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September 2012 Issue 5 ...Volume 1

Playing it Safe Remodeling Sense Can Save You Lots of Cents! New landscaping also will add value, as well as curb appeal, to your home. Experts say this improvement pays back best in temperate climates, where you can show off your ... By Steve Dinnen

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Personal Finance How the Health Care Law Will Impact Your Taxes The intent of this article is to explain how the Affordable Care Act will impact your pocketbook in 2013 ... By Thompson Myers and Associates, PC Click here to Read

Safety Pins Reflecting on a half century of economic growth Today, almost everyone who meets the poverty definition (about half the 1962 share) has chosen poorly on education and parenting. By Dr. Michael Hicks

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Safe Retirement

10 Money Questions You Need To Ask Yourself - by Raymond J. OHlson CLU, CRC Before you determine what you should do with your money, either figuring it out by yourself or with the help of a financial professional, you need to ask and answer some hard questions. The questions will help you understand what your financial needs really are so you don’t choose or get sold the wrong solutions and help both you and any professional find the right solutions.

When you hear the word annuity, what do you think of? The first annuities were issued by the Roman Empire as a reward to legionnaires for their service. Two millennium later annuities are still being used to provide a dependable income. By Dr. Jack Marrion Click here to Read

Safe for Life Striking a Safe Balance in Your Fitness Life Most successful athletes, business people, and fitness enthusiasts possess a balance of outcome oriented and process oriented drive. By Dan Hubbard M.Ed. Click here to Read

Safety Pins ...

10 Money Questions You Need to Ask Yourself Cont.

Here we go: 1. Overall, what is your main financial objective? In other words, what are the

8. How is your health? Do you feel as

things that are most important to you? What keeps you up at night?

though a long term care need might be in the offing for either you and or your spouse?

2. How much liquid money do you have and how much do you need?

9. What are the two or three things that you want your money to do for you?

Think about emergencies. Will you be in need of a new roof? What about your heating and air conditioning units? Any weddings or other large expenses that are facing you in the near term? But, it doesn’t usually make sense keeping long term monies in a low interest rate instrument

3. Are taxes a consideration? And what

would a possible change in the tax law do to your financial plans?

4. How much financial inexperience do you have? Yes, I use “inexperience” as most Americans have more Inexperience than they do experience.

5. How much risk can you tolerate?

Does a 10% drop in the S&P have you heading for the antacids?

6. Who is dependent upon you? Are you

part of the “sandwich generation”? Do you have kids, grandkids or parents that are, or may be, dependent on you for income?

7. Take a financial snapshot, where’s your money today? Pull out the

statements and compare your positions in relationship to the answers you have given above.

This is where you have to look into the mirror, and with your spouse if married, and have an adult conversation. Pick the priorities and write them down.

10. Finally, do you understand the realities of the solution? Yes, the

realities. If a plan is developed to meet your goals are you prepared to face the reality that it is up to you to implement the plan? About the Author: Raymond J. Ohlson CLU, CRC, CEO & President of The Ohlson Group, Inc. and SMP International, LLC

Mr. Ohlson entered the insurance business while completing his Bachelor of Science Degree at Ball State University. He quickly qualified for the Million Dollar Round Table (MDRT) of which he is a Life Member. He also received his Chartered Life Underwriter (CLU) designation from the American College in Bryn Mawr, Pennsylvania. Mr. Ohlson, a former life insurance company president, currently sits on college and hospital boards and is a published author. Raymond J. Ohlson can be reached at: Email:

Have other Safe Money Questions? Please visit and simply click on “Ask a Question” and we’ll get back with you. Back to Table of Contents

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Playing it Safe

Remodeling Sense Can Save You Lots of Cents! - by Steve Dinnen It felt good to get a new air conditioner installed just as the summer heat kicked in this year. But my elation was tempered a bit after I learned that all that coolness wasn’t adding much to the value of my home. When it comes to safe money projects around your house, air conditioners and furnaces might do little to enhance the property’s value, though certainly a crummy heating/ cooling system can dissuade a potential buyer from making an offer if you’re in a selling mode. Most buyers kind of expect the HVAC system to be working! It’s not as if I had had a Back to Table of Contents

choice in replacing my old air-conditioning unit – it was shot and summer was upon us. However, you and I do have many options that will indeed add value or at least recover a greater portion of the dollars spent on remodeling or upgrading other areas of our homes. I call these, “Safe Money Projects” for homeowners. For example, take new siding. Remodeling Magazine looked at a number of projects inside and outside a home and estimates that, on average, you will recoup 78% of the money you spend on fiber-cement

siding. That replacement product has earned the number one ranking in six out of the past seven years the magazine has conducted its survey (visit: costvsvalue/national.aspx).

Here are a few more ideas. I’m not overly excited about garage doors, but Remodeling tells me that if I put in a new one I can expect to recover about 72% of its expense. Speaking of doors, another low cost value-adder is replacing your old, faded and cracking wooden front door with a new steel front door. ( Page 3 )

Playing it Safe ... New landscaping also will add value, as well as curb appeal, to your home. Experts say this improvement pays back best in temperate climates, where you can show off your landscaping year-round. And in the back yard, you can install a deck and likewise expect to recover a substantial portion of the expense. Plus, you’ll have somewhere to chill while you grill a steak! Inside your home, bathrooms and kitchens get a lot of attention, and deservedly so. A new bathroom can add as much as 20% to the value of a home. That seems to jibe with recommendations from the National Association of Realtors, which has selected a bathroom makeover in Illinois as one of its finalists for a $ 20,000 cash prize in its latest “Boost Your Roost” contest. Another finalist is a kitchen redo. In its latest survey, Remodeling estimated that a minor kitchen remodel will cost $ 20,000 but will recoup 72% of its expense. “This

Remodeling Sense Can Save You Lots of Cents! Cont.

project is the least expensive way to give an existing kitchen a complete facelift,” say the editors. It would include new cabinet doors, drawer fronts and hardware, new countertops, and new appliances. Adding a new sunroom is an easy way to create more useable space and carries a price tag of about one-half of what a regular room addition would cost. You can add a skylight or vaulted ceiling giving the sunroom a spacious feel. Furthermore, if possible, placing the sunroom near your kitchen or dining room will let you utilize it for overflow eating. Finally, how about your dingy or out-of-date basement? Man cave, anyone? Yes, redoing your basement can add value to your home, as would creating an entertainment or media room. Basements often pose a danger of seeming to be socked in, even scarey! So, if you undertake this project, “light and airy” plus open spaces are the orders of the day. And don’t forget that basement bathroom.

Can you really run upstairs, take care of business, and then hustle back downstairs in time to not miss the third-and-goal, fourth-down snap? If space and ease of construction allow, adding at least a half-bath will pay dividends, even if you’re not planning to sell your home in the near future! I hope these simple suggestions give you some ideas on how to improve the quality of your life at home while helping you make smart, safe money remodeling decisions. About the Author: Steve Dinnen Steve is a freelance writer specializing in financial and travel news. He received his Bachelors Degree from Drake University and his Master of Journalism from Oklahoma University. Mr. Dinnen served as Sr. Business Reporter for the Des Moines Register, Business News Editor for the Indianapolis Star and served as Editor (freelance) for the Christian Science Monitor of its weekly personal finance column. Steve can be reached at : Email:

We have made a glossary of definitions about safe money places terms as well as financial policy definitions. Please click here to visit our dictionary Back to Table of Contents

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Playing it Safe

Volunteerism - by Norm Wilkens

“It is better and SAFER to give than receive.” (From the Bible, Acts 20:35 KJV) “Volunteerism is vital to the health of our communities and our lives.” (Author unknown)

Recently, several articles on the topics of Volunteerism and “giving to charity” have appeared in print. A number of these articles mention that women are more likely than men to volunteer. A 2006 report on volunteerism by the Corporation for National and Community Service supports this assertion. The 2006 report was part of an annual U.S. Census Bureau study of 60,000 households covering the giving habits and patterns for volunteering in each region and state. As the study points out, females volunteer at higher rates than males in every state. Interestingly, women with children younger than 18 volunteer at a rate of 39.9%; whereas, women without children are at 29.0%. Women who work volunteer at 36.1% while non-workers are at 27.2%. Men and women who are in the age group 35-54 are more likely to give of their time, talent, and treasure than older individuals. None of these figures surprise Back to Table of Contents

me because I have seen this trend taking place on a first hand basis for some time. Moreover, I respect and understand what these statistics represent. These US Census numbers, however, got me thinking about my own activities in the area of volunteering and giving to charities -- particularly the subject of volunteering that has been a significant part of my personal and business life for many years. Initially, I

believed it was important to be a part of activities in which I knew others and in which I had some personal interest. This type of commitment began at an early age in high school and continued into my university life. It was fun to belong to a group with mutual aspirations. And, to be honest, and a bit selfish, I also hoped that volunteering would gain me the respect of my peers and the public recognition that were important in those younger years.

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Playing it Safe ... As time has gone by and my activities and accomplishments in the business world have broadened, my reasons for volunteering have changed dramatically. Now I am being asked to volunteer because I have something to give to the association and to achieve some of my personal goals and satisfaction. For example, I find it gratifying to mentor younger people; to lend my expertise to fundraising, and to participate in manual activities at charitable group sessions. Yet, I have found there is a strong element of safety involved in many of the programs in which I find myself presently active. Most organizations today want volunteers who are willing to put their talents as well as their reputations on the line. That wasn’t always the case in the past. Many organizations were looking for “names” that could be added to their roster list to increase awareness and their reputation in the community. Although those goals are still significant, the need for those who will dig in and work for the organization is now just as important as the big name that person may be bringing to the group. Coaching Little League Teams, participating in church activities, and attending non-profit social groups of all kinds are as important today as they ever were. I can assure you that volunteers are desperately needed to fill those programs, and they are expected to work. Back to Table of Contents

Volunteerism Continued

However, there is a risk in being a volunteer. The climate in most volunteer groups is the need for people who will actively lend their expertise and be willing to go on the line and stand behind their opinions and decisions. Board of Directors Insurance is not just a fine print in board requirements anymore. It is essentially there because it may be needed in emergency situations. If you are willing to work hard and protect the mission of the organization you represent, you will find many groups will seek your assistance.

About the Author: Norm Wilkens A nationally recognized speaker and writer, Norman Wilkens has traveled to fortyseven of the fifty states speaking on topics of marketing, advertising and public relations. His most noteworthy subjects include: Healthcare Marketing; Multi-generational travel and Baby Boomers their contribution to society and economics. He is presently serving as Midwestern Contributor to California’s AAA WESTWAYS Magazine. Among Wilkens’ current activities are the Butler University Alumni Board of Directors; Butler’s Central Indiana Alumni Chapter Board; Chairman of the Board of Visitors for the new Communication College of Butler; Board of Directors of Ruth Lilly Educational Foundation; Salvation Army of Indiana Advisory Board and as an Elder at Second Presbyterian Church of Indiana.

Today, among others, I enjoy working with Butler University (Indianapolis, IN) as Chair of the Board of Visitors for the new Communications College. Also, I engage in the monthly church activities in which I am called Email: upon to use my skills as a public speaker, and you will often find me making presentations on marketing, advertising, and public relations to all types of groups, associations, and organizations. These activities are enjoyable because I have the opportunity to utilize my skills developed over many Get Your FREE years. I take the responsibilities for these gatherings and others Subscription in which I am engaged very Today. seriously. Volunteerism springs from a passion of the heart as well as the mind. To succeed as a volunteer in any situation, you must truly care about another’s well being. Plus, I believe it leads to a safer America.

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THE SAFE MONEY VIDEOS & AUDIOS Yep, that’s right. It’s movie time and it is free. So, get out the popcorn, pour a glass of your favorite beverage and relax. But, make sure you have a piece of paper and a pencil. You’ll want to call in to get more info when the number flashes across the screen. Now, please turn off you cell phones and enjoy our featured presentations.




Personal Finance

How the Health Care Law Will Impact Your Taxes - by Thompson Myers and Associates, PC There has been a great deal of media coverage related to the US Supreme Court upholding the Affordable Care Act, also know as the Health Care Law. The media coverage was generally political and failed to explain the details of how the law will impact individuals. If you are interested in political rhetoric as to whether it is a tax, penalty, or a forced purchase, look no further. The intent of this article is to explain how the Affordable Care Act will impact your pocketbook in 2013, when the healthcare taxes kick in, and in 2014, when the mandatory insurance requirement becomes effective. Here are the details for 2013: Back to Table of Contents

Increased Hospital Insurance Tax - Part of the taxes withheld on employees’ wages covers the Hospital Insurance (HI) portion of their contribution to Medicare; self-employed individuals pay the HI tax as part of the self-employment tax that is included in their tax return. The HI tax rate (currently at 1.45% for employees and 2.9% for selfemployed individuals) will increase by 0.9 percentage points on individual taxpayer earnings (wages and selfemployment income) in excess of compensation thresholds for the taxpayer’s filing status. Thus, the wage withholding HI rate will be 1.45% up to

the income threshold noted below and 2.35% (1.45 + 0.9) on amounts in excess of the income thresholds. The hospital insurance portion of the SE tax rate will be 2.9% up to the income threshold and 3.8% (2.9 + 0.9) on amounts in excess of the threshold. The income threshold at which this increase begins is $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, and $200,000 for all other taxpayers. Impact: Higher income working families. For married taxpayers, this additional tax is based upon their joint income. However, if both spouses work, their

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Personal Finance... employers will only base the withholding on the employee’s individual earnings. Thus, married taxpayers who both work may find themselves under-withheld on HI taxes and will therefore be required to pay the uncollected HI tax on their income tax return when it is filed. They may need to take steps to increase income tax withholding or pay or increase estimated taxes in order to compensate. Surtax on Unearned Income - A new surtax called the Unearned Income Medicare Contribution Tax is imposed on the unearned income of individuals, estates, and trusts. For individuals, the surtax is 3.8% of the lesser of: 1. The taxpayer’s net investment income or 2. The excess of modified adjusted gross income

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How the Health Care Law Will Impact Your Taxes Cont.

over the threshold amount ($250,000 for a joint return or surviving spouse, $125,000 for a married individual filing a separate return, and $200,000 for all others). “Net” investment income is investment income reduced by allowable investment expenses. Investment income includes income from interest, dividends, annuities, royalties, rents (other than those derived from a trade or business), capital gains (other than those derived from a trade or business), trade or business income that is a passive activity with respect to the taxpayer, and trade or business income with respect to the trading of financial instruments or commodities. For surtax purposes, modified adjusted gross income does not include excluded items, such as interest on tax-exempt bonds, veterans’

benefits, and excluded gains from the sale of a principal residence. Impact: Higher income families. In order to avoid or minimize this new tax, higher income taxpayers may wish to alter their investment portfolios to include more of the non-taxable investments mentioned above. Homeowners should be aware that the gain from the sale of their primary home in excess of the homeowner’s gain exclusion or gain from selling a second home is treated as investment income and would be subject to this new tax. Deductible Medical Expenses Threshold Increases Beginning in 2013, for taxpayers under the age of 65, the AGI threshold percentage for claiming medical expenses on a taxpayer’s Schedule A

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Personal Finance ...

How the Health Care Law Will Impact Your Taxes Cont.

will increase from 7.5% to 10%, which is the same as the current threshold percentage for alternative minimum tax (AMT) purposes. Individuals (and their spouses) age 65 (before the close of the year) and older will continue to use the 7.5% rate through 2016. Thus, it may be appropriate to pay outstanding medical bills or pre-pay such things as orthodontics for a child before the AGI threshold increases to 10%. In addition, if you are considering elective deductible medical procedures, such as laser eye surgery, it may be beneficial to have the procedure and pay for it in 2012. Impact: All taxpayers (except seniors for now) who itemize their medical expenses. Employer Health FLEX Spending Plan Contributions Limited—In order for a health flexible spending account (FSA) to be a qualified benefit under a cafeteria plan, the maximum amount available for the reimbursement of incurred medical expenses of an employee, the employee’s dependents, and any other eligible beneficiaries with respect to the employee under the health FSA for a plan year (or other 12-month coverage period) cannot exceed $2,500. Impact: All taxpayers participating in health FSAs. Some taxpayers or employers may wish to consider establishing Health Savings Accounts or Medical Expense Reimbursement Plans to write Back to Table of Contents

off newly-disallowed medical expenses as a result of the increased medical deduction AGI limitation and the reduced benefits from the employer’s health flex-spending plans. Beginning in 2014, all U.S. citizens and legal residents, except for those who are exempt from the requirement, will have to maintain minimum essential health insurance coverage or pay a penalty. Generally, individuals who are covered by health insurance through their employers will have met the

mandate. Impact: Lower income individuals and families not exempt from the requirement. Those exempt from this requirement include low income individuals and families (for whom the cost of minimum required coverage exceeds 8% of their annual income), those not required to file a Federal tax return because their income is below the filing threshold, those who are unlawfully present in the United States, incarcerated individuals, Indian tribal members, religious objectors, and individuals with hardship ( Page 10 )

waivers. Minimum essential coverage generally includes: • Private market plans • Government sponsored programs (e.g., Medicare, Medicaid, Veterans Administration, etc.) • Eligible employer-sponsored plans • American Health Exchange “bronze” coverage (pays 60% of covered expenses) According to the American Health Benefit Exchange, by 2014, each state must establish an Exchange to help individuals and small employers obtain coverage. Benefit options will be in a standard format, and a single enrollment form will be used for all policies. Plans offered through an Exchange must provide essential health benefits, limit cost sharing, and provide specified accrual benefits (i.e., the percentage amount paid the insurer). Out-of-pocket deductibles are limited to the same amounts as the caps for Health Savings Accounts and are further limited to $2,000 ($4,000 for families) in the small group market. Plans in the individual and small group markets use a metallic designation for the accrual benefits provided: • Bronze 60% • Silver 70% Back to Table of Contents

• Gold 80% • Platinum 90% The law provides a premium assistance credit for low-income families whose household income is at least 100%, but not more than 400% of the federal poverty line, and who do not receive health insurance under an employer plan, Medicaid, or other acceptable coverage. Based upon the 2011 poverty levels, the credit would phase out at $43,560 for individuals and $89,400 for a family of four. Eligibility for the premium assistance credit will be based on the individual’s income for the tax year ending two years prior to the enrollment period. The credit, which will be paid by the government directly to the insurance company, is based on the taxpayer’s household income level relative to the federal poverty line. The calculation is computed on a sliding scale starting at 2.0% of income for taxpayers at or above 100% of the poverty line and phasing out to 9.5% of income for those at 400% of the poverty line. The reference premium will be the second lowest cost silver plan available in the individual market in the rating area in which the taxpayer resides. The penalty for individuals required to purchase insurance who fail to do so will be phased in beginning in 2014 and will be fully

implemented in 2016. The penalty for noncompliance is the greater of: • The sum of the monthly penalty amounts for months in the taxable year during which 1 or more such failures occurred, or • An amount equal to the national average premium for qualified health plans that have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends. The monthly penalty amounts are based upon a complex formula (what else would one expect?) and is equal to the greater of an inflation adjusted flat dollar amount, which is $95 for 2014 and increases to $625 in 2016, or 1% of income increasing to 2.5% in 2016. However, in either case, the annual family penalty cannot exceed 300% of the individual maximum penalty for the year ($1,875 in 2016). Household income refers to the sum of the incomes of the taxpayer and all individuals accounted for in the family size required to file a tax return for that year. Income includes all tax-exempt interest and foreign earned income.

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Personal Finance... The penalty will be included on the taxpayer’s individual income tax return for each year in which the individual has not complied with the insurance coverage requirement. Although the IRS is charged with the responsibility of collecting the penalty, the law prohibits the IRS from jailing taxpayers or seizing their property if they fail to pay it. The foregoing is a very brief overview of the health care provisions for individuals and of how your pocketbook may be impacted beginning in 2013. However, the health care provisions not yet cast in stone. In fact, this is a hot political issue, so be sure to watch for further developments. If you have questions or would like to schedule a tax planning appointment, please give this office a call at:


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How the Health Care Law Will Impact Your Taxes Cont.

About Thompson Myers & Associates, PC Accounting Firm Thompson Myers & Associates’ accounting and payroll staff have been delivering professional services to small businesses in Central Indiana for over 20 years. Having worked with hundreds of small business clients, we have significant expertise with a wide variety of service businesses in Indiana. We have especially strong experience and expertise in working with businesses in the healthcare (medical, dental, etc.) and foodservice (restaurants, caterers, etc.) industries. We recognize the value of a personal hands-on approach to doing business and earning clients for life. Thompson Myers & Associates is committed to carrying out our services with integrity, excellence, and respect for others. Our dedication and client support are beyond compare—focused on putting your best financial interests at the forefront. Phone Number: (317) 571-8080 Email: Website: https://www.thompsonmyers. com/

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Safety Pins Reflecting on a half century of economic growth - by Dr. Michael Hicks

This summer marks the 50th year of Walmart, America’s manned space exploration and – youthful appearances notwithstanding – your columnist. So I thought I’d ruminate a bit upon what has happened to our economy over the past half century. The rapid demise of totalitarians had the most impact. Ending the Cold War and its proxy conflicts didn’t bring peace, but it did deliver us from the imminent threat of unspeakable carnage. That allowed us to reduce military budgets, even now while we are at war, to a much smaller share of our economy. A half century ago, we had no Clean Air or Clean Water Act, little mining regulation and nothing to protect endangered species. Today, the country is so much cleaner that it bewilders the senses. Along the banks of the Potomac, where as a boy I watched trash clog the waterways, bald eagles now feast on bass and sunfish. The past 50 years also have seen dramatic growth in some freedoms from which we all benefit. We could use more.

roughly one in five – is invariable a ward of the state as is that person’s children.

A half century ago, Vietnam and the outline of a war on poverty began. Neither of these turned out well, despite the best intentions. Both were quagmires that destroyed countless lives, challenged the entire culture of our nation, and nearly bankrupted us.

In 1962, fewer than 5 percent of children lived in homes without fathers. Today, more than 40 percent of kids are born into father-less families. The modern definition of poverty (which had not yet been invented) would capture perhaps a quarter of Americans on farms and in towns alike.

Fifty years ago, most Americans had not gone to college, and it was not uncommon to encounter an older adult, with a good job and decent home, who did not possess a high school diploma –

Today, almost everyone who meets the poverty definition (about half the 1962 share) has chosen poorly on education and parenting. It is no longer the economy that breeds poverty.

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Safety Pins ...

Reflecting on a Half Century of Economic Growth Continued

We are stunningly better off than we were 50 years ago. The U.S. standard of living has tripled and life spans have grown by more than a decade. How we continue to grow and how we use this newfound wealth and time are the important questions for the next half centry. Fifty years ago, more than a third of Americans worked to make things that were sold a long way from the factory. Today, only about one in seven do. For local and state leaders who care about economic development, this is perhaps the most frequently misunderstood fact of the modern economy. The location of factories no longer determines where people live, rather the quality of communities do. Almost none of our economic development policies fully grasp that. We are stunningly better off than we were 50 years ago. The U.S. standard of living has tripled and life spans have grown by more than a decade. How we continue to grow and how we use this newfound wealth and time are the important questions for the next half century.

About the Author ... Dr. Michael Hicks Dr. Michael Hicks is an Associate Professor of Economics and Director of Ball State University’s Center for Business and Economic Research. Mike has economics degrees from Virginia Military Institute and the University of Tennessee and has been on the faculty at the University of Tennessee, Marshall University and the Air Force Institute of Technology. In addition to writing a syndicated weekly column on economic policy, he has written three books, more than 30 scholarly papers and over 150 technical reports. He has testified before U.S. House and Senate committees, several state legislatures and in federal and state courts. His research has been cited by most national outlets including the Wall Street Journal, New York Times, CNBC, Fox Business, MSNBC, CSPAN, Al Jazeera, and others. Mike is an infantry Lieutenant Colonel in the Army Reserves and has served in Africa, Asia, Europe and the Middle East, in both peacekeeping and combat. He’s married to the former Janet Thomas, a Butler University graduate, and has a daughter aged twelve, and two sons, aged eleven and seven. Phone: 765-285-5926 ... Fax: 765-285-8024 Email:

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Safe Retirement

Happy New Year - by Gary Ryan, JD, LL.M, CLU, ChFC Happy New Year, everyone! No, I haven’t lost my mind, my Google Calendar is still working, and, yes, I realize it’s not very close to January 1, 2013. But if you were the Federal Government, it very well could already be a very Happy New Year. Please allow me a few moments to explain. The end of 2012 is bringing much uncertainty to the estate tax planning area. With the presidential election, along with the congressional and senate races, looming, it doesn’t look positive for any vote or action to avoid the estate tax reverting back to the law that was in effect for 2001. Let’s look at how we got to this point with all the uncertainty. Prior to the 2001 tax law, the maximum estate tax rate was 55% (60% percent for estates between $10 million and $17.2 million). The estate tax exclusions were $675,000, increasing yearly until 2006 when they stopped at $1,000,000. In 2002, Back to Table of Contents

the law was changed to lower the maximum rate to 45% in 2007, and the estate tax exemption was modified to increase incrementally to $3,500,000 by the year 2009. The gift tax exemption remained at $1 million. The law was changed again in 2010 and 2011 to reach the current tax rate and exemption. Currently, the estate exemption is $5,120,000 and the maximum tax rate is 35%. However, on January 1, 2013, things could change dramatically! Here’s what could happen. If Congress does not pass a law to extend or modify the Estate and Gift tax laws, the estate tax exemption rate reverts to 55% from 35% and the exemption maximum falls back to $1,000,000. What is the likelihood of that happening? It is anybody’s guess. President Obama campaigned for a top rate of 45% and an exemption of $3,500,000. His budget proposals forecast the same numbers. ( Page 15 )

Safe Retirement ...

Happy New Year Continued

It doesn’t appear that there are enough votes in Washington to repeal the estate tax or revert permanently to the 2001 amounts. The good news is, you have a once-in-a-lifetime opportunity to transfer substantial assets out of a taxable estate, but the window is closing fast. Even if the new estate exemption ends up at $3,500,000, if you act soon, you can remove $1,620,000 of assets from your taxable estate. One planning tool you might consider is the purchase of a survivorship life insurance policy. This type of product will allow more of your assets to pass to your heirs with the leverage life insurance provides. Here is an example: A couple, both age 60, have decided to transfer $1 million to an irrevocable trust for the purpose of buying a no-lapse survivorship (or secondto-die) life insurance policy. If they use single premiums, they could be insured for over $5,600,000. The death benefit would be over $8,800,000 if one of them survives for the next 35 years.

will, of course, depend upon the underwriting classification of each insured. With proper planning (with your legal advisor), the life insurance or any gift between now and December 31, 2012, can be outside your taxable estate. Don’t miss this great opportunity to leverage your estate with the current estate tax exemptions of $5,120,000. About the Author: Gary Ryan, JD, LL.M, CLU, ChFC ... Gary is Director of Life Insurance and Advanced Sales with The Ohlson Group, Inc. Gary received his bachelors degree in accounting and finance and his JD from the University of Mississippi. He received his LL.M., Master of Tax in Estate Planning from the University of Miami. He has a very broad background in the financial services industry. Ryan has served in many executive roles in the insurance industry ranging from senior vice president of marketing to president. Gary can be reached at

Here’s what they will have accomplished using this tool. They will have transferred one type of asset (CASH) to another asset (LIFE INSURANCE) and increased the inheritance for their children! As a matter of comparison, the first question to ask is, “What amount of after tax growth would they need in order to equal the death benefit of the insurance?” The second question is, “Where could they find a safe and reliable investment to equal the amount from the life insurance?” Frankly, with today’s low interest rates and volatile market conditions, the answers to these important questions may not be easy to find. In this example of a 60-year-old couple, we use an even $1 million premium figure to allow you to interpolate your personal situations. If you only want to give $100,000 to your heirs, then the insurance would be over $560,000. If you want to use the $5,120,000, then the insurance would be over $29,000,000! The insurance amounts Back to Table of Contents

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Safe Retirement

When you hear the word annuity what do you think of ? - by Dr. Jack Marrion People often think of different things. For many people the first thought when the word annuity is mentioned is that an annuity provides an income – a pension is a type of annuity. However, while every annuity could be used to provide an income, the ways in which the income is provided differs depending on the annuity. A period certain income annuity provides income for a certain period. You provide the Back to Table of Contents

principal and the insurer will pay back the principal plus interest for 5 years, 7 years, 10 years, 20 years, whatever timeframe you select. Why might you do something like this? Perhaps you are forced into early retirement at age 57 and you need an income to carry you through until you are old enough to collect Social Security. Perhaps you want to help a grandchild with their college expenses,

without giving them a lump sum, a period certain annuity could help cover college costs for the years needed for them to get that bachelor’s degree. Perhaps you already own an annuity and you’d like to convert a part of that annuity value into a tax-free life insurance benefit; a period certain annuity could fund that conversion. The use of a period certain annuity can also offer certain tax advantages because most ( Page 17 )

Safe Retirement ... of the income produced is not only free from federal and state income taxes, but it isn’t included in calculating whether you owe taxes on your Social Security benefit. It would take too much time to get into all of these different uses, so the main point you should take away from this is a period certain annuity pays out a steady income for a specified number of years. Those Roman legionnaires were given a life income annuity that paid an income as long they lived. When they died, the income stopped. You can also get the same type of annuity today. It’s a great deal if you live a long time and a bad deal if you get hit by a bus next month. Why would you buy this type of life income annuity? People buy them when they don’t plan to leave this particular money to children or charities and want to get the maximum income. A person typically would not put all of their assets into buying a life income annuity, but they might purchase one to ensure they have a guaranteed income to cover the essentials if something happens to their other assets. A life annuity can be set up to last as long as one person lives or two. If your health and genes are good, a life annuity can provide a dependable monthly income for a long time, so it is often used in conjunction with other assets to provide for a tranquil retirement. Back to Table of Contents

When you hear the word annuity what do you think of?

The rap on a life annuity is if you die the insurer keeps any money that is leftover, but that isn’t necessarily true. You can buy a type of life annuity that guarantees that if you die early the annuity will continue to pay out to your beneficiary until your original principal is returned – if you put in $100,000 the insurer will pay out at least $100,000. There are a variety of other options. You can have the annuity pay out until you die or for 20 years, whichever is longer. You can arrange it so that your spouse would still get all or half of the original income amount if you die. You can even buy a life annuity that won’t start payments until 10 or 20 years from now. The different options offer different amounts of income. The first annuities were issued by the Roman Empire as a reward to legionnaires for their service. Two millennium later annuities are still being used to provide a dependable income. About the Author: Dr. Jack Marrion Dr. Marrion’s research on senior decision making and the financial world have been featured in hundreds of publications including: Business Week, Kiplinger, Smart Money, and The Wall Street Journal. He is the author of six books and a frequent media guest. Email:

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Safe for Life Striking a Safe Balance in Your Fitness Life - by Dan Hubbard, M.Ed. We love hearing stories about success, whether in sports, business, or even health and fitness. Often, we seek to emulate those whom we consider “successful,” such as Bill Gates or Tiger Woods. In his 2008 book, Outliers: The Story of Success, Malcolm Gladwell explains that hard work, practice, and opportunity are key factors in achieving success. But, what about the average Joe or Jane? More specifically, what determines success for them in health and fitness? Our most accessible window to “success” for the average Joe or Jane in health and fitness is the TV show, The Biggest Loser. We hear about contestants losing a hundred pounds in three months; however, nearly everyone questions whether these individuals can keep the weight off long-term, especially when they return to their regular lives. Another example of fitness “success” is the not so mythical character I call the “life-long runner.” This runner may be sixty years old and have an arthritic hip, but he consistently runs thirty miles per week and has done so for the last forty years. He isn’t breaking any

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records, but his running is like clock-work: No matter what is going on in his life, he gets his millage in. Most everyone marvels at his impressive motivation or they just chalk him up as being a little “nuts.”

oriented.” Most people look at fitness success in an outcomeoriented manner. They utter statements, such as, “I want to lose fifteen pounds,” or “I want to be able to run a half marathon.”

What can we learn from these two “success” stories? First, they showcase two different types of motivation. The Biggest Loser contestant is highly “outcome-oriented.” On the other hand, our sixty-yearold runner is highly “process-

These statements are both examples of outcome-oriented approaches to fitness and health. Nothing short of accomplishing these goals would be considered a success. But, we all know that most average Joes and Janes rarely

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Safe For Life ... reach these goals. Inevitably, something gets in their way. They may realize that their initial goal was too lofty or their motivation has waned. They may get frustrated and quit, only to start the cycle all over again the following January. Now, you may already be thinking ahead. What’s missing? What’s missing is an optimal and safe balance between “outcome-oriented” and “process-oriented” drive. The most successful athletes, business people, and fitness enthusiasts all possess this kind of balance. Not only do they love the day-to-day process (the life-long runner), but also they have some specific goals (The Biggest Loser contestant). I see this balance daily in my most successful clients. To a person, they understand that as much as they want to reach specific goals, they must focus on the process. Focusing on the process is what sustains you day in, day out; week in,

Striking a Safe Balance in Your Fitness Life Continued

week out. When you keep your focus on the process of working toward your goals, it is easier to stay on that path. What surprises some is that they discover that it’s the enjoyment of the process that carries them to their outcome goals. So, how about you? Do you have a good, safe balance between outcome-oriented and process-oriented drive? Where do you currently fall on the outcome-process spectrum? I challenge you to consider the possibility that you can achieve this balance in your life. It’s not just for the superstars, the reality show stars, nor that guy who might seem a little nuts at times. It is a safe, intelligent, and logical approach to taking care of the only body you have. Give it a try and let us know how it works for you, because it will work for you!

About the Author: Dan Hubbard, M.Ed. Dan Hubbard received a bachelor’s degree in exercise science in 1999 and a master’s degree in exercise physiology in 2000 from the University of Georgia. He worked for five years as a clinical exercise physiologist in Indianapolis, working with patients after heart atttacks, openheart surgery, heart failure, and pre and post-cardiac transplant. He has held certifications from the American College of Sports Medicine, the National Strength and Conditioning Association, and United States Weightlifting; and published a research article in the Strength and Conditioning Journal. Additionally, he has been a guest on local radio and television. His training facility is located in Carmel, Indiana. Phone: 1-317-308-9274 Email:



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