every two years – including the study notes. • Learn or improve your proficiency at a recreational activity: golf, tennis, bowling, walking, running, hiking, swimming or skiing – you name it. What have you always wanted to try or improve upon? • Keep a journal and include observations, discoveries and lessons learned.
Retirement doesn’t have to be a time to sit, rust and fade. Be sure to enjoy the change of pace and absence of daily job pressure. But more importantly, retire “on purpose” by answering these questions early and often. Active, engaged seniors are typically healthier and happier than those who retire to a passive existence. Look on your retirement years as the time to step up, reach out, and give back – making the most of the rest of your life. RNA Dan Benson is author of several books on retirement including͞”Never Retire”͟and “12 Stupid Mistakes People Make with Their Money.” He is a retired resident of Colorado.
IN COME MAT T E R S
TAXATION OF
SOCIAL SECURITY BENEFITS by David Lewis
You probably thought you were done paying taxes when you retired, right? Wrong. A little known provision in the tax code could result in you paying income tax on your Social Security income. Since your Social Security income is the result of taxes you paid during your lifetime, this additional tax is both an insult and unfair.
D
id you know you could be taxed on your Social Security income? It’s called “combined income” and it’s determined by the Social Security Administration as the following: Your adjusted gross income plus non-taxable interest (muni bond interest), plus half of your Social Security benefits. This formula will allow you to determine how much is subject to additional taxation.
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HOW YOU WILL BE TAXED If you’re single and half of your Social Security benefits plus all of your other income is between $25,000 and $34,000, then you will be liable for income tax on up to 50 percent of your benefits. If half of your benefits, plus all of your other income is over $34,000, you’ll be required to pay income tax on up to 85 percent of your earned benefits.
If you’re married, take you and your spouse’s non-Social Security income and combine it. If half of your own personal Social Security benefit payments plus your combined income is between $32,000 and $44,000, then you may have to pay tax on up to 50 percent of your those benefits. If your combined income plus half of your Social Security benefits is more than $44,000, then expect RETIRE NOW AMERICA ®
I NC O ME MAT T ER S
to be taxed on up to 85 percent. And, if you are married and file a separate tax return, expect to pay tax on your Social Security benefits as well. Year
Workers
HOW TO AVOID THE TAX The only way to avoid the tax on your Social Security benefits is by reducing your income or using investments that aren’t Ratio
1945
42 to 1
2005
3.3 to 1
2030
2.2 to 1
Recipients
Starting in 1940, slightly more than 222,000 people received a Social Security benefit. Today, more than 66 million people receive a Social Security benefit. Source: Social Security Administration RETIRE NOW AMERICA ®
figured into the calculation for taxation of benefits. Roth IRAs are one investment account that are excluded from this calculation, so use it to your advantage. Cash values of life insurance are another option. Taking policy loans from a cash value life insurance policy won’t affect your Social Security income, regardless of the size of the policy loan. Since some life insurance policies can be structured to provide retirement income, this is another viable option. It does take roughly 10 years for most high-cash value insurance policies to really start growing and producing significant cash values, so it is advised to take that into consideration. RNA
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YOUR NEW PRESIDENT
A ND T HE E CONOMIC OU T L OOK F OR 2 017 by Anirban Basu
I NS I DERS ’ V IEW
E
conomists, pundits and most of America have been puzzling over what the election results from this past November will mean for the U.S., both in terms of public policy and economic performance. At press time, President-elect Donald Trump was announcing his plans to slash corporate and personal income taxes, renegotiate trade deals with U.S. partners, end commitments to follow certain environmental rules, follow through with his promises on immigration reform, partially deregulate banking, and make it easier to tap into America’s oil and natural gas reserves. He also has promised an infrastructureled stimulus package and significant reforms to America’s health insurance system. Trump and his coterie of advisors believe these moves will supercharge the sluggish U.S. economy, which has failed to expand more than 3 percent or better since the middle of the last decade. Many economists have expressed skepticism regarding the wisdom of Trump’s package of economic promises, indicating that such policies could ramp-up the national debt, initiate trade wars, speed global warming, and accelerate inflation. For Trump and his ilk, these appear to be speculative, longer-term problems. In the near-term, the U.S. economy is expected to enjoy added stimulus even as the country already approaches full employment. The stimulus
RETIRE NOW AMERICA ®
The current median household savings in all retirement accounts among baby boomers is less than $150,000. Baby boomers believe working longer is a commonsense solution to mitigating retirement savings shortfalls. the president-elect promises will likely push prospective economic weakness back towards the end of the current decade, possibly beyond. When the next recession does arrive, it may be much deeper than it otherwise would have been. For now, equity markets are ebullient. Some of the rise in stock prices was perfectly predictable. After all, if corporate taxes are reduced, corporate after-tax profits rise with all things being equal. That translates into healthier balance sheets and perhaps larger dividends, which render holding U.S. equities more valuable. But there’s something more at work. Economists have a tough time accounting for the impact of so-called animal spirits, but we know psychology plays a role. CEO sentiment has seemingly improved markedly since the November 8 election. The notion among many is that America’s period of stagnant growth is coming to an end. The next few years will be associated with faster economic growth and more inflation, which creates better opportunities for companies to boost corporate earnings. That altered expectation may translate into
more business investment today as corporations seek positions to take full advantage of the faster growth to come. Naturally, there are skeptics. Many observers are at least somewhat unnerved by the impact of the president-elect’s policymaking on federal budget deficits and the national debt. Already, Medicare and Social Security trust funds are moving toward insolvency within the next two decades. While stock prices rose during the immediate aftermath of Trump’s victory, so did interest rates in the form of higher 15-year and 30-year mortgage rates. While planned stimulus may guarantee one or two more birthdays for the current economic expansion, the longerterm is decidedly murkier. That’s perhaps always the case, but it’s particularly true now as a shifting policy environment meets an already mature economic expansion. The question about longer-term economic prospects revolves around the extent to which Trumpian policies will alter the structure of the U.S. economy. Recent years have delivered only soft economic growth and very little in the way of
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IN SI D E R S’ VI E W productivity growth. If planned infrastructure investments bolster productivity, the longterm may turn out to be much better than many people presently foresee. Changes in entitlement policies also might induce more people to join the U.S. labor market, helping businesses to better support their staffing models and reducing reliance on a variety of government programs. That would help governments stretch each budget dollar a bit further, helping to alleviate some budgetary angst. There are other considerations. For instance, in the past, infrastructure spending presumed government financing, but that’s an increasingly shaky presumption. In a 10-page white paper posted on his campaign website, Donald Trump makes private financing a cornerstone of his
infrastructural ambitions. By offering $130 billion in federal tax credits to private investors who back infrastructure projects, President Trump envisions public-private partnerships as representing the key to building and maintaining the nation’s infrastructure. That sounds promising, but will of course require congressional sanction and will be scrutinized from the perspective of actual budgetary impact.
RETIREMENT AND PENSIONS: THE OTHER 800-LB. GORILLA Baby boomers have emerged as a remarkably successful generation. Growing up during the 50s and 60s and helping drive the booms of the 80s and 90s, baby boomers have helped position America at the vanguard of many of the world’s cutting-edge industries, from life sciences and applications development to nanotechnology and
e-commerce. Still, many boomers are right to be unnerved by their own retirement prospects. While many boomers have prospered, others have been negatively impacted by deindustrialization, rising healthcare costs, the cost of financing their children’s education, and occasional bouts of unemployment. Since 1989, the Transamerica Center for Retirement Studies has conducted a national survey of U.S. businesses and workers regarding their attitudes toward retirement. Key highlights from the most recent survey administration indicate just how unnerved many Americans remain regarding retirement prospects. Sixty-one percent of workers indicate they have not fully recovered from the Great Recession, including 7 percent who believe they may never recover. Forty percent of baby boomer workers expect a decrease in their standard of living when they retire.
I NS I DERS ’ V IEW Eighty-three percent of Generation X workers, many of whom are in their 40s, believe their generation will have a more difficult time attaining financial security than their parents. Among Millennial workers, the youngest members of the labor force, only 18 percent are confident about their future retirement. Prospective retirees frequently depend on a three-legged stool comprising Social Security, personal savings, and employersponsored retirement benefits. The current median household savings in all retirement accounts among baby boomers is less than $150,000. Baby boomers believe working longer is a commonsense solution to mitigating retirement savings shortfalls. Accordingly, many are taking active steps to remain healthy so they can keep working. The need to work additional years is likely keener among those who depend on the solvency of shaky pension plans. For instance, consider
the plight of the California Public Employees’ Retirement System (CalPERS), the largest pension fund in the country, which maintains an annual rate of return goal of 7.5 percent. Recently, the fund returned just .6 percent. Some states are in even worse shape. In 2015, New Jersey emerged as the state with the worst-funded public pension system. The Garden State has about $136 billion less than it needs to cover all the benefits that have been promised. That shortfall rose by nearly $23 billion in just one year. Illinois’ unfunded pension liabilities recently rose to around $120 billion. A recent Forbes article indicated that if the Actuarial Standards Board enacts recommendations from its Pension Task Force, actuarial valuations for state and local government pensions will report collective unfunded liabilities of more than $5 trillion and funding ratios of only 39 percent.
Many corporate pension funds are in similar straits. Citigroup recently published a report indicating that the companies in the S&P 500 alone have pensions that are about $375 billion underfunded, with the top 25 underfunded plans accounting for more than $225 billion of the underfunding. There are many reasons for this, including the vast losses sustained during the Great Recession and stubbornly low interest rates, which have made meeting rate of return targets challenging. Some pension funds have responded by reducing their presumed rates of return on investment, which requires current workers to contribute more to these funds. RNA Anirban Basu is chairman and CEO of Sage Policy Group, Inc. in Baltimore, MD.
HEA LTH Y L I FES T YL E
WITH RETIREMENT COMES FREEDOM FROM PROFESSIONAL OBLIGATIONS, SOMETHING YOU LIKELY HAVE ANTICIPATED MUCH OF YOUR WORKING LIFE. WITH A LOT MORE FREE TIME TO DELVE INTO YOUR INTERESTS AND HOBBIES, YOU MAY CONSIDER MOVING TO A CITY THAT PROVIDES THE INFRASTRUCTURE AND COMMUNITY TO DO JUST THAT. DEPENDING ON YOUR STYLE, HERE ARE FIVE UNIQUE AND VIBRANT CITIES TO CONSIDER:
OUTDOOR ENTHUSIAST: BOULDER, COLORADO LOCATED 25 MILES NORTHWEST OF DENVER, Boulder offers outdoor enthusiasts a rich retirement option. With four seasons of beauty and in view of the majestic Rocky Mountains, the city is invigorated by the University of Colorado campus. The Pearl Street Mall is a pedestrian paradise with natural food stores and coffee shops, restaurants and book stores catering to an affluent and liberal community, 20 percent of which is over the age of 45.
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H EALT H Y LI FES T YL E Retired Seniors Volunteer Program Boulder is the nation’s largest volunteer network pairing volunteers with organizations all over the area. Dozens of hiking trails for located within city limits with difficulty ranging from rambling walks to strenuous rock scrambles. Many trails are horse friendly and open all year, offering interest as the leaves change in autumn and the wildflowers bloom in the spring. The Boulder Reservoir provides guarded swimming, sunning and wildlife watching, plus power boat and paddle sport rentals and miles of running and walking trails. Boulder also serves as one of Colorado’s gateways to skiing. The nearest mountain, Eldora, is just a 45-minute drive while world-class Breckenridge is only 90 minutes from downtown. An abundance of retail stores will provide all you need – from the latest gear to advice on how to make the most of your outdoor adventures.
AVERAGE HOME PRICE: $479,700 STATE SALES TAX: 2.9% PROPERTY TAX: 0.641%
INTERNATIONAL TRAVELER: NEW YORK CITY RETIRING IN NEW YORK CITY BRINGS THE WORLD TO YOUR FRONT DOOR. With a world-class public transportation system and residents from all over the globe opening shops and restaurants every day, true immersion in unique cultures is at your fingertips. Three Chinatowns in three boroughs provide dim sum for every weekend. Arthur Avenue in the Bronx (adjacent to the New York Botanical Garden, the Bronx Zoo and Fordham University) offers old world Italian specialty shops and the best pizza in the city. Brighton Beach offers stunning sand on the Atlantic Ocean, a newly rebuilt boardwalk and aquarium, and spectacular Russian, Ukrainian, Uzbek and Uyghur cuisine, all walking distance from the thrills of Coney Island. In Queens, Tibetan momo dumplings and Mediterranean slouvakis are aplenty. And when you want to get away, choose from four international airline hubs (American, Delta, JetBlue and United) located at three public transit-accessible airports.
AVERAGE HOME PRICE: $690,000 STATE SALES TAX: 8.875% PROPERTY TAX: 0.72% RETIRE NOW AMERICA ®
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ARTS & CULTURE: LOUISVILLE, KENTUCKY MAKING NEARLY EVERY “TOP CITY” LIST FOR YEARS, Louisville has much to boast about. Landmark cultural assets include: the Louisville Orchestra, with an 11 a.m. Coffee Concert Series every Friday and Saturday before live events; the Louisville Ballet where you can watch art-in-themaking during Main Street rehearsals; and Kentucky Shakespeare Festival, the oldest free Shakespeare festival in the country. The Speed Art Museum has reopened after a three-year, $60 million renovation to house its varied collection, and the Kentucky Center features significant pieces of modern art while attracting international performers. The number of live music venues is mind-boggling and, combined with the music festivals, visitors and residents can enjoy many simultaneous events yearround. The city, home to the annual Kentucky Derby horse race, has 120 parks. Nearly a quarter of the population is over the age of 55, and ranks among the friendliest in the nation. With Kentucky bourbon and bluegrass music in abundance, you are sure to find new friends easily…and often.
AVERAGE HOME PRICE: $174,950 STATE SALES TAX: 6% PROPERTY TAX: 0.941%
SMALL TOWN RECREATION & LEISURE: YAKIMA, WASHINGTON LOCATED IN THE HEART OF WASHINGTON STATE, Yakima boasts 300 days of sunshine per year. It shares the same latitude as the famous Burgundy, France and, as a result, is home to more than 125 wineries, wine bars and tasting rooms all situated in the
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H EALT H Y LI FES T YL E Yakima Valley American Viticultural Area, the first named in Washington state. Because the wineries are in such close proximity, a popular outing is a bicycle tour through wine country. Golf enthusiasts have a choice of 15 courses – from the high-end Apple Tree Resort and Suncadia, named a Best New Public Golf Course by Golf Digest, to a wide assortment of executive-style courses, putting greens, driving ranges and country clubs. Gardeners can delight in zone 6b perennial and rose plantings in one of the country’s top producing areas of apples, berries, cherries and hops. U-Pick farms are popular along with the annual folk festival, Season Performance Hall and open auditions at Warehouse Theater Company. Plus, the urban buzz of Seattle is only a short two-hour drive!
AVERAGE HOME PRICE: $203,245 STATE SALES TAX: 6.5% PROPERTY TAX: 1.057%
DINING & NIGHTLIFE: NEW ORLEANS, LOUISIANA “THE BIG EASY” BOASTS SUCCULENT FOOD FROM GIFTED CHEFS, A NATIONAL PARK DEDICATED TO JAZZ, AND THE HIGHEST CONCENTRATION OF LIVE MUSIC IN THE COUNTRY, if not the world. The heat of the day gives way to happy hour and a cutting-edge craft cocktail culture. Head to Frenchman Street in the Marigny neighborhood to hear everything from blues and Latin to reggae and jazz every night of the week, intermixed with world-class dining and dancing in this two-block stretch. Late night menus are the norm, oysters and gulf shrimp are plentiful, and cajun and creole are cultural classics. The neon lights of the French Quarter provide nightly entertainment, Bourbon Street offers people-watching, and the more tranquil Garden District offers stately mansions, tree-lined streets and a network of streetcars to take you back and forth 24/7. RNA
AVERAGE HOME PRICE: $356,000 STATE SALES TAX: 10% PROPERTY TAX: 0.18% RETIRE NOW AMERICA ®
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IN COME MAT T E R S
MONEY MATTERS
DON’T FALL FOR THESE COMMON RETIREMENT MYTHS RETIREMENT MYTHS ARE EVERYWHERE THESE DAYS, AND FALLING VICTIM TO ONE OF THEM COULD SIDETRACK YOUR RETIREMENT AND MAKE LIFE UNNECESSARILY STRESSFUL. IF YOU BELIEVE ONE OF THESE RETIREMENT FABLES, IT’S TIME TO RETHINK YOUR PLANNING AND START MAKING THE NECESSARY ADJUSTMENTS. 32
RETIRE NOW AMERICA ®
P LAN AH E AD
MYTH #1
YOUR EXPENSES WILL GO DOWN You simply cannot assume your expenses will be lower once you leave the workforce. If you plan to travel the world and stay in the best resorts, you will probably end up spending more than you did while you were working. If you plan to hang out with the grandkids and have fun closer to home, you may spend a lot less. No matter what, the key is to develop a realistic budget for your retirement based on what you plan to do and what you want your retirement to feel like. You may not be able to predict your spending to the penny, but you should be able to come up with a good ballpark figure. Refer to the 90-Second Retirement Checkup featured in this magazine (see page 48), which will calculate your retirement income. This checkup will tell you if you have enough income to meet your basic expenses.
MYTH #2
YOU CAN WITHDRAW 4% FROM YOUR NEST EGG EVERY YEAR The highly touted 4 percent standard is more of a guideline than a hard and fast rule. The amount you can safely withdraw from your nest egg will depend on a number of factors, from how old you are when you retire and how many years you plan to spend in retirement to whether RETIRE NOW AMERICA ÂŽ
or not you have a pension and how much Social Security income you can expect. The returns you achieve with your investments also can have an impact on how much you can afford to withdraw in a given year. If you are lucky enough to retire on the cusp of a bull market, those high stock market returns may allow you to withdraw 5 or even 6 percent in a single year. However, if the market goes down right after you retire, you may need to scale back that initial withdrawal to 3 percent or less. The key is to be as flexible as possible. If your nest egg has a great year, take some of that money off the table and sock it away in a money market account or CD. You can then use that extra cash to cover your expenses during those inevitable bad years.
MYTH #3
SAVING MONEY IS A THING OF THE PAST Many retirees have spent their entire working lives saving aggressively and building up a substantial nest egg. It makes sense to assume additional savings will no longer be required. While you will no longer be contributing to your 401(k) or putting money into an IRA, saving money still should be part of your retirement lifestyle. Adopting a pay-yourself strategy is one of the best ways to make your money last throughout retirement. Directing a small
portion of your Social Security, pension or other monthly income into a savings account is a great way to prepare for unexpected expenses and avoid drawing on your stock market money too soon.
MYTH #4
AVOID THE STOCK MARKET Another myth is that retirees should avoid the volatility of the stock market and put all their money in bonds and certificates of deposit. While it certainly makes sense to have part of your money in those fixedincome investments, it is highly unlikely they will earn enough to keep up with inflation in the long run. Keeping a portion of your money in the stock market can provide that growth potential and inflation protection. While it is true that stocks are volatile, over the long term they have had an excellent track record. A widely diversified stock market investment, like a low-cost index fund, should be part of your retirement portfolio. RNA
TAKEAWAY MYTHS HAVE A WAY OF LINGERING. HOWEVER, TIMES ARE CONTINUALLY CHANGING AND NEW KNOWLEDGE IS AVAILABLE THAT CAN HELP MAKE YOUR RETIREMENT YEARS BETTER THAN YOU IMAGINED.
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IN COME MAT T E R S
GETTING
READY TO RETIRE? T ASK YOURSELF THESE IMPORTANT QUESTIONS… ransitioning into retirement is exciting, but it can be nerveracking as well. If you’re looking forward to your upcoming retirement with a mixture of excitement and fear, you certainly are not alone.
Many workers worry they haven’t saved sufficiently for retirement, or that they won’t have enough money to see them through the rest of their lives. Even those who have managed to accumulate a substantial nest egg often worry that unforeseen events, from a serious health problem to high inflation or a severe bear market, could derail their carefully laid plans. That trepidation is certainly understandable, but it is still
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possible to plan a long and happy retirement. As you get closer to that date, think about these important questions.
WHEN SHOULD I START PLANNING MY WITHDRAWAL STRATEGY? Planning for retirement is all about setting money aside and making it grow. When it comes time to actually retire, many have problems changing their focus from saving that money to tapping it. If you plan to retire at age 62, you need to start thinking about how to tap those funds in your mid to late 50s. Meeting with a financial planner who also is a fiduciary is a
great way to get started. Even if you are comfortable handling your own investments, a good financial planner can help you devise a strategy for tapping your assets in retirement.
HOW MUCH ANNUAL INCOME WILL I NEED IN RETIREMENT? This is perhaps the hardest question to answer, and there is no simple answer. While many financial experts use an estimate of anywhere from 60 to 80 percent of your current salary, that figure is just a starting point. Low income retirees may need as much as 90 or even 100 percent of their pre-retirement income to live comfortably after they quit working. The same is often true of wealthy retirees, who may be used to a certain lifestyle prior to retirement. RETIRE NOW AMERICA ®
I NC O ME MAT T ER S The best way to answer this difficult question is to look at your own situation. What do you plan to do when you retire? Do you want to travel the world, or stay at home with the grandkids? Will you be enjoying a new hobby or working at a part-time job? The answers to these questions can help you estimate how much income you may need in retirement.
HOW MUCH CAN I AFFORD TO WITHDRAW FROM MY RETIREMENT PORTFOLIO? If you have been saving for retirement, you likely have heard of the so-called 4 percent rule, which means you can comfortably withdraw 4 percent of your initial portfolio value in the first year of retirement, then adjust those withdrawals for inflation each subsequent year. That rule doesn’t work anymore. What is now considered the “norm” is 3 percent or less. This is due to ultra-low interest rates that force people to spend down the principal. Fortunately, there are a couple of options available. The most popular today is creating a bridge account, which is forming your own pension plan that can yield 4 to 7 percent.
WHICH ACCOUNTS SHOULD I USE FIRST? Chances are you have several accounts you can use to generate income in retirement. RETIRE NOW AMERICA ®
You probably have some money in a 401(k) or 403(b) plan from your employer, or in a rollover IRA. You can create a bridge account, which is quite possible and used by many affluent people. You may also have additional money and investments outside those tax-deferred retirement accounts. If so, it often makes sense to tap those taxable accounts first. Using your taxable accounts to generate income preserve the tax-deferred nature of your retirement accounts and gives them more time to grow. Keep in mind, however, that you must start taking withdrawals from your retirement accounts when you reach age 70½. If you fail to take the required minimum, you will be subject to severe tax penalties.
HOW CAN I GENERATE INCOME? There are a number of ways to generate income in retirement, and no one strategy will be right for everyone. Entering retirement with a welldiversified portfolio gives you more choices and makes it easier to adapt to a changing market. You can, for instance, use the fixed income portion of your portfolio to build a ladder of bonds or certificates of deposit. Laddering simply means buying bonds or CDs of varying maturities. That way you can collect the interest and roll
the money over when it comes due. That strategy helps protect you against changing interest rates. While this was popular when interest rates were 3 to 4 percent higher, it’s not nearly as popular today. You can also generate retirement income from the stock portion of your portfolio, even without liquidating shares of stock or mutual funds. You can typically expect a dividend payout between 2 to 3 percent on a good low-cost market index fund, and you can use those dividends to generate part of the income you need in retirement. Another option is to invest in individual dividend stocks. Many pay a healthy dividend, some as high as 6 percent. Make sure the portfolio you build is diversified across many different industries. This approach has market volatility, so it’s possible to lose principal if the market goes down. Also, companies can slash and even suspend dividends, which happened in the 2007-2008 meltdown. The most popular again, with the least amount of risk, is a pension-like annuity with a guaranteed income for life rider from a big, strong A-rated insurance company. You can even set up the income to continue at 100 percent to the surviving spouse. Worried about dying too quickly and the insurance company keeping the money? No worries; any remaining balances are paid out to the beneficiaries. RNA
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IN COME MAT T E R S
INVESTING
IN YOURSELF N
S TAY ACTI VE FO R PHY SICA L A N D MENTA L HE A LT H ot only can a lack of exercise result in a higher number of doctor visits and hospitalizations, but it could accelerate the need for in-home or nursing facility care.
habits of an excessively sedentary nature. After all, you have worked hard to earn the personal autonomy that accompanies retirement. To make the most of it, you’ll want to maintain an active lifestyle.
People often work, plan and save for retirement most of their careers, if not the majority of their lives. It’s not uncommon for individuals to compare their working years to running a race, with retirement as the highly anticipated and well-deserved finish line.
The baby boomer generation is one of the first in which many jobs require more mental rather than significant physical exertion. As retirees transition from sedentary work roles and begin to find themselves with more free time, they face higher rates of chronic conditions and lower levels of physical activity than previous generations (www.healthline.com).
If this sounds like you, it may be tempting to picture yourself sleeping in every morning and lounging on the couch in front of the television. However, be sure to avoid falling into
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While it’s well known that an active lifestyle influences overall health, retirees should hold it in
even higher regard. As you age, it’s important to incorporate physical exercise and mental focus into your routine to avoid a decline in capabilities. The U.S. National Institutes of Health indicates regular exercise and physical activity can help delay or prevent many diseases and disabilities. In some cases, routine exercise can be an effective treatment for chronic conditions such as arthritis, heart disease or diabetes. Although some retirees may cringe at the thought of a traditional exercise routine, fearing difficulty or even injury, studies prove that a sedentary lifestyle can be even more unsafe. Not only can lack of exercise result in more doctor visits and hospitalizations, but it may accelerate the need for in-home or nursing facility care, according to Amy Blitchok, a writer for insideeldercare. com. When older people lose RETIRE NOW AMERICA ®
H EALT H Y LI FES T YL E
When surveyed, pre-retirees listed their most important retirement hobbies as traveling, volunteer work, reading more books, and spending time with family. RETIRE NOW AMERICA ® SURVEY*
the ability to perform everyday activities for themselves, sedentary habits may be the cause rather than plain old age. While there are countless simple and low-impact exercise options, the most important thing to avoid is trying to do too much, too soon. The Center for Disease Control recommends starting with 5 to 10 minutes of exercise a day, and working your way up to the desired level. In addition, the U.S. Department of Health and Human Services released guidelines recommending older adults participate in both aerobic and strengthening activities each week. Here are some ideas for keeping active mentally and physically during your retirement:
CHALLENGE YOURSELF Try something new while challenging your mind and body – get outside of your comfort zone! Maybe this means joining a gym or taking a class. Perhaps you’ve thought about trying ballroom dancing, bowling, golf or water aerobics. Even learning a new card game can be a fun and unique mental challenge.
PURSUE A HOBBY It can be rewarding to dedicate yourself to tasks or projects that you find rewarding. Take the time to learn a new RETIRE NOW AMERICA ®
skill. Gardening, sewing, puzzles, drawing, painting and woodwork are some examples of engaging activities that can provide fulfillment, stimulation and increase your social connections.
BE SOCIAL AND GET CONNECTED Join a book club, play bingo, or organize a walking group. Meet up with friends for coffee and a bike ride. Connect with your peers, or spend time with family, and enjoy the numerous proven health benefits associated with nurturing and maintaining quality social relationships as you age.
volunteers to assist with various events and projects. Choose an organization you believe in, and ask them how you can help. Working adults often lament there simply are not enough hours in the day. Retirement is your chance to spend those precious hours doing what you love and enjoying what matters most to you. Be sure to invest in yourself and your interests by getting and staying active to reap the hard-earned reward that is your retirement. RNA
BENEFITS OF A REGULAR EXERCISE ROUTINE IMPROVE BALANCE
TRAVEL LOCALLY
INCREASE ENERGY AND STAMINA
Visit a winery, a state park, some local landmarks, or a charming bed & breakfast. Short weekend getaways can allow you to visit lots of different places without putting a strain on your budget. Plus, finding and planning your next destination will keep you looking forward to your next adventure!
BECOME A VOLUNTEER Retirement is a wonderful opportunity to give back to your community by being a volunteer. Organizations such as the Red Cross and local animal shelters are often looking for
IMPROVE MOOD/ COGNITIVE ABILITIES COMBAT DEPRESSION AND DEMENTIA IMPROVE HEALING TIME AFTER ILLNESS, INJURY OR SURGERY IT’S NEVER TOO LATE TO START! According to research by the American Academy of Family Physicians, even people who don’t begin exercising until age 75 can increase their life expectancy. No matter your fitness level, you have a choice where you go from here. So set a goal and get moving!
*Data based on Retire Now America® research using SurveyMonkey®.
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IN COME MAT T E R S
IS THE ‘INVISIBLE’ PENSION BUBBLE ABOUT TO BURST? It’s hard to pick up a major newspaper or financial publication without learning of yet another company, municipality or state running into the pension problem. Why is this the case? The actuaries that created many of these pensions relied on an overall pension return (such as 7.5 percent) that used to be the norm, according to Financial Times (www.ft.com). With stock market fluctuations and a nearly flat yield curve, pensions have come up woefully short.
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I NC O ME MAT T ER S
“Chicago’s unfunded liabilities are 10 times its revenues. Just assume that they’re going to have to pay 5 percent, which means you’re looking at 50 percent of their cash going into pensions.” –Robert Inman
F
or public pension plans, 2016 has proved to be the worst since the Great Recession, notes a recent Insurance News Net article, with no major pension plan reporting a preliminary annual investment return greater than 1.5 percent. It also states that fiscal 2015 was not much better, with most plans coming in with investment gains of just 1.5 to 4 percent. A Moody’s analysis of 56 major public pension plans indicated that even if investment returns were 5 percent, it would increase plans’ overall liability by 10 percent. Pensions were created to reward employees for years of service with a promise to pay for the remainder of their lifetime, when they could no longer work. A great idea and a sound one if properly constructed, actuarially sound, monitored and most importantly, funded. But something happened over the years, and the problem is growing worse by the day. State after state is reporting record percentages of underfunded pensions, which simply means they don’t have enough cash to pay the promises that they made in the past. Some local municipalities are in even worse condition, both Detroit, MI, and San Bernardino, CA, filed for bankruptcy protection. Many fear other cities may become RETIRE NOW AMERICA ®
insolvent due to the size of their pension deficits.
benefits being trimmed by 20 percent.”
EFFECTS OF THE CRISIS
The article further indicates the plan has barely 50 percent of the assets needed to cover projected benefits for covered employees as of 2015 (based on financials provided to retirees). That amounts to $1.58 billion in assets and a projected liability of $3.22 billion. Plan administrators have asked participants to make the sacrifice to save the plan from possible insolvency.
U.S. Rep. Devin Nunes (R-Calif.) told Financial Times last year, “It’s been clear for years that many areas are critically underfunding their pension programs and hiding the fiscal holes with accounting tricks.” Last year, a Star Tribune of Minneapolis online news article reported 14,800 teamsters’ pensions were cut an average of 34 percent in Minnesota, but actually range to 50 percent or more. The figures were released by the Pension Rights Center, a nonprofit consumer organization in Washington, D.C. According to Karen Friedman, executive vice president, “Every person I’ve talked to is looking at cuts of up to 70 percent in their pensions.” And an October 2016 USA Today article stated 35,000 members of the New York Teamsters Union may have to sacrifice some of their retirement income to bail out the pension funds. “Current retirees will possibly see almost a third of their monthly payment wiped out next year,” the article states. “Those still working can count on their projected pension
“Our fund remains severely underfunded and cannot be saved unless we take additional and immediate action,” reads a letter from trustees to plan participants. “We are determined not to allow our fund to deteriorate to a point where the fund cannot be saved.” Last August, UPS announced cuts of 34 to 70 percent for more than 8,500 employees. Randy Collins, a 30-year UPS employee, saw his $2,400 monthly pension check nearly cut in half. The Dallas Police & Fire Pension (DPFP), which covers nearly 10,000 police and firefighters, is on the verge of collapse as its board and the City of Dallas struggle to pitch benefit cuts to save the plan from complete failure, according to National Real Estate Investor.
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IN COME MAT T E R S Once having been applauded for its “diverse investment portfolio,” it turns out the DPFP may have been a fraud as the pension’s former real estate investment manager, CDK Realty Advisors, was raided by the FBI in April 2016 and the fund was subsequently forced to mark down their entire real estate book by 32 percent. Guess it’s fairly easy to generate good returns if you manage a book of illiquid assets that can be marked at your “discretion.” The financial health of each state can be analyzed through the states’ own audited financial
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reports. By looking at states’ basic financial statistics on revenues, expenditures, cash, assets, liabilities, and debt, states may be ranked according to how easily they will be able to cover short-term and longterm bills, including pension obligations. Wharton finance professor Robert Inman tweeted this cautionary perspective: “This is a serious problem, and there is no running away from it. It has made the front pages of every financial newspaper in the world, and rightly so.” He noted that researchers who
have studied this crisis have “corrected a fundamental flaw in the way that people were thinking about these unfunded liabilities.” The bottom line, Inman said, is that there were $3 trillion worth of unfunded pension liabilities at the state level, and $400 billion of unfunded liabilities at the large-city level. That turns out to be about $10,000 per American citizen. “That’s something that we really have to think about, and it has not gotten significantly better,” he told the Penn Institute for Urban Research. RNA
RETIRE NOW AMERICA ®
I NC O ME MAT T ER S
STATES WITH THE MOST UNDERFUNDED PENSIONS*
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ILLINOIS The most poorly funded state in America, Illinois only funds 43.4 percent of its pensions. It has an unfunded liability of $82.9 billion, with 20.7 percent going unfunded for each person.
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NEW HAMPSHIRE At a ratio for 57.4 percent funded, New Hampshire has an unfunded liability of over $4 billion and an average of $3,000 not delivered to an individual’s pension fund.
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2 KANSAS With only 56.4 percent of the state’s individual pensions funded, Kansas is a very difficult place to retire. It owes $9.2 billion in unfunded liability and fail to pay an average of 10 percent per person.
7 HAWAII 40 percent of pensions go underfunded in Hawaii, with nearly $40 billion in unfunded liability and a whopping average of $20,000 in per-person unfunded liability.
CONNECTICUT The funded ratio for Connecticut is 55 percent with more than $20 billion in unfunded liability. The state owes each person an average of $56,000, 18.6 percent of an individual’s pension.
5 MISSISSIPPI With unfunded liability reaching nearly $50 billion and per-person unfunded liability at more than $16,000, Mississippi has a funded ratio of just 57.6 percent, a record low for the state.
1 0
3
KENTUCKY With a funding ratio at 53.4 percent, Kentucky is at nearly the top of the list for poorly funded pensions. The average unfunded liability for each person was more than $16,000.
ALASKA The funding ratio for Alaska is only at 54.7 percent with more than $23 billion in unfunded liability and 27 percent of an individual’s pension going unfunded.
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LOUISIANA The population is 4.65 million, but only 58.1 percent of those people receive their full pensions. The unfunded liability is nearly $75 billion with per-person unfunded liability at over $16,000.
MASSACHUSETTS Finally, this state’s funding has something to be desired with 60.8 percent of its inhabitants receiving their full pensions. It’s unfunded liability totals about $75 billion.
*Source: Bloomberg.com
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PROTECT YOUR WEALTH IN COME MAT T E R S
by David Pessin
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I NS I DERS ’ V IEW
YOU’VE WORKED HARD TO SAVE AND INVEST RESPONSIBLY. WHETHER YOU MEASURE IT IN THOUSANDS OR MILLIONS, YOU MAY THINK YOU’RE FINANCIALLY SECURE, OR AT LEAST HEADING THAT WAY.
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ot so fast. Accumulating wealth is only part of the plan. Now you need to protect the wealth you spent so many years acquiring. Protect it against what? Here are some obstacles that can erode, if not decimate, your wealth and financial security: • state and federal estate taxes • family fights • probate • long-term care • divorce • lawsuits for personal liability • improper management of your assets in the event of your incapacity • incorrect titling of your assets and beneficiary designations Like most Americans, you will encounter at least one of these circumstances. Probably more. To protect yourself, you need a plan, which you might want to revise throughout your lifetime. Your family, friends, dependents and other significant people in your life should be adjusted occasionally in correlation to the amount of your wealth and the current legal ramifications. Think of your planning as a multi-tiered process. RETIRE NOW AMERICA ®
TIER ONE: BASIC PLANNING The following are basic planning elements that apply to everyone:
FINANCIAL POWER OF ATTORNEY This comprehensive document authorizes those you name to handle your “real world” transactional, financial, business and all other nonmedical matters in the event of your incapacity. It should be effective when executed. If you are concerned that the persons you name will act before you are incapacitated, then you shouldn’t designate them. We don’t need the “speed bumps” of a determination of your incapacity (which really only stymies those you name – and presumably trust) from dealing with the financial institutions. This should not be your mother’s 3-page, 10-year-old Power of Attorney naming your father as the sole powerholder. This brings us to perhaps the most important part of the process – picking the fiduciaries. More problems arise from a poor selection of those who will handle things for you than almost any other breakdown in the process. The problems range from theft or mismanagement
to failure to have anyone act for you because of your designee’s own death or disability (the latter often resulting in court). Name someone who is of the right age and health to ensure they will be able to act, someone with unquestionable integrity (that you have personally observed), good judgment, a noticeable degree of experience with money, and decent organizational skills. You may need to designate more than one person to find these qualities, but it’s still advisable to name an alternate to your first choice.
MEDICAL DIRECTIVE This is a state-regulated document that designates who will make healthcare decisions for you in the event of your incapacity. It will allow your healthcare agents access to your healthcare information, the privacy of which is protected by law (HIPAA), and delineates the scope of the decisions that may be made. There are two key components to making this work. The first is ensuring that your healthcare agents (you need to name more than one) are carefully selected. The second is that they truly know your wishes as far as your care, from the mundane situations they may face (think concussion) to end-of-life decisions.
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IN SI D E R S’ VI E W Not only will you need a Financial Power of Attorney and Medical Directive, but so will those around you. This includes your parents, whose affairs will need to be handled as they age, and your non-minor children going off to college (whose grades and bills need to be checked, but only with your permission, which would be in their Powers of Attorney).
don’t designate the contingent beneficiaries on your IRAs, 401(k)s and life insurance policies to be the trustees, those trusts will not work, which leaves it up to the courts.
WILL
As you accumulate more wealth, which typically increases with age, these issues can arise:
Every adult needs a Will. It’s not just about how much wealth you leave behind, but it’s also to protect your estate. A myriad of complications could occur without it. Best be prepared! Your Will, at minimum, should include the following: • The final say as to the disposal of your remains • The disposition of your personal items • Distribution of your estate, including alternate beneficiaries in case a primary beneficiary dies • Trusts for the young and old beneficiaries, and those with special needs • The selection of those who will administer the estate (personal representatives or executors), as well as trustees for trusts to be established. Here’s where beneficiary designations become important. It’s one thing to have a Will that creates trusts for your minor children if your spouse dies before you, but if you
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TIER TWO: MORE WEALTH, MORE COMPLEXITY REDUCING OR ELIMINATING FEDERAL AND STATE ESTATE TAXES Do you think estate taxes only affect the super wealthy? While that may be true about federal estate taxes, which kick in when someone has $5.45 million or more, nearly $11 million per couple (U.S. citizens only; noncitizens need special planning), some states can get you when all you have is a house, retirement plan and a life insurance policy. Estate tax planning is “modular.” At the base are estate tax planning Wills, which allow for the possibility of diverting wealth upon the first spouse’s death to a trust that will shelter some of that wealth from estate taxes, most notably at the state level. Typically, the next module is the use of irrevocable trusts to own large life insurance policies so the proceeds escape taxation. For those whose wealth exceeds the $11 million federal threshold, planning typically
revolves around eliminating growth on the gifted assets (often in trusts) and “dynasty” planning to reduce estate taxes for subsequent generations. All estate tax planning requires flexibility in light of unforeseen changes in estate tax laws. Avoiding probate, which is the passing of wealth through the courts, a somewhat costly, delay-ridden, and certainly “unprivate” process. Besides increasing the administration and expenses of transmitting wealth at death, probate also offers a fairly low-cost, low-risk forum for vexing expensive and frequently unwarranted challenges by disappointed would-be beneficiaries. Also, if you have real estate in more than one state, you will have probate in each state. Generally, probate may be avoided when the first spouse dies with proper titling of the assets and beneficiary designations. However, this is often not the case if state estate taxes are an issue or if it is a second spouse’s death. A widely used tool to avoid probate is a revocable trust – a flexible, self-settled trust in which the trust assets are not subject to probate upon death. As a bonus, management of assets is enhanced in the event of incapacity.
LONG-TERM CARE PLANNING Basically, this means protecting your wealth from the nursing RETIRE NOW AMERICA ®
I NS I DERS ’ V IEW home. People who don’t need to worry about long-term care planning fall into two categories: those with very few assets whose costs of care may be easily covered by public benefits; and those with abundant assets sufficient to “self-insure” the costs of care (that is, to pay privately for such care without concern for the erosion of assets). There are two ways to protect assets from the cost of care. One is to obtain long-term care insurance while you are relatively healthy and young to decrease the premiums. Another way is to plan so you gain access to Medicaid which, contrary to popular belief, is perfectly legal and typically does not affect the quality of care. This type of planning may be implemented well before the need for such care with a wellstructured plan of transferring assets, either to individuals or to irrevocable trusts for control and tax planning purposes. Also, at the time one spouse needs nursing home care, the assets may be protected with a “Medicaid annuity.” This involves converting exposed assets to an income stream for the “well spouse.” It is protected under Medicaid rules.
TIER THREE: ASSET PROTECTION This level is comprised of just about everything else. A plan of asset protection involves several factors RETIRE NOW AMERICA ®
including the nature and value of the assets, activities that could result in liability, the likelihood of liability, and the degree of risk and exposure. Asset protection can be as simple as the way assets are titled (owned), the nature of those assets, or obtaining adequate liability insurance. Or, it may be as complex as foreign asset protection trusts established in exotic locations with substantial expense. Some of the tools for asset protection and the situations they cover include:
INHERENTLY PROTECTED ASSETS Depending on state law and the nature of the creditor (watch out for IRS with its super powers!), certain assets are protected by their very nature. This includes most retirement plans such as IRAs and 401(k) s and, in terms of the judgment creditors of only one spouse, assets held as tenants by the entireties (basically, joint ownership between spouses).
LIABILITY INSURANCE We all know to have liability coverage for our vehicles, but those who are involved in activities that expose them to more risk should consider specially crafted liability insurance. Of course, this includes professionals such as doctors and lawyers, but also those involved in risky businesses such as instructional camps or those dealing with animals and landlords.
LIMITED LIABILITY COMPANIES Businesses that involved ownership of rental or other commercial properties should establish LLCs to shelter personal assets from liability arising from those activities.
PREMARITAL AGREEMENTS People are marrying later in life and are reaching significant earning plateaus. Premarital agreements are vital to protect those assets and income in the event of divorce and to ensure inheritances for children from prior relationships in the event of death.
ASSET PROTECTION TRUSTS If you have significant assets and substantial risk of liability, then under laws of certain U.S. states and foreign jurisdictions, you may establish trusts to protect those assets while making them available to you and your family. These trusts are frequently expensive to establish and maintain, so the reward of asset protection must be justified by the exposure. Let your wealth preservation attorney establish a plan to prevent the tax man, the litigious interlopers, the probate court, the nursing home, the disgruntled family member – from taking your wealth. RNA David Pessin is an attorney and co-founding member of Baltimore, MD-based Pessin Katz Law, P.A.
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IN COME MAT T E R S
10 TERRIFIC DISCOUNTS FOR 50+ 1 G
Here are our top picks:
L IVE LONG & PR O SP ER !
etting older comes with perks. A wealth of “senior” discounts are available, some starting as young as 50. Not all discounts are advertised, so the Retire Now America team has compiled a list of the top deals that allow you to have more – and do more – for less.
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AARP HAS YOUR BACK
AARP has negotiated a bunch of deals for members who join when they turn 50. Get your AARP card on your 50th birthday and enjoy discounts on hotels, restaurants, and even rental cars that are usually reserved for those 65 and older.
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FASTER AND CHEAPER FOOD
Although they don’t usually come out and say it, many casual and fast food joints offer awesome senior discounts. Applebee’s offers a 15 percent discount, Ben & Jerry’s will give you 10 percent off your cone, and Burger King will take 10 percent off your burger order. Age cutoffs vary, but Boston Market, Bob’s Big Boy, Chili’s, RETIRE NOW AMERICA ®
H EALT H Y LI FES T YL E Chick-Fil-A, Dunkin’ Donuts, Subway, and a host of other food chains will give you a discount. All you need to do is ask.
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BIG DISCOUNTS AT THE SUPERMARKET
Albertson’s, A&P, Kroger, Publix, Great Valu, Hy-Vee and many other supermarkets offer discounts up to 15 percent on certain days each month. Some items might not be eligible – lobster, perhaps – so double check the amount of the discount as well as any restrictions.
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TIME TO HIT THE ROAD
If you’re itching for a change of scenery, you’ll be pleasantly surprised at the numerous discounts offered by rental car companies. Whether you want a flashy little convertible, a roomy RV, or something in between, you can get up to 15 percent off, particularly if you are an AARP member. Call around to Enterprise, Avis, Budget, Dollar and Alamo, for example, to see who offers the best rate.
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RIDING THE RAILS
Train travel might seem like a step back in time, but it’s also a wonderfully relaxing way to travel. Amtrak offers all kinds of senior discounts ranging from 15 percent for U.S. travel to 10 percent for border-crossing travel in and around Canada. It’s a good idea to pack snacks and drinks because the club car services are often limited. RETIRE NOW AMERICA ®
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TAKE TO THE AIR
If you are booking online, make sure you check the box for senior fares. If you don’t see this option, call the airline directly. American, Southwest and Continental Airlines all offer senior fares, but they often don’t show up on their websites. Alaska Airlines provides a 10 percent discount for anyone over 65. Sometimes there is a charge for booking over the phone, but they do not charge for asking questions. Try calling in the middle of the night for less wait time, which usually means less frustration.
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VEGAS, BABY!
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MOVIE NIGHT
Las Vegas is a place where deals are made, and senior deals are no exception. You don’t have to be a big spender to get a “whale” of a deal, either. AARP members get a 10 percent discount at Circus Circus, Mandalay Bay, MGM Grand, and Luxor as long as you book in advance. A word to the wise: Even after you get your discount, ask if you can get an upgrade. You may receive a nice surprise!
Senior discounts for movies are quite remarkable, with the average price cut being 30 to 35 percent. AMC starts its price cut at age 55, but most of the others have a 65-yearold cutoff. Even IMAX has a discount, but you need to call in advance to find out rates and any age restrictions.
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LIFE IN THE WILDERNESS
Not only can you get a lifetime pass to U.S. National Parks for a mere $10, you get to bring three other adults with you – and they needn’t be seniors. The pass allows you entrance to and use of all national parks and federal recreation sites that charge a fee. Even better, cardholders get a 50 percent discount on such amenities as boat launches and camping locations. As a bonus, most states offer highly discounted lifetime fishing and hunting licenses for seniors.
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STAY FIT AND LIVE LONGER
Even if you’ve never been to a gym, you can start by getting $100 off a Bally Fitness membership. Check what other programs and classes you can get for free or at a discount. Gold’s Gym and 24 Hour Fitness offer both discounts and special senior programs. Check out Silver Sneakers to see if you can get your Medicare or other health insurance to pay for you to sweat to the oldies. Remember, the longer you live, the more discounts you get! It’s important to remember that you will receive more discounts and benefits if you ask for them. A young clerk is not going to want to say, “Hey, you look like a senior! Want a discount that we don’t tell anyone about?” So, own it! After all, age is only important if you are cheese or wine – or if you want 30 percent off your room rate. RNA
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IN COME MAT T E R S
THE 90-SECOND FINANCIAL CHECKUP OUR FINANCIAL CALCULATOR FOCUSES ON REAL DATA, NOT HYPOTHETICAL. IF YOU’RE INTERESTED IN A “REAL-TIME” PICTURE OF WHERE YOU STAND, PLEASE TAKE OUR 90-SECOND FINANCIAL CHECKUP AT RNACHECKUP.COM
CONTACT A LIVE REPRESENTATIVE AT
RNACHECKUP.COM 48
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I NC O ME MAT T ER S
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IN COME MAT T E R S
COLA (COST-OF-LIVING ADJUSTMENT)
CONSPIRACY? A By Mike Causey
growing number of federal retirees are convinced something is rotten in Washington. As in, more rotten than usual. Some think that somebody, for some reason, is playing the numbers game. With their numbers. A game designed to make them, the former feds, lose.
living adjustment (COLA) are being cooked. Regular COLAs are critically important to the budgets of a huge group of retirees: Those who get COLAs from the government include former federal and postal workers, retired military personnel and tens of millions of people on Social Security.
They suspect the numbers and data that will determine the size of their January 2017 cost-of-
Many, maybe most, depend in whole or part on their monthly check from Uncle Sam – which
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they expect to go up each year to take into account inflation – to help them keep pace with higher health insurance premiums, much higher longterm care insurance premiums and other things, from beans and bacon to gasoline. Because their payments are linked to inflation, they expect to get a COLA every year. And for a while, it worked that way. But during the Great Recession, things started to change. The retirees got a 5.8 percent COLA in 2009, but there was no increase (zero, zip, nada) in 2010 and 2011. In January RETIRE NOW AMERICA ®
T H E FEDERAL C O RN ER 2012, retirees got 3.6 percent, followed by 1.7 percent in 2013, 1.5 percent in 2014, and 1.7 percent last year. But there was no COLA this year (2016), and the one coming up in January is on track to be very small... almost microscopic. It’s likely the COLA, which at presstime was scheduled to be announced in January 2017, will be very, very small. While lower gas prices are credited/blamed for the low inflation rate, other things have been getting more expensive year by year. This is why some retirees are puzzled or suspicious. • The average retiree under the Civil Service Retirement System (CSRS) gets $3,529 a month. Remember that is the average. Some get much less, some get much more. Long-time workers (with 41-plus years) retire on 80 percent of salary and that annuity is fully indexed to inflation. • The average person who retired under the Federal Employees Retirement System (FERS) gets $1,355 per month. • The average Social Security benefit in 2016 was $1,341 per month. The January 2017 COLA amount would be worth about $10.59 per month for CSRS retirees, and $4.07 per month for FERS retirees. Something. But not much. Some people presumed the RETIRE NOW AMERICA ®
Some people presumed the Fed was holding off on any rate increase until after the election. Others think the Obama administration, the Labor Department, somebody, is keeping an artificial lid on the “true” inflation numbers to make the economy look better than it really is. Fed was holding off on any rate increase until after the election. Others think the Obama administration, the Labor Department, somebody, is keeping an artificial lid on the “true” inflation numbers to make the economy look better than it really is. Here’s what some folks are telling us: • “The Obama administration is fudging the numbers in regard to inflation because the economy is much worse than they are admitting, and the COLA that should be paid out would be too much to afford primarily because of the Obama administration’s skyrocketing welfare payments. Retirees were being ripped off to keep the votes of welfare recipients at election time!” • Retiree Bob Lancione said that columns about retirees, specifically the COLA, seem to get the most viewers. He adds: “Mike, you know my feelings about COLAs, but I truly feel that the federal retirees and Social Security recipients are getting screwed and I
believe President Obama has something to do with it. I know you disagree, but so be it. The cost of too many things has gone up not to get a COLA. And they are intentionally keeping the gas prices low.” National Active and Retired Federal Employees (NARFE) – which represents both working and retired feds – doesn’t see a plot or a numbers suppression. NARFE believes that while the professionals at the Bureau of Labor Statistics are just that – professional and nonpartisan – that the government uses the wrong yardstick to measure inflation for older Americans. As for me, I don’t have an opinion either way. Washington manufactures numbers, statistics and data at a blinding rate. They are often corrected later on. Still, they come. So, what do you think?
RNA
Mike Causey, former contributor to The Washington Post, is author of the “Federal Report” and radio show host for FederalNewsRadio.com.
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THE NEW $40,000 BUYOUT IN COME MAT T E R S
by Mike Causey
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T H E FEDERAL C O RN ER
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ith time running out, politicians in preelection panic mode and the government running on financial fumes, what are the odds Uncle Sam will boost his buyout package from $25,000 to $40,000? Late as it is in the day, the bigger buyout might cease being the three-legged horse in the race. Here’s why: The federal retirement “tsunami,” which experts first predicted in the late 1990s, still hasn’t happened. Instead of leaving in droves, tens of thousands of retirement-eligible feds remain on the payroll for a variety of reasons: Patriotism; fear of boredom; or fear that they won’t be able to afford retirement because of smallto-zero inflation adjustments (COLAs) because of near record low oil prices. For whatever reason, the gray tidal wave hasn’t taken place. In recent months, the number of feds putting in for retirement has actually dropped below even the most conservative estimates. The fear theory of a massive brain drain has shifted to the what-if-theywork-till-they-drop scenario. While some federal jobs have a mandatory retirement age (law enforcement, air traffic controllers), most do not. Along comes the American Federation of Government Employees with a most interesting proposal. Raise the buyout amount to $40,000 for Defense Department civilians and get an immediate and long-term reduction in the payroll. AFGE is the union RETIRE NOW AMERICA ®
with the most DoD members. So how does it make a case for almost doubling the amount of the buyout? Why and how would it “save” money? Simple. The government’s GS (general schedule) pay system has 15 grades. Under the time in grade system, most employees get a 3 percent raise (in addition to any general pay raise) every one, two or three years. What that means in Kansas City, for example, is that a brand new GS11 has a starting salary this year of $59,318, whereas somebody at the top of that grade in KC makes $77,114. The Washington-Baltimore area has, for obvious reasons, a large percentage of workers in high-grade, higher-paid jobs. A new GS13, for example, would be paid $92,145 compared to someone at the top of that grade whose salary is $119,794. In the New York City area, the spread between a new replacement, Step 1 GS9 ($55,100) employee for someone at the top of the grade ($71,920) is considerable. Replacing a GS13 employee at the top step of the grade ($124,037) with a mid-career GS12 employee ($90,932) would quickly pay for itself, AFGE has told Congress, even with the one-time $40,000, which is subject to taxes and other deductions. Houston, Austin and DallasFort Worth have their own federal locality pay levels that are generally higher than many other cities. The difference between a newly minted Grade 12 in Austin vs. a long-time
employee in the same grade level is $21,333 per year. Why a Defense-only $40,000 buyout? The original buyouts (under the Clinton administration) were set at $25,000 and limited, at first, to DoD. The White House wanted to downsize the federal workforce by almost a quarter of a million jobs. It did it by targeting buyouts to blue collar workers who had veterans preference job protection, a large-scale contracting-out effort and relatively small numbers of reductions in force, which is what the government calls a layoff. Later, the buyouts were extended to other agencies. But $25,000 in 2016 doesn’t buy what it did in the 1990s. AFGE’s Don Hale, chairman of the AFGE Defense Conference, says the union is pushing for inclusion of the $40,000 buyouts in the National Defense Authorization Act. The $40,000 buyouts are part of the Senate version. The trick is to get them in the House version too, or approved as part of a conference agreement. With the clock ticking, it’s anybody’s guess what, if anything will happen. But it could lay groundwork for a sweeter buyout in 2017, which could extend to other agencies depending on what changes the Trump administration wants to make. RNA Mike Causey, former contributor to The Washington Post, is author of the “Federal Report” and radio show host for FederalNewsRadio.com.
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IN SI D E RS’ VI E W
WHY WEALTHY FOLKS BUY
INSURANCE B Y B Y RON U D E L L , JD, CLU, CFP, CH FC
L
ife insurance is the most amazing financial product mankind has ever invented. It is also, however, the most misunderstood and often maligned. Besides the fact life insurance is complicated in its many forms, it also requires the buyer to come to grips with his or her own mortality. So much has been written about it – good and bad, accurate and inaccurate. And since anyone (no license, experience or knowledge needed) can write about any topic, including life insurance, there is no shortage of misinformation floating around. That being said, why would someone who ostensibly seems to not “need” life insurance
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(a wealthy person with no liquidity issues), want to own life insurance? For illustrative purposes, let’s create a hypothetical example. Mr. Jones, a 60-year-old selfmade entrepreneur, is married to Mrs. Jones, also 60. They have 3 kids and Mr. Jones has built a business he believes is worth approximately $3 million. He earns about $500,000 per year, and has another $2 million in relatively liquid investments. He expects to sell his company sometime within the next 5 years, at which time (other than his residence) his assets very soon will be comprised almost entirely of stocks, bonds and cash…all of which are obviously liquid.
Estate taxes do not look to be an issue under current law, assuming Mr. Jones sets things up correctly, unless he lives in a state with a significant inheritance tax. He also has no reason to believe he (or his spouse) will die any time soon. None of the typical issues of providing income for his family exist as his wife will have access to all the assets if he dies, and even after she dies, more than enough should be left for the kids. So why are folks like Mr. and Mrs. Jones buying so much life insurance? Aren’t these the people so many financial gurus talk about? Those that have “made it” and no longer “need” life insurance? RETIRE NOW AMERICA ®
I NS I DERS ’ VIEW HERE’S MY THEORY: WEALTHY PEOPLE ARE USUALLY PRETTY GOOD AT MATH. THEY’VE CRUNCHED THE NUMBERS AND FIGURED OUT THAT IF THEY JUST HOLD ONTO THEIR POLICY UNTIL THEY DIE, THE RATE OF RETURN ON THEIR PREMIUMS AT DEATH WILL BE HIGHER THAN ANY OTHER SAFE, CONSERVATIVE INVESTMENT THEY COULD MAKE. IN FACT, IT’LL BEAT MANY OF THEIR RISKIER INVESTMENTS – WITHOUT HAVING TO TAKE THE RISK.
Certainly that argument can be made. But interestingly, the fact is rich people (especially those with even more assets than Mr. Jones) are the ones buying the most life insurance. Why?
and your plan for your family. But unlike the other risks, death is a certainty. Doesn’t it make sense to diversify your portfolio against the possibility that you might die early?
dollars – income tax-free! In fact, it’s almost impossible to fathom a scenario where you could live long enough to turn a good permanent life insurance policy into a bad deal.
To those that are good at math, life insurance is simply another asset class. Let’s face it, every investment advisor or money manager on the planet always recommends diversification. You might own some stocks, but not all one stock. Not just stocks, but some bonds, too, and perhaps some annuities, real estate, precious metals and commodities...maybe even some cash. If it’s all done perfectly, theoretically, given enough time and through diversification, your returns should be steadier…and given enough time, all should be fine in the long run.
This is called time diversification. Oddly though, as obvious and important as it is, you won’t likely hear about it from most investment advisors.
When smart folks see these numbers, the obvious question is, “How can that work for the life insurance company?” Well, the fact is, if you die with your policy in force, it won’t work for them. They’ll actually lose money on your policy. But don’t feel bad. They have thousands of customers every year who cancel or lapse their policies for all kinds of reasons. And those people obviously paid a lot of money, received nothing, and ended up subsidizing the ridiculously high rates of return for those smart enough to hold on to their coverage and die with their policies in force.
But what if you die earlier than you plan to? No one expects that to happen and we don’t want to think about it, but it happens every day. Time then, is a key component to the success of any financial plan. Investments need time to grow. Your portfolio is probably diversified to protect against a whole assortment of risks, many of which will never come to pass. For example, some of us own gold as a hedge against currency devaluation, an event that may or may not happen. However, one’s eventual death also is a risk to your portfolio RETIRE NOW AMERICA ®
The fact is, if you die young, there is simply no asset class that’ll even come close to outperforming a life insurance policy. And if you die when you’re supposed to, right around your life expectancy (at say age 85), the rate of return is still over 6 percent after tax. That’s an 8 to 12 percent pretax equivalent depending on your tax bracket, which beats virtually every other safe investment on the planet. The best part is that unlike any other type of financial instrument, life insurance doesn’t need time to grow. For example, say you’re age 60 and you buy a $1 million life insurance policy. That might cost around $15,000 per year, and that premium is guaranteed never to change for life. If you die next year, the $15,000 instantly turns into $1,000,000. Die in 3 years, and $45,000 in premiums will have turned into $1 million tax-free. Die in 20 years (at age 80) and you will have turned just $300,000 in premiums into $1 million
In essence, these six words are the secret of winning the game of life insurance: Die with your policy in force. Just as important, and in keeping with the theme of diversification, life insurance performs best and has the highest return on investment when all the other investments perform the worst. So that begs the question – should you consider taking a small slice of your portfolio and diversifying it into life insurance as an asset class? It’s up to you, but I know I did! RNA
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H EALT H Y LI FES T YL E
GOING ORGANIC
FEEL BETTER, LIVE LONGER I n the last year, certified organic farms have increased nearly 12 percent in this country. There’s a direct link between this trend and the amount of information we now have on the unhealthy ingredients in our food.
The biggest concerns are chemical additives and preservatives, as well as genetic modification (GMOs) of our foods. While these practices have been rampant in our food supply for decades, severe spikes in health issues among Americans is turning the spotlight on what we eat. GMO is the latest buzzword in the food industry, with both supporters and protesters outspoken about the benefits and health risks of this type of processing. Many are concerned that food producers are not required to label products as genetically modified. Some estimates indicate up to 75 percent of food on grocery store shelves contain GMOs. The solution for many people is to make a move to more organic products. By law, food labeled “organic” must be grown and produced without chemicals, preservatives or GMOs. Here are the top benefits of eating organic foods (and some tips to get you started): RETIRE NOW AMERICA ®
IMPROVED NUTRITION
Organic foods are usually much fresher and have higher levels of fiber and nutrients, which help the body absorb and use the nutrients. Therefore, organic foods provide a healthier and more nutritious meal regardless of the food or the nutrients it contains.
ENHANCED NUTRIENT CONTENT Research comparing organic fruits and vegetables with their more conventional counterparts found in the grocery store indicates organic foods have higher levels of antioxidants and ‘micronutrients’ such as vitamins and minerals. Antioxidants are instrumental in maintaining a healthy immune system and fighting inflammation, so switching to organic foods can improve your diet, boost your health, and facilitate recovery after a workout.
DECREASED RISK OF ILLNESS, DISEASE Some pesticides and chemicals in our foods – like artificial sweeteners – have been linked to increased inflammation, which leads to a higher risk of cancer, type 2 diabetes,
heart disease and other diseases. Reducing intake of these common ingredients by consuming more organic foods can only lead to improved overall health and prevention of future illness.
FRESHER ORGANIC FOOD IS FRESHER Because organic foods don’t have the preservatives that conventional items contain, they don’t usually last as long on the shelf. This means they are always consumed fresh, whereas many non-organic foods can be at least a week or more old when first purchased. And fresher food means better tasting.
LESS RISK OF ANTIBIOTIC RESISTANCE Resistance to antibiotics is a growing health concern in the U.S. Increasingly, we are seeing infections that are unresponsive to antibiotics. Many meats, like chicken or turkey, are treated with antibiotics to prevent them from acquiring life-threatening infections, which can then be consumed by humans and promote resistance. The increased risk of infection is due to the poor conditions that these animals are usually kept in.
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ENVIRONMENTALLY FRIENDLY The reduced risk of pesticides and chemical additives in organic products means choosing these foods is good for your health and the environment. It helps the environment because fewer pesticide use means decreased soil and water pollution, as well as reduced emissions from production of these chemicals. Plus, the reduced shelf-life translates into more demand for locally grown produce.
INCREASED ANIMAL KINDNESS AND WELFARE The conditions in which many animals, especially chickens and livestock, are maintained for the purposes of conventional meat production are much less humane than those used for organic meat production. This is because nearly all organic meats are produced in freerange conditions, where animals are allowed to roam free in farm-like conditions instead of being housed together in caged enclosures.
HIGHER QUALITY Due to increased freshness, nutritional content and value, organic products are usually higher quality than conventional foods. In meats, this typically means less fat and more lean meat per serving, juicier fruit and thicker vegetables.
REDUCED HUNGER Organic foods are often superior in squashing hunger and preventing overeating. This is due to more fiber and the absence of artificial sweeteners (and highly addictive chemicals like monosodium glutamate) that can increase hunger. So if you are into fitness or seek to reduce fat and/or lose weight, organic foods are the way to go.
BETTER TASTE In addition to higher nutritional content and quality, many claim organic foods taste better than conventional products. This fact, combined with reduced hunger and the many health benefits noted above, make the switch to more natural and organic foods a no brainer.
IT’S EASY! Not too long ago, organic foods were niche products difficult to find in many mainstream grocery stores. Due to increased popularity and demand, organic alternatives to nearly every food – from chocolate to eggs to vegetables – are now available in most supermarkets around the world. This makes it easy for organic newbies to make the transition away from conventional foods... or those with busy lifestyles who need quick, healthy options on the go. RNA
HOW TO INCORPORATE MORE ORGANIC FOODS INTO YOUR DIET BE DISCERNING – Just because a product says ‘free range,’ ‘whole grain,’ or ‘whole wheat’ does not guarantee it is organic. For example, many eggs may be produced by free range chickens, but still are chemically treated before sale. And foods grown or produced locally are no guarantee the food is organic. Always check the label.
SHOP AROUND – Many organic options are more expensive than their conventional alternatives. When shopping for the lowest price, it’s a good idea to check the larger mainstream grocery stores before searching the specialized health shops.
START SIMPLE – Always start with basic foods such as meats, dairies and grains when making the switch to organic. These are the foods you likely will eat the most of – and gain the most benefit. Then begin to incorporate less common foods to complete the transition.
START SMALL – Select one or two common food substitutions and gradually build from there. This will ease the transition to organic food from both financial and psychological perspectives.
PLAN AHEAD – If you’re traveling, check local health stores or see if large grocery stores stock organic foods through Google. If you’re only traveling a short distance, storing organic products in airtight containers will preserve them for slightly longer. This is also a good way to ensure you’re eating organic during busy lunch hours at work.
READ THE FINE PRINT – When reading product labels, be aware that ‘organic’ means at least 70 percent of the ingredients must be organic, and a label claiming to be 100 percent organic must live up to the claim. So be sure to check all the information carefully to make an informed choice.
CHOOSING A FINANCIAL PROFESSIONAL There’s nothing like doing your homework and being selective. Income Planning is a very important aspect of a retirement plan, make sure you are working with someone who understands your needs. Call us today to located a professional near you.
877-337-5500
THE ULTIMATE GUIDE TO ACHIEVING YOUR GOALS
MAKING MONEY IN RETIREMENT IN COME MAT T E R S
WHAT WALL STREET HASN’T TOLD YOU
by Gordon Haave, CFA, MBA
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I NS I DERS ’ V IEW
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f you are approaching retirement, you may not know the first rule of retirement investing – Losses hurt more than gains help. What does this mean? If Mr. Smith’s portfolio, with an initial value of $100,000, is up 10 percent in its first year and down 10 percent in its second year, what is the ending value of the portfolio? Most of our clients, even very sophisticated ones, instinctively answer “$100,000.” It seems logical, but let’s do the math: $100,000 times 1.10 (first-year return) times .9 (second-year return) = $99,000. While Wall Street tries to sell you on large gains, it ignores the more important part of the equation – avoiding losses. This is a real problem for those in or close to retirement. Why? Let’s review some basics. The standard case for allocating a large portion of your savings to the stock market is the longterm compounded returns that have historically been achieved. That is, over time, the stock market is the greatest vehicle
S&P 500 COMPOSITE – TOTAL RETURN INDEX WITH DIVIDENDS REINVESTED
available to the average investor for building long-term wealth. This story is absolutely true. However, it’s not the whole story. Consider at any given time you might be underwater for as long as 10, 12 or even 14 years. That’s fine if you are in your 20s or 30s. However, the first 10 years after retirement are the 10 best years of your life if you have planned properly. A 20, 30 or even 40 percent or more drop in your assets during that time would be devastating to your retirement plans.
STOCK MARKET 101 Shares of stock represent actual ownership in a company. While there are many ways to value shares in a company, as a general rule, the value of shares today represents the future cash flows the investor expects to receive from his share ownership, with future earnings discounted back to their present value. Thus, when corporate earnings increase, the value of your share of that company also should increase.
RETIRE NOW AMERICA ®
Take a look at the chart above. If you retired in 1999, could you have afforded to be down 50 percent 4 years later? How about if you retired in 2007? The Wall Street agenda of selling you on the promise of large gains over time is why there is always so much bullish talk with very little discussion of the devastating impact of losses and what they can mean for investors in retirement. So what does the investment landscape look like? As we go to press at the beginning of 2017, the election of Donald Trump has brought optimism to the stock market. Since November 8, stock prices have moved markedly higher as investors anticipate increased earnings during Trump’s term. Here’s how we see this bullish case shaping up – while Trump is notoriously imprecise in communicating his plans, there is broad consensus that he will slash regulations in the finance, healthcare, oil and gas industries. Trump’s cabinet picks seem to confirm this.
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IN SI D E RS V IE W investment. There are many ways to gauge the price that one is paying for stocks. However, all commonly used measures are at or near an all-time high.
In addition, Trump plans to “rebuild” America with a large dose of infrastructure spending. Therefore, a case can be made for an increase in corporate earnings which, market bulls say, will lead to a rise in stock prices. The case is thus being made that the Trump presidency will be a replay of the Reagan era, when stocks surged as corporate earnings rose under the administration’s tax cuts and spending increases.
Let’s address the first issue. While earnings drive stock prices in the long run, two important considerations are missing from the bullish scenario.
The price you pay for an investment matters. Just as a home or a car can’t be valued without reference to price, neither can a share of stock. The greatest company in the world might still be too expensive for it to be a wise
The chart below shows the price/earnings ratio of the S&P 500 Composite approaching the levels of the last market perk. In the early 1980s, valuations were lower. Thus, during that decade market participants had the opportunity to buy cheap stocks in an environment of strongly increasing earnings. Today it’s a different story as a believer in the bull market is buying into already expensive stocks.
Interest rates are rising, too. This is occurring amidst all the chatter of rising corporate earnings. Rising interest rates can affect the stock market in two ways: 1) Rising rates lead to higher interest payments on items such as mortgages, auto loans, and small business loans. As these rates go up, consumers purchase less goods,
The above chart illustrates the potential stock market gains if the Trump presidency mimics the Reagan era. Gold represents the actual performance of the market from 1969–1987. Red reflects years 2000–2016. The question facing us is: How much of your retirement should you bet on the bullish case? There are two ways to approach this question. First, is the bullish case correct? Second, how much can you afford to lose if it’s wrong?
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S&P 500 COMPOSITE – SHILLER PRICE/EARNINGS RATIO
RETIRE NOW AMERICA ®
I NS I DERS V IEW which pulls down the overall economy; and 2) the value of a share of stock is reflected by the value of expected future cash flows discounted back to today. That is, if you were going to get $100 in 10 years, what is that worth to you today? The answer depends on interest rates. When interest rates rise, expected future cash flows, and thus stocks, are worth less today. Due to already high stock prices and rising interest rates, the bullish case for 2017 may not be as strong as it seems. This raises the second question of our dilemma: how much can you afford to lose if the bullish case is wrong? Circling back to an earlier point, can you afford to be down 50 percent four or five years into your retirement? Unless you have an abnormally large amount of money saved, the answer is no.
What can you do?
dividends, you won’t face such a problem as you can continue to spend the dividends while waiting for share prices to recover. Further, a shift to value stocks (stocks selling at a lower priceto earnings ratio) can help as well. The chart below shows what happens to stocks during large drawdowns. Going back to 1940, the 20 percent of best value stocks (those with the lowest price/earnings ratio) suffer on average a 4 percent drawdown during market declines. Meanwhile the most expensive 20 percent of stocks suffer an 18 percent average decline. More importantly, the maximum drawdown for the most expensive 20 percent of stocks was a whopping 50.9 percent, compared to a more modest 22.9 percent for the best value stocks.
In Conclusion Dividend and Value oriented stocks are a better bet if you are in or approaching retirement. What else can be done? Our advice is to consider adding some additional risk management techniques to help protect your nest egg. For example, it is commonly known that when the economy takes a turn for the worse, employment declines. This is only partially true. Part-time employment tends to rise concurrently with the decline in full-time employment. Understanding that losses hurt you more than gains help you is vital to ensuring you have peace of mind in retirement. Don’t just accept that the only thing you can do is reduce your overall equity exposure as you enter retirement. You also need to strongly consider what equity strategies to invest in. RNA
At the most basic level, a shift in your investment portfolio to a strong dividend portfolio gives you some very important advantages. For example, if you are invested in growth stocks that don’t pay dividends and the market is down 40 percent, you will have to start liquidating shares in order to fund your retirement. This will make it even harder to get back to even in the next bull market. However, if your investment plan consists of living off of RETIRE NOW AMERICA ®
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P LA N A HE A D
61% of people surveyed say they are worried about their monthly income in retirement. RETIRE NOW AMERICA ® SURVEY*
Create Up to 6 Streams of Retirement Income
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hether you’re on the cusp of retirement or have years left to go, it’s never too early to begin planning for your financial future. Increased life expectancies, along with rising costs of living, mean retirement is no longer a guaranteed time to relax and live off accumulated savings. Even for those who already have retired, there are still ways to protect your principal and reduce risk.
same standard of living in retirement. Advanced planning and careful asset management is crucial to maintain solid financial health.
Managing one’s assets can be challenging, especially for those seeking to maintain the
Here are six ways to help stay in the black in retirement:
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Instead of relying solely on pensions or Social Security, today’s retirees are diversifying their strategies and looking for creative ways to bring in extra cash. Creating multiple streams of income in retirement can ease some of the pressure that comes with the end of a regular paycheck.
*Data based on Retire Now America® research using SurveyMonkey®.
RETIRE NOW AMERICA ®
P LAN AH E AD
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DIVIDEND PAYING STOCKS
Diversification of financial assets is always important, but it can become even more critical in retirement. No one wants to have all their eggs in one basket and owning a well-balanced mix of stocks, bonds and cash can reduce financial risk and help bring greater peace of mind. Choosing a mix of top-quality dividend payers can also make stock market holdings do double duty. Dividend-paying stocks can provide a steady stream of retirement income and these stocks are often less volatile than their non-dividend paying counterparts.
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TURN A HOBBY INTO EXTRA INCOME
Retirement brings more time to pursue hobbies and favorite leisure activities. Consider monetizing some of those pastimes to pad your postretirement bank account. There are plenty of ways to turn a hobby into extra income. For example, flea market and yard sale lovers with a keen eye can pick up some good deals and sell them online at sites like eBay and Shopify.com. Crafty types can sell their wares on sites like Etsy. Golf aficionados could give lessons or take a part-time gig at a pro shop or retailer. With a little ingenuity, nearly every interest can be turned into a moneymaking endeavor. RETIRE NOW AMERICA ®
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RENTAL PROPERTY
Owning rental property is a great way for retirees to diversify their portfolios and bring in some steady extra income. Skilled do-it-yourselfers can turn a good profit buying fixer-uppers and putting in the work themselves before renting out or flipping the property. Even people who are all thumbs can earn extra money owning real estate by hiring a property management company to take care of the maintenance. Just find a suitable property, invest the cash and the management company will handle all the details from collecting the rent to fixing the plumbing.
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IMMEDIATE ANNUITIES
An immediate annuity can turn a lump sum of cash or a 401(k) balance into a steady stream of monthly payments. The actual amount received depends on a combination of factors, including age, gender, the amount invested and the size of the payouts you wish to receive. These are generally irrevocable and to get a return of premium at death (if available) come with a slight reduction in income.
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INDEXED ANNUITIES WITH INCOME FOR LIFE RIDERS
An indexed annuity can be similar to an immediate annuity but with more control because you don’t have to annuitize
the principal. These types of annuities are tied into a benchmark index, most often Standard and Poor’s 500, and when the index rises, so can the performance of the annuity. Indexed annuities are better if you like having the ability to start income, stop it, and restart it again. You can also get your principal back at any time, unlike the immediate annuity, although you may be charged a penalty of up to 10 percent. Another advantage is spouses can receive 100 percent survivor benefits. For example, if your spouse dies, you will receive the same annuity income for the remainder of your life. However, when selecting a joint payout option, the income received is generally 10 percent less than that selected under a single life payout. With traditional pensions quickly disappearing, this approach to retirement income is gaining appeal.
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PART-TIME EMPLOYMENT
Many retirees find themselves bored after a few years and miss the stimulation of the workplace. An area of expertise in one’s career field can be used to give lectures, do executive coaching or part-time consulting. For those craving the stability of a set schedule, a part-time retail job can be a great way to earn some extra money and have a high-level of interaction with others. RNA
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WHAT’S UP WITH UBER?
H EALT H Y LI FES T YL E
U
ber can make getting around in retirement an attractive option, especially if you’re looking to cut costs. The ride-sharing service makes getting around fast, easy and affordable. You can save wear and tear – and gas – on your own vehicle by hitching a ride with a qualified Uber driver. Better yet, you may decide to forego car ownership altogether, swapping maintenance, insurance and gas fees for the on-demand ride service. Here are some of the benefits:
AS A PASSENGER… CHOOSE YOUR RIDE. Uber offers several ride choices by car type, price range and proximity. The original “Black” cars are higher-end sedans that can seat up to four passengers. The pricier SUV option is good for a larger group, while Uber XL provides a less upscale SUV option. Cost-conscious riders can select UberX, a lowerend vehicle that seats up to four people. ORDER ON THE SPOT. The Uber app shows you the Uber cars near you, how far away they are, and the estimated cost for each. Just make your selections in the app and your car is on its way. RIDE IN CONFIDENCE. Transactional safety is also assured as money never changes hands. Riders automatically pay via the credit card used at enrollment, or can choose another electronic method like Google Wallet or PayPal.
RETIRE NOW AMERICA ®
AS A DRIVER… MAKE EXTRA INCOME. According to a recent survey, 23 percent of the company’s drivers are 50 years of age or older. You can set your own hours and earn extra money driving passengers around in your own car. GET FREE LIABILITY COVERAGE. Although drivers are responsible for their gas and vehicle costs, the company provides up to $1 million in third-party liability and uninsured motorist insurance coverage. GET SOCIAL. Missing the chats with coworkers? As an Uber driver, opportunities for social engagement go far beyond the traditional office environment. Uber passengers range from business travelers and retirees to teenagers needing a ride to their extracurricular activities. Uber teamed with AARP to spread awareness about the company and attract potential new members. Recently Uber announced an incentive to encourage its “drive partners” to save money – a free, one-year membership with online investment company Betterment. Now drivers can use their Uber app to open an IRA or Roth IRA with Betterment with no annual fees for the first year. Uber has also created a partner rewards program offering discounts on auto parts, maintenance, mobile phone plan specials and other exclusive perks.Visit www.uber.com for details. RNA
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CRACK THE RE TIREMENT NE S T EGG 5 R E T IR EM EN T IN C O M E S T R AT EG IE S
K
I NC O ME MAT T ER S A thoroughly researched income strategy is essential to a happy and active retirement. It can be a complicated business when you’re trying to balance what’s best for your lifestyle with how much risk you’re willing to take. By diversifying your retirement income strategy, you can keep your finances buoyant and secure the income you need for the rest of your life. Although you may have pension income and Social Security, a comprehensive retirement income strategy will give you financial independence. RETIRE NOW AMERICA ®
1 TOTAL RETURN INVESTMENTS
Total return investments combine both capital appreciation (growth) and income. By splitting your assets into these two categories when you’re looking at retirement income strategies, you get a much greater return on your investment. Investing part of your assets into equities provides the growth income you want, but be careful to diversify your investments as they can be risky. By putting the remainder of your assets into low-risk, income-yielding investments, your investments will have a better balance.
2 DIVIDEND PAYING STOCKS
Blue chip stocks represent larger established companies. The dividends from these companies generally yield 3 to 5 percent. This is quite competitive versus CDs, which offer less than 1 percent. Keep in mind that although these typically are considered safe, they do have a substantial market risk.
3 GUARANTEED INVESTMENTS
For the more cautious investor, guaranteed investments come in the form of treasury securities, certificates of deposit, income protected funds, and fixed annuities. Guaranteed investments are great as a base for retirement income, but it’s prudent to balance these with higher interest-bearing investments to ensure stable finances during your retirement years.
4 IMMEDIATE ANNUITIES
As “guaranteed investments,” fixed annuities offer structured payments based on your age and whether you select a survivor benefit and/or a return of premium. This is an irrevocable contract between you and your insurance company. You’ll also may lose access to your annuity investment, so it is important you have other resources available in case of emergencies.
5 FIXED INDEXED ANNUITIES
WITH LIFETIME INCOME RIDERS
This type of annuity, also known as a private pension, is becoming widely viewed as the most popular option due to the guarantees, flexibility and low fees. Similar to an immediate annuity, you can get guaranteed payments for life, but you have a revocable contract with an insurance company. There may be a 10 percent or more surrender charge if you choose to cancel the contract. Consult a trustworthy and reputable financial planner that can assist you with this type of annuity. By fully examining the options available to you upon retirement, you can benefit from guaranteed income with the potential for growth. The most important thing to remember – don’t put all of your nest eggs in one basket! RNA
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IN COME MAT T E R S How times have changed. These days, pensions are available to only a small portion of the working population, and the percentage of workers covered by traditional defined benefit pension plans continues to decrease each year. It seems employers are placing more of the retirement planning burden on the shoulders of their workers.
DON’T
BE CAUGHT WITHOUT A PLAN I
UNDERSTANDI NG Y O U R R ET IR EMEN T O P T IO N S f you start early enough, save diligently and invest wisely throughout your working years, you can accumulate a nest egg that will provide a far better standard of living than the meager pension you would have earned. Just a few generations ago, most people worked for companies that offered a traditional defined benefit pension plan. If those workers remained loyal to the same company throughout their working lives, they could count on a monthly check for life, and often fully paid healthcare benefits as well.
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This is not necessarily a bad thing for those with the financial savvy and foresight to turn things to their advantage. Truth is, the key to a comfortable retirement is in the preparation. If you plan wisely for your retirement, you can use your employer-sponsored plans to build a solid foundation for the future. You can build your nest egg even further by taking advantage of additional savings and investment opportunities beyond what your employer offers. Before you get started, it’s helpful to look at the retirement plan options available to workers in the modern workplace. Each of these plans has its own unique rules and advantages, and understanding those intricacies can make you a better – and ultimately, richer – investor.
THE 401(k) PLAN For better or worse, the 401(k) plan has become the main retirement savings vehicle for many workers. When the 401(k) plan was first introduced, it was meant to serve as one leg of a three-legged stool that also RETIRE NOW AMERICA ®
I NC O ME MAT T ER S included company pension plans and government programs like Social Security. But with pension plans disappearing fast and Social Security on shaky financial ground, the 401(k) now stands alone as the main source of retirement funding for a growing number of workers. Fortunately for those workers, a 401(k) plan can be an excellent source of retirement income if handled properly and invested wisely. One of the smartest things employees can do is to start participating in the 401(k) as soon as they become eligible. The sooner you start building wealth in your 401(k), the larger that nest egg can grow. Investing for long-term growth by using a mixture of growth stock funds, value stock funds and international funds can help a great deal as well. A 401(k) plan is also an excellent deal from a tax perspective. Every dollar you put into your 401(k) is another dollar that is not subject to current federal income taxes. Contributing the maximum to your 401(k) can reduce your current tax burden enormously, especially if you are in a high tax bracket. But even if your tax bracket is low, those tax savings can be significant. When you avoid current taxes you gain not only that tax money, but the interest and dividends that money can accumulate over decades of saving and investing. If your employer offers a company match, the 401(k) plan becomes an even better deal. The money your employer puts into the 401(k) is basically RETIRE NOW AMERICA ÂŽ
free money to you, and it is hard to beat that immediate return on your investment. Just consider a typical scenario in which an employer matches 50 percent of employee contributions up to 6 percent of earnings. That is an immediate 50 percent return on your investment, something that would be impossible to duplicate anywhere else.
ADDING AN IRA The high contribution limits and superior tax savings make the 401(k) the best retirement plan option for most, but it is not the only game in town. Workers also have access to individual retirement arrangements, also known as IRAs. When these plans were first introduced, they were designed to encourage workers to save for retirement by providing tax incentives and tax-deferred growth. Those same benefits still exist today, and they make the IRA an excellent addition to any retirement savings plan. When the IRA concept was first introduced, only one type was available. That original IRA provided an upfront tax deduction equal to the amount invested, thereby lowering a worker’s taxes and providing a strong incentive to save for the future. While that original IRA is still around, it now has been joined by the Roth IRA, which can be an even better deal for many workers. With a Roth IRA, workers do not get the same tax deduction they do with a
traditional one, but they do get the promise of tax-free withdrawals when they retire. As long as they follow the rules established by the IRS, those workers can withdraw their Roth IRA money in retirement with no federal taxes at all. That makes the Roth IRA an excellent choice for younger workers, and for those who expect tax rates to rise in the future. With record deficits and federal spending by the government, many people think higher taxes are inevitable. But smart investors can build their retirement savings and protect their wealth from taxation by maxing out their Roth IRA contributions each year. RNA
TAKEAWAY THE AVAILABILITY OF THESE RETIREMENT SAVINGS VEHICLES CAN SOFTEN THE BLOW CAUSED BY THE LOSS OF THE TRADITIONALLY DEFINED BENEFIT PENSION PLAN. THERE IS NO GUARANTEE YOU WILL RETIRE A MILLIONAIRE OR EVEN DUPLICATE THE PAYOUT YOU WOULD HAVE RECEIVED FROM A COMPANYSPONSORED PENSION. BUT IF YOU SAVE THROUGHOUT YOUR LIFETIME AND INVEST WISELY, YOU CAN END UP FAR BETTER OFF THAN PREVIOUS GENERATIONS WAITING FOR THAT MONTHLY PENSION CHECK TO ARRIVE.
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IN COME MAT T E R S
TOP 10 REASONS
TO PURCHASE LIFE INSURANCE I f you ever want to bore someone to death or make them run for cover, bring up life insurance. Trust me...just those two words seem to make people clam up and start looking at the clock. We all know we are going to die someday, but we really don’t like to think about it. Even harder to grasp is the idea of
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a “plan” for giving our money away upon our death. The reality is, most people don’t buy “burial life insurance” (if you can call it that). Life insurance has many more purposes and benefits beyond the purchase of a burial policy. In fact, life insurance plays a crucial role in estate planning. It can help pay for estate taxes,
allowing heirs more time to make decisions on selling property. Life insurance can also help loved ones replace lost income. Let’s face it, we don’t have a crystal ball and we don’t know when we will die. It is possible we will die prematurely and leave our spouses without our income. Ask yourself this question: If you weren’t here tomorrow, RETIRE NOW AMERICA ®
P LAN AH E AD
If you weren’t here tomorrow, would your spouse be able to survive with the loss of your income – and without having to make drastic changes? would your spouse be able to survive with the loss of your income – and without having to make drastic changes? Most people would have to answer that question with “NO!” That’s where life insurance makes a big difference. In addition to personal reasons, life insurance can be especially helpful for businesses that are “partnerships,” where the death of a partner would impact the other. For example, if one partner dies, the other partner suddenly could find themselves in business with the spouse or relative of the deceased partner. This can cause serious problems for the business. To avoid these issues, the business can take out life insurance on each business partner, otherwise called a business continuation insurance policy. This also can be done with an employee who is extremely important to a partnership, whose death would put a financial burden on the business. In this case, the business would take out and fund a key man insurance policy. Life insurance also can strengthen retirement planning. For married people who will retire with a pension, having life insurance can help you get the largest benefit from the pension RETIRE NOW AMERICA ®
without putting your spouse at risk. This concept is called pension maximization. For example, instead of taking a lesser monthly benefit so your wife would continue to receive a monthly benefit from your pension upon your death, you could take the “life only” benefit along with a permanent life insurance policy (in the amount of the benefit your spouse would receive in pension income upon your death). Instead of the income coming from the pension, your spouse would receive a check from the life insurance company, and then enlist the assistance of your life insurance agent to invest it wisely to obtain the monthly income needed. Those are a few examples of how life insurance can provide many benefits beyond the traditional use (protecting your family if you die prematurely). Typically, term life insurance or permanent life insurance will cover many of the above features. The amount of insurance you apply for, however, will depend on which benefits you need. The good news – many policies are easy to apply for, and don’t require a medical exam. For more information or for a life insurance quote, contact your local agent. RNA
TOP 10 COMMON USES FOR LIFE INSURANCE INCOME REPLACEMENT & FINAL DEBT PAYMENTS MORTGAGE PROTECTION INSURANCE PENSION MAXIMIZATION PLANS KEY MAN INSURANCE BUSINESS CONTINUATION PLANS ESTATE PLANNING CHILDREN’S EDUCATION COSTS RETIREMENT PLANNING CHARITABLE GIFT REPLACEMENT INHERITANCE EQUALIZATION
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HEA LTH Y L I FES T YL E
5 Ways Yoga Can Improve Your Life by Katie Hocker CERTIFIED YOGA INSTRUCTOR & FREELANCE WRITER
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H EALT H Y LI FES T YL E
With 86% of yoga practitioners reporting a strong sense of mental clarity and 73% feeling physically strong, why not start practicing yoga today? Yoga is a fantastic, relaxing way for adults of every age to maintain their mobility and improve both their mental and physical health. Here are five healthy reasons:
1
TUNES YOUR BODY
2
REGULATES HORMONES
3
IMPROVES BALANCE
4
STRENGTHENS YOUR LUNGS
5
IMPROVES FLEXIBILITY
An activity that promotes tuning into the body, yoga is a very personal practice that allows you to control the flow, intensity and variety of your routine. For this reason, yoga is a viable option for a wide range of ages and body types. And with hundreds of poses to choose from, practitioners do not need to worry about getting into a challenging or painful posture as there is always a gentle and equally effective alternative. So, yoga is a pressure-free and relaxing way to begin building muscle, unlike other fitness activities that may prove challenging with age.
Menopause is a milestone full of physiological, hormonal and psychological changes for many women. The good news is that consistently practicing yoga may relieve many of the physiological changes associated with menopause, such as irritability and insomnia. Yoga has been shown to decrease depression and anxiety, also associated with menopause. Be sure to communicate your needs and health conditions with a certified yoga teacher as they may be able to offer additional at-home postures and breathing techniques to help improve your symptoms.
Yoga is a gentle, non-competitive way to increase balance later in life. By attending to daily balance work, you can work to prevent falls, which can cause considerable more damage later in life. Don’t be intimidated by the idea of balancing on one foot in the middle of a room. There are a variety of postures you can do on a wall to become comfortable while increasing your balance.
As our age increases, so do instances of breathing problems, such as asthma. Since yoga focuses heavily on various breathing techniques, it encourages practitioners to combine correct breathing with each pose while also strengthening and detoxifying the lungs. By attending to routine breathing work in yoga, older people can learn to breathe more efficiently, increasing energy as well as circulation.
No article on yoga would be complete without mentioning flexibility. Many older people suffer from stiff joints and muscles. Yoga is a gentle, gradual way to reduce these problems because it works to lengthen and strengthen the muscles. Another great reason to get on your mat! RETIRE NOW AMERICA ÂŽ
RNA
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IN COME MAT T E R S
WHY LONG-TERM CARE INSURANCE SHOULD BE IN YOUR PORTFOLIO T he inadequacy of health insurance coverage among the U.S. population was a hot topic during the 2008 presidential election. The fact that many people had no health insurance was deemed a crisis that needed
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governmental intervention. However, an uninsured person was never denied healthcare prior to the passage of the Affordable Care Act of 2010. A true crisis is now in the making. As our citizens get older and a tidal wave of baby
boomers reaches retirement age, 7 out of 10 of those boomers will eventually be confined to a nursing home or an assisted living facility. The current daily cost of nursing home care is $250, and Medicare pays nothing toward these expenses. This leaves most seniors with two options: • Sell off all assets and depend on Medicaid to pay the bills, or • Protect assets with a longterm care insurance policy. A long-term care policy, available to anyone 55 years or older, is written specifically to cover the costs associated with nursing home confinement or assisted living care. Long-term RETIRE NOW AMERICA ®
P LAN AH E AD
As the U.S. population gets older and a tidal wave of baby boomers reaches retirement age, 7 out of 10 boomers will eventually be confined to a nursing home or an assisted living facility. care policies can be purchased individually or, according to financial planner Steven Daar, as a rider on a life insurance policy. As with any insurance, long-term care rates vary according to the age, gender, health history and lifestyle of the applicant. The applicant with a greater probability of incurring a disability that would place him or her in a nursing facility– and who applies for the insurance at a greater age – will have a higher premium than the applicant with few health concerns and who applies at age 55. Long–term care needs can bankrupt even the most prepared retiree. It would require a portfolio of $2.9 million that generates 3.5 percent in income just to cover one year of nursing home care. Most retirees fail to accumulate that much in an IRA or 401(k) plan. A retiree who is single with no dependents and no plans to will his or her assets to a friend, relative or organization may opt to spend down what he or she has and then apply for Medicaid. The criteria for Medicaid approval vary from state-tostate. Negotiating the path of fine print to an approval often demands the assistance of an elder law attorney. However, a retiree who is married, who has children, or who wants to pass his or her assets on to a charity should consider a long-term care RETIRE NOW AMERICA ®
policy to protect those assets, as well as his or her spouse’s current standard of living. Georgia health insurance advocate Cindy Holtzman says a retiree with grown children should be aware of filial responsibility laws in 30 states that exist. These laws state that a child is responsible for his or her parent’s nursing home bills if the parent is unable to pay. Although these laws have largely been ignored in the past, the rising cost of nursing home care coupled with reductions in Medicaid spending have spurred nursing homes to file civil suits against the children of indigent parents. In Pennsylvania, for example, a daughter was sued for over $300,000 by a nursing home for her parents’ care. The home lost the case, but the daughter had to hire an attorney and prove that she was unable to pay this bill. Some states, such as Ohio and Massachusetts, may impose criminal charges against adult children who fail to provide for a parent’s long-term care. These charges may result either in a fine or jail time, and they would show up on a criminal background check. The damage to the relationship between parent and child after one of these lawsuits may outweigh the actual financial damage, but both can be prevented with the
purchase of a long-term care policy. Many financial planners advise putting off the purchase of long-term care insurance until well after retirement age, but it might be wise to begin shopping prior to retirement. Many insurance companies are dropping their long-term care policies, and those that continue to offer long-term care policies are raising rates dramatically. Insurance companies make money by investing premiums to invest in bonds or moneymarket instruments and then paying claims out of the revenue stream they receive from interest and dividend payments. With interest rates for Treasury bonds hovering near 3 percent and money markets paying less than 1 percent, these firms are actually losing money on longterm care policies. Even though demand for long-term care policies is rising, there may be fewer insurers from which to choose. A high demand coupled with limited supply translates to a high cost for the product. Insurance of any kind is the last item anyone wants to buy, but as life’s seasons change, so do life’s demands. A worry-free retirement begins with solid financial planning, and longterm care insurance should be part of that plan. RNA
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For the Young & Young at Heart
A Landmark Restored. A Village Reborn. A Lifestyle Revealed. 1, 2, & 3 Bedroom Residences and Beach Homes starting in the upper $500’s
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This offering is subject to errors, omissions, prior sale, change of price, or withdrawal without notice, and not intended to solicit currently listed property. Oral representation cannot be relied upon as correctly stating the representatTons of the developer. For correct representations, make reference to this brochure and to the documents required by section 718.503, Florida statutes, to be furnished by a developer to a buyer or lessee. This is not an offer to sell or solicitation of offers to buy condominium units in states where such offer or solicitation cannot be made. Prices, plans, and specifications are subject to change without notice. Void in states where prohibited. Additional restrictions may apply.
IN COME MAT T E R S
THE SKINNY
ON JUICE T
F IGHT W RI NKLES A N D G ET A Y O U THF U L G L O W he market for anti-aging supplements is surging as people strive to look younger and healthier – it’s expected to reach $216 billion by 2021. However, not only can these products be costly, but little research has been done on the long-term health benefits. The good news is that natural remedies are available to help turn back the clock on
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aging. Organic juices are a fast, low-cost way to improve overall health and wellness. In particular, the nutrients in juice can minimize wrinkles and flaky skin, helping you maintain a youthful glow. Plus, juice is convenient for those seeking a snack or nutritional intake on the go. Just grab a bottle and go!
Here are 10 easy juices you can include in your diet to fight aging and promote a youthful appearance.
1
YOGURT, ORANGE & GELATIN JUICE
Anti-aging Ingredients: Vitamin C, B Vitamins & Proline This may seem like a strange combination, but this juice has everything you need to optimize skin health. These benefits stem from the amino acid proline (found in the gelatin), which increases collagen synthesis.
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I NC O ME MAT T ER S
JUICY TIP:
INTRODUCE VARIETY WHENEVER POSSIBLE TO GET THE MOST BENEFITS FOR YOUR SKIN AND OVERALL HEALTH.
With collagen being the primary protein that makes skin, this can make a big difference to skin appearance and breakdown.
This juice is perfect for those
Adding yogurt provides a good dose of vitamin D, which helps protect skin, and vitamin C, which reduces inflammation.
collagen production, the vitamin
2
KALE, SPINACH, APPLE, CELERY & LEMON JUICE
Anti-aging Ingredients: Vitamin C, Vitamin A, B Vitamins, Vitamin D, Iron and Antioxidants RETIRE NOW AMERICA ÂŽ
looking to boost their overall health by getting their greens. The vitamin C helps boost D helps protect the skin against harmful ultraviolet light, and the B vitamins promote keratin production. Other antioxidants in the leafy vegetables also contribute to fighting inflammation and iron can help improve oxygen and nutrient transport in the body.
3
BEETROOT, GINGER & TOMATO JUICE
Anti-aging Ingredients: Betaine, Vitamin A, Betacarotene and Antioxidants This juice has a few unique benefits through the inclusion of beetroot, which causes blood vessels to dilate and provide more blood flow to the skin. The beta-carotene and vitamin A in the tomatoes help protect the skin from damage, and the beta-carotene gives the skin a healthy glow.
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IN COME MAT T E R S
4
PEACH, ORANGE & LEMON JUICE
Anti-aging Ingredients: Vitamin C This is a simple, no frills juice that you can use when on the go or in a rush. The high level of vitamin C combats inflammation and boosts skin health. It also will help combat fatigue and keep your energy levels high throughout the day. There is a significant amount of water content in these fruits, making it an ideal juice if you’re looking to stay hydrated.
5
PARSLEY, WATERCRESS & SPINACH JUICE
Anti-aging Ingredients: B Vitamins, Vitamin C, Vitamin D and a Range of Minerals and Phytonutrients Sporting high levels of B vitamins and vitamin D, this juice is another good option for protecting skin health and boosting overall health and wellness. The watercress also provides good levels of fiber to help regulate bowel movement, making this juice one of the more diversely beneficial beverages on the list.
6
APPLE, CABBAGE & GINGER JUICE
Anti-aging Ingredients: Vitamin E, B Vitamins, Iron and a Range of Antioxidants
Anti-aging Ingredients: Betaine, Proline, Vitamin A and Beta-carotene
The combination of vitamin E and B vitamins make this juice especially effective in stimulating and maintaining keratin levels in the skin.
This juice acts as a type of “collagen and keratin booster” to provide one of the best mixes for skin health and anti-aging. The gelatin helps produce more collagen and keratin in the body and the vitamin A acts as an anti-inflammatory and collagen booster. The beta-carotene in the tomatoes gives the skin a glowing, tanned appearance.
The apples also provide fiber to further augment nutrient absorption and digestion.
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PINEAPPLE & GELATIN JUICE
Anti-aging Ingredients: Proline and Vitamin C This juice is for those with a sweet tooth. Containing a mix of gelatin and pineapple, it helps deliver a powerful dose of antioxidants and proline to fight off inflammation and enhance skin regeneration. With only two ingredients, it’s a fast and easy shake.
8
LEMON, PINEAPPLE & PAPAYA
Anti-aging Ingredients: Vitamin C, Carotenes and a Range of Antioxidants For those who prefer a citrus and sweet taste to their juices, this is a good way to increase your vitamin C consumption. The inclusion of papaya offers a good dose of carotenes, which again can help give a glowing appearance to the skin and combat inflammation while delivering a range of unique antioxidants to help improve health and prevent disease.
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9
BEETROOT, GELATIN & CARROT JUICE
10
YOGURT, WATERCRESS & PAPAYA JUICE
Anti-aging Ingredients: Vitamin D, B Vitamins, Iron, Carotenes and a Range of Antioxidants and Phytonutrients This juice is a good way to get all the nutrition you need for overall health and antiaging. The B vitamins, iron and antioxidants improve skin health directly by providing nutrients and supporting skin regeneration and the vitamin D helps protect the skin from further damage. This simultaneous development and protective effect of the juice makes it another strong choice for promoting youthful skin. RNA
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South Carolina‌ Smiling Faces. Beautiful Places. Retire Here. The Palmetto State offers affordable Southern charm and an often-balmy climate, without congestion. Contact licensed agent, Carol Grier Fuccella Phone: 843-655-6330 Fax: 843-215-1748 carolsellsthesea@gmail.com
Serving Myrtle Beach along "The Grand Strand"
IN COME MAT T E R S
5 STEPS
TO READY YOURSELF 1 YOU’VE SPENT A LIFETIME DILIGENTLY PUTTING MONEY ASIDE FOR THE FUTURE. You have faithfully made contributions to your 401(k) year after year, funding the account to its maximum and watching it grow. Now, after decades of hard work, you’re thinking about finally giving your notice and working hard on your golf game instead of your career. But how do you know that you are really ready to retire? You only get one chance to build a retirement nest egg – making the wrong move financially in the first few years could devastate your savings. Your retirement should be a source of joy, not a time of stress and cash flow concerns.
ARE YOU READ TO RETIRE? READ ON… 84
LEARN HOW EXPENSES CHANGE
Before you can tell if you are ready to retire, you will need to develop a comprehensive retirement budget – one that looks at your expected expenses in an honest way. Many people assume their expenses will go down in retirement, and most retirement calculators are built on this premise. It’s true some expenses will be reduced. For example, you won’t be shopping for suits, ties and other workplace clothing, but you may need to beef-up the amount of casual wear in your closet. Although the car doesn’t need to be gassed up for the daily commute, with a surplus of RETIRE NOW AMERICA ®
P LAN AH E AD free time you may find yourself driving more to take classes, meet friends or do some local exploration. Take an honest assessment and create a solid post-retirement budget. For example, healthcare expenses are one of the biggest increases to expect with age and if your post-work plans include wallet-busting items like plane tickets, golf memberships or finally tackling that home improvement project, you could end up blowing through that nest egg faster than anticipated.
2
TEST YOUR CASH FLOW
Once you determine your monthly expenses, take steps to ensure your post-retirement cash flow will support those expenditures. Carefully review your financial statements to see how much cash is being generated. Before retirement, most people reinvest their dividends and capital gains. After retirement, it may make the most sense to cash-out some of those earnings. You can contact your broker and make the arrangements as retirement nears, but for now all you need is an approximate income figure. If you plan to sign up for Social Security before you retire, you will need to determine the amount of benefits you’ll receive. Although you can start collecting payments as early as age 62, if you decide to work longer, delaying your Social Security claim could mean a bigger benefit. The difference between retiring at 62 or the full RETIRE NOW AMERICA ®
retirement age of 70 can be as much as several hundred dollars a month, according to the Social Security Administration. Once you’ve identified your sources of post-retirement income, take a retirement test drive. If your paycheck is setup for direct deposit, divert it to a savings account instead. Leave yourself the equivalent of your post-retirement budget and see if you can comfortably manage on that amount. If you find this manageable after a year, you most likely can afford to retire and maintain your lifestyle. However, if you find yourself forced to cut back or are frequently dipping into your savings, you may want to work a few more years.
3
UNDERSTAND YOUR MONTHLY INCOME
It’s a good idea to meet with a fiduciary planner who can map out your income for life. If you’re married, the planner also will help you determine the income, not just for one life, but for both lives. This planner also will be able to demonstrate what happens if he dies first, or if she dies first, and the economic impact on the surviving spouse. The advisor also should be able to pinpoint any deficiencies in your overall plan.
4
SHOP FOR HEALTH INSURANCE
Healthcare is one of the biggest financial challenges retirees face. If you retire before age 65, you may need to purchase your
own health insurance plan and prices can be surprisingly high. Check out the Health Insurance Exchange for your state and contact a health insurance broker well before retirement to get an idea of how much the monthly premiums will be. You also will need to account for price increases, co-payments and deductibles in your budget. Gather as much information as possible to estimate your post-retirement healthcare expenses. Funding a health savings account (HSA) can be a beneficial step. An HSA allows you to put away pre-tax money and use it for health expenses later on. You can even use the funds to pay for a Medicare supplement when you turn 65.
5
GET OUT OF DEBT
Debt can be a budget killer in retirement, so paying it off should be a top priority. Paying the mortgage is tough enough when you have a regular paycheck coming in, but dealing with a hefty house payment after retirement can be extremely stressful. If you still have a mortgage, take a close look at the payment, the interest rate and the remaining terms of the loan. If you have a low interest rate and expect to have strong post-retirement cash flow, you might be able to enter retirement with the mortgage in place. If not, plan to work until the house is paid off. If you want to expedite your plans to retire, consider downsizing to a smaller home and pay cash for it. RNA
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Treat yourself to something special
A FOUNTA IN OF YOUTH — Keeping your insides beautiful through a diet rich in antioxidants, polyphenols and phytochemical, can protect against oxidative stress and result in radiant skin, hair and even better eyes sight. DrS’ philosophy is to prepare foods that will keep you looking and feeling young for a lifetime. Includes Resveratrol & Grape Seed Polyphenol.
SMART FOOD FOR A GOOD MOOD
IN COME MAT T E R S
ADD MORE DOLLARS TO YOUR SOCIAL SECURITY PENSION By Isabel Cunningham
T
he average federal Social Security pension paid to a U.S. senior citizen is $1,294 per month. As is the case for all average figures, there are many people who receive less than that. Of the elderly, 22 percent of married couples and about 47 percent of unmarried Americans count on Social Security for 90 percent or more of their income. Many find it difficult to get by financially.
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Here’s how it works. The amount you receive depends on the contributions you have made during your working life. Unfortunately, depending on the age at which you opt to take your benefits, the result is that many people reach retirement without having enough income to support a reasonable lifestyle. Obviously, the best situation is one where a person approaches retirement with an adequate
private or occupational pension as their main income. Ideally, Social Security should serve as an extra benefit and/or provide a comfortable savings cushion. The mortgage should be completely paid off and the children educated and independent. Sadly, that’s not the situation for most Americans. Particularly since the financial downturn, many people retire without having put in enough working years to receive the maximum benefit, forcing them to take their Social Security when they reach the age of 62 (rather than waiting until full retirement age). Each year you wait after 62, you receive an 8 percent increase in annual benefits. This deferred benefit increase maxes out at age 70. Supplementary benefits are available, depending on which RETIRE NOW AMERICA ®
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state you live in, to ease these problems. Seniors whose total income is somewhere around $1,500 per month may be eligible, and should check out the benefits they could claim locally. The drawback is that the eligibility calculation will not only take into account your income, but also any savings or other capital you own. So, you can’t keep a sizable nestegg aside for a rainy day. On the bright side, at least for homeowners, the value of your residence will be disregarded. If you retire early, with less than the maximum Social Security benefit, what are the other options to maximize your income? One way is to
downsize. If you are willing and able to sell your home and buy a smaller place in a cheaper area, maybe even abroad, then that clearly will free up some money to help stretch out your Social Security pension. You also could use part of it for other purposes such as assisting any of your adult children who are struggling to get by in the current climate. However, it can be hard to make a geographical move later in life. Working part-time in retirement can be an attractive option, providing a small income to add to Social Security. Being part of the workforce gives older people regular social interaction, and may prevent some of the
isolation felt by many senior citizens. Bear in mind that more than $15,720 per year in earnings will lead to the Social Security payout being reduced by 1 dollar for every 2 dollars you earn. That should be OK, though. The federal pension takes care of most true essentials, so there’s no need to earn more than a small, part-time income to transform the situation from one where the retiree is struggling to survive, with no disposable income, to one where he or she can live quite comfortably. RNA
TAKEAWAY IF YOU DECIDE TO DOWNSIZE AND RELOCATE, CONSIDER A PART-TIME JOB TO EASE THE TRANSITION. YOU WILL BENEFIT FROM THE SOCIAL INTERACTION AND THE ADDITIONAL INCOME. PUT SOME OF THE PROCEEDS FROM YOUR PREVIOUS HOME SALE ASIDE FOR UNEXPECTED EXPENSES AND OCCASIONAL SPLURGES. GO FROM LIVING LIKE SOMEONE DEPENDENT ON SOCIAL SECURITY BENEFITS TO A RETIREE WITH A HIGHER PENSION...AND SAVINGS!
RETIRE NOW AMERICA ®
*Data based on Retire Now America® research using SurveyMonkey®.
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E STATE PLANN IN G FA ILU R ES SAMMY DAVIS JR. AGE: 64 DIED: May 16 1990, Beverly Hills, CA CAUSE: Throat cancer FAMILY: Daughter, 2 sons, wife, 2 ex-wives ESTATE MISTAKE: Although he made more than $50 million in his lifetime, Sammy left $5 million, and owed $7 million in taxes. He had no means such as life insurance to satisfy the debt. His widow sold many of his belongings to help pay the debt, but reportedly only got about $500,000.
JAMES BROWN AGE: 73 DIED: Dec. 25, 2006, Atlanta, GA CAUSE: Congestive heart failure due to pneumonia FAMILY: 6 children named in will; many others contending paternity
MARILYN MONROE AGE: 36 DIED: Aug. 5, 1962, Brentwood, CA CAUSE: Drug overdose FAMILY: 3 ex-husbands ESTATE MISTAKE: Marilyn left much of her estate to her acting coach, Lee Strasberg. The estate itself was not huge, about $800,000, but Strasberg claimed a right to her image. That led to at least a $30 million payout for a woman Marilyn never met – Anna Strasberg, Lee’s third wife. Marilyn’s case is often cited as an instance in which a trust would have been best to carry out a client’s wishes.
ESTATE MISTAKE: Although he was known for keeping a very tight beat, he left a very loose will and sloppy estate planning, which led to multiple lawsuits and severe tax implications. His will was contested by several parties, partly because he had not updated the document since 2000. He also left his mansion and music rights to an irrevocable trust to benefit underprivileged students, but the trustees and family are still battling over it. His assets were not well sheltered so an auction of his personal affects was ordered to help settle the tax bill.
HOWARD HUGHES AGE: 70 DIED: April 5, 1976, somewhere over Texas CAUSE: Heart failure while on a plane from Mexico to Houston for medical treatment FAMILY: No children but 22 cousins. ESTATE MISTAKE: The famed aviator/industrialist/film producer/eccentric left a $2.5 billion estate and hundreds of people scrambling for it. Because he apparently did not leave a will, it took seven years to settle the estate, spreading the fortune among 22 cousins.
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OF THE RI C H A N D FA M O U S HEATH LEDGER AGE: 28 DIED: Jan. 22, 2008, New York City CAUSE: Drug overdose FAMILY: Daughter. ESTATE MISTAKE: Ledger had a will when he died in 2008, but it was drafted in Australia before he found huge success and fathered a child in the United States. His will did not reflect any of this, so a reported $20 million went to his parents and siblings. His family said they would give the entire estate to Ledger’s former girlfriend and daughter.
JERRY GARCIA AGE: 53 DIED: Aug. 9, 1995, Forest Knolls, CA CAUSE: Heart attack while in drug treatment FAMILY: 4 daughters, 3 wives and a long-time girlfriend ESTATE MISTAKE: Jerry Garcia of The Grateful Dead left a proper will when he died of heart failure in 1995, but an ex-wife said Garcia had made promises to her. That and many other issues involving the administration of his estate are still under contention. Garcia and his band lived by ‘60s rules, or the lack of rules, and that has led to a difficult situation in courts, not just with potential heirs, but also with property.
ELVIS PRESLEY AGE: 42 DIED: Aug. 16, 1977, Memphis, TN CAUSE: Drug overdose FAMILY: Daughter ESTATE MISTAKE: Elvis is probably the most notorious example of a poorly planned estate. Of his $10 million estate, about 73 percent was lost in the probate process to estate taxes and other settlement costs. His case illustrates why a trust is often the best way to protect an estate. A revocable living trust can be used to avoid the costs and delays associated with the probate process, and in most states keeps the disposition of the estate out of public view. The estate plan must also focus on estate taxes in order to not only minimize them, but also to avoid untimely liquidations in order to pay the tax.
PRINCE ROGERS NELSON AGE: 57 DIED: April 21, 2016, Chanhassen, MN CAUSE: Accidental Overdose FAMILY: 1 full sibling and 5 half siblings ESTATE MISTAKE: Prince was one of the most prolific songwriters and performers of his generation. His sister has reported to the court that Prince never executed a will. As a result, Prince has lost total control of who receives his assets and will have to pay the government vast sums in estate taxes. RETIRE NOW AMERICA ®
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IN COME MAT T E R S
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FROM SCRATCH RET IREE FULFI LL S D R EA M O F FARM- TO- TABLE L IV IN G
I
f you try to picture your ideal retirement lifestyle, Janet Garman is living proof that your dreams are within reach. The Crownsville, MD, resident is pursuing her dream of small-scale farming with a goal of sustainable living. Not only is she living her dream, but she has turned it into a thriving business. Last year, Garman launched her own label, Free Range Yarn, based on wool from sheep raised humanely in small flocks. The sheep are treated humanely and
with as little chemical intervention as possible. “My life has come full circle as the farm operation we began when our daughter wanted horses has blossomed into a yarn farming operation,” Garman says. “We love what we do and I enjoy encouraging others to take a small step towards living their dream, whether it involves livestock, a vegetable or herb garden, or learning a new skill,” Garman concludes.
Garman also became a published author in retirement. She wrote “Chickens from Scratch” (2014) to simplify chicken raising for people who are just getting started. Her most recent accomplishment is a children’s book, “Margarita and The Beautiful Gifts.” RNA
For more information visit timbercreekfarmer.com
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Lifetime Income Matters SM
TIME FOR FAMILY, not time for worrying about your savings!
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Lifetime income for retirement matters! Explore your plan for retirement today. Contact your agent today for more information about The Power Series of Index Annuities ®
*A guaranteed living benefit rider is available at contract issue for an annual fee of 0.95% of the Income Base. The rider guarantees lifetime income up to the Maximum Annual Withdrawal Amount (MAWA), which ranges from 2.75% to 5.50%, for as long as you and/or your spouse live, even if withdrawals reduce your Contract Value to zero. If your Contract Value is reduced to zero, income is then based on the Protected Income Payment (PIP). In general, the amount you can withdraw annually is based on how old you are when you start taking withdrawals under the benefit, the amount of your Income Base each year, and whether you elect for payments to continue over one life (single life) or two lives (joint life). The MAWA is expressed as a percentage (“Maximum Annual Withdrawal Percentage”) of the rider’s Income Base. The Income Base is the value on which your guaranteed income will be based. It is not a liquidation value, cannot be taken as a lump sum, and does not represent the contract value. For more information, please see the Owner Acknowledgement and Disclosure Statement. You can also receive lifetime income at no additional cost through annuitization. Index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the claims-paying ability of the issuing insurance company. They provide the potential for interest to be credited based in part on the performance of the specified index, without the risk of loss of premium due to market downturns or fluctuations. Index annuities may not be suitable or appropriate for all individuals. Withdrawals may be subject to federal and/or state income taxes. An additional 10% federal tax may apply if you make withdrawals or surrender your annuity before age 59½. Consult your tax advisor regarding your specific situation. This material was prepared to support the marketing of the Power Series of Index Annuities.® Please keep in mind that American General Life Insurance Company and its distributors and representatives cannot provide tax, accounting, legal, financial or investment advice or recommendations, and do not serve in any fiduciary capacity in our relationship with you. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. Such discussions generally are based upon the company’s understanding of current tax rules and interpretations. Tax laws are subject to legislative modification, and while many such modifications will have only a prospective application, it is important to recognize that a change could have a retroactive effect as well. You should seek the advice of an independent tax advisor or attorney for more complete information concerning your particular circumstances and any tax statements made in this material. Annuities are issued by American General Life Insurance Company (AGL) , 2727-A Allen Parkway, Houston, Texas 77019. Modified Single Premium Deferred Fixed Index Annuity (Single Premium Only in Oregon), Contract Number AG-800 (12/12). AGL is a member of the American International Group, Inc. (AIG) financial services companies. AIG is a leading international insurance organization serving customers in more than 100 countries and jurisdictions. The underwriting risks, financial and contractual obligations and support functions associated with the annuities issued by AGL are its responsibility. Guarantees are backed by the claims-paying ability of AGL. AGL does not solicit business in the state of New York. Annuities and riders may vary by state and are not available in all states. © American International Group, Inc. All rights reserved. Not FDIC or NCUA/NCUSIF Insured I5528AD3 (2/17)
May Lose Value • No Bank or Credit Union Guarantee Not a Deposit • Not Insured by any Federal Government Agency
time to discover the beauty of retirement the blessed luxury of having grandchildren the beauty of time itself
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