Is Generation X Preparing Adequately for Retirement?

Future financial needs may be underestimated

If you were born during 1965-80, you belong to “Generation X.” Ten or twenty years ago,

you may have thought of retirement as an event in the lives of your parents or grandparents;

within the next 10-15 years, you will probably be thinking about how your own retirement will

unfold.1

According to the most recent annual retirement survey from the Transamerica Center for

Retirement Studies, the average Gen Xer has saved only about $72,000 for retirement.

Hypothetically, how much would that $72,000 grow in a tax-deferred account returning 6%

over 15 years, assuming ongoing monthly contributions of $500? According to the compound

interest calculator at Investor.gov, the answer is $312,208. Across 20 years, the projection is

$451,627.2,3

Should any Gen Xer retire with less than $500,000? Today, people are urged to save $1

million (or more) for retirement; $1 million is being widely promoted as the new benchmark,

especially for those retiring in an area with high costs of living. While a saver aged 38-53 may

or may not be able to reach that goal by age 65, striving for it has definite merit.4

Many Gen Xers are staring at two retirement planning shortfalls. Our hypothetical Gen Xer

directs $500 a month into a retirement account. This might be optimistic: Gen Xers contribute

an average of 8% of their pay to retirement plans. For someone earning $60,000, that means

just $400 a month. A typical Gen X worker would do well to either put 10% or 15% of his or her

salary toward retirement savings or simply contribute the maximum to retirement accounts, if

income or good fortune allows.2

How many Gen Xers have Health Savings Accounts (HSAs)? These accounts set aside a distinct

pool of money for medical needs. Unlike Flexible Spending Accounts (FSAs), HSAs do not have

to be drawn down each year. Assets in an HSA grow with taxes deferred, and if a distribution

from the HSA is used to pay qualified health care expenses, that money comes out of the

account, tax free. HSAs go hand-in-hand with high-deductible health plans (HDHPs), which

have lower premiums than typical health plans. A taxpayer with a family can contribute up to

$7,000 to an HSA in 2019. (The limit is $8,000 if that taxpayer will be 55 or older at any time

next year.) HSA contributions also reduce taxable income.2,5

Fidelity Investments projects that the average couple will pay $280,000 in health care

expenses after age 65. A particular retiree household may pay more or less, but no one can

deny that the costs of health care late in life can be significant. An HSA provides a dedicated,

tax-advantaged way to address those expenses early.6

Retirement is less than 25 years away for most of the members of Generation X. For

some, it is less than a decade away. Is this generation prepared for the financial realities of life

after work? Traditional pensions are largely gone, and Social Security could change in the

decades to come. At midlife, Gen Xers must dedicate themselves to sufficiently funding their

retirements and squarely facing the financial challenges ahead.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular

investment.

«RepresentativeDisclosure»

Citations.

1 - businessinsider.com/generation-you-are-in-by-birth-year-millennial-gen-x-baby-boomer-2018-3 [4/19/18]

2 - forbes.com/sites/megangorman/2018/05/27/generation-x-our-top-2-retirement-planning-priorities/ [5/27/18]

3 - investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator [11/8/18]

4 - washingtonpost.com/news/get-there/wp/2018/04/26/is-1-million-enough-to-retire-why-this-benchmark-is-both-real-and-unrealistic [4/26/18]

5 - kiplinger.com/article/insurance/T027-C001-S003-health-savings-account-limits-for-2019.html [8/28/18]

6 - fool.com/retirement/2018/11/05/3-reasons-its-not-always-a-good-idea-to-retire-ear.aspx [11/5/18]

When You Retire Without Enough

Start your “second act” with inadequate assets, and your vision of the future may be revised

How much have you saved for retirement? Are you on pace to amass a retirement fund of $1

million by age 65? More than a few retirement counselors urge pre-retirees to strive for that

goal. If you have $1 million in invested assets when you retire, you can withdraw 4% a year from

your retirement funds and receive $40,000 in annual income to go along with Social Security

benefits (in ballpark terms, about $30,000 per year for someone retiring from a long career). If

your investment portfolio is properly diversified, you may be able to do this for 25-30 years

without delving into assets elsewhere.1

Perhaps you are 20-25 years away from retiring. Factoring in inflation and medical costs, maybe

you would prefer $80,000 in annual income plus Social Security at the time you retire. Strictly

adhering to the 4% rule, you will need to save $2 million in retirement funds to satisfy that

preference.1

There are many variables in retirement planning, but there are also two realities that are hard

to dismiss. One, retiring with $1 million in invested assets may suffice in 2018, but not in the

2030s or 2040s, given how even moderate inflation whittles away purchasing power over time.

Two, most Americans are saving too little for retirement: about 5% of their pay, according to

research from the Federal Reserve Bank of St. Louis. Fifteen percent is a better goal.1

Fifteen percent? Really? Yes. Imagine a 30-year-old earning $40,000 annually who starts saving

for retirement. She gets 3.8% raises each year until age 67; her investment portfolio earns 6% a

year during that time frame. At a 5% savings rate, she would have close to $424,000 in her

retirement account 37 years later; at a 15% savings rate, she would have about $1.3 million by

age 67. From boosting her savings rate 10%, she ends up with three times as much in

retirement assets.1

Now, what if you save too little for retirement? That implies some degree of compromise to

your lifestyle, your dreams, or both. You may have seen your parents, grandparents, or

neighbors make such compromises.

There is the 75-year-old who takes any job he can, no matter how unsatisfying or awkward,

because he realizes he is within a few years of outliving his money. There is the small business

owner entering her sixties with little or no savings (and no exit strategy) who doggedly

resolves to work until she dies.

Perhaps you have seen the widow in her seventies who moves in with her son and his spouse

out of financial desperation, exhibiting early signs of dementia and receiving only minimal

Social Security benefits. Or the healthy and active couple in their sixties who retire years

before their savings really allow, and who are chagrined to learn that their only solid hope of

funding their retirement comes down to selling the home they have always loved and moving

to a cheaper and less cosmopolitan area or a tiny condominium.

When you think of retirement, you probably do not think of “just getting by.” That is no

one’s retirement dream. Sadly, that risks becoming reality for those who save too little for the

future. Talk to a financial professional about what you have in mind for retirement: what you

want your life to look like, what your living expenses could be like. From that conversation, you

might get a glimpse of just how much you should be saving today for tomorrow.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.

1 - investopedia.com/retirement/retirement-income-planning/ [6/7/18]

Investing Means Tolerating Some Risk

That truth must always be recognized.

When financial markets have a bad day, week, or month, discomforting headlines and data can

swiftly communicate a message to retirees and retirement savers alike: equity investments are

risky things, and Wall Street is a risky place.

All true. If you want to accumulate significant retirement savings or try and grow your wealth

through the opportunities in the markets, this is a reality you cannot avoid.

Regularly, your investments contend with assorted market risks. They never go away. At

times, they may seem dangerous to your net worth or your retirement savings, so much so that

you think about getting out of equities entirely.

If you are having such thoughts, think about this: in the big picture, the real danger to your

retirement could be being too risk averse.

Is it possible to hold too much in cash? Yes. Some pre-retirees do. (Even some retirees, in fact.)

Some have six-figure savings accounts, built up since the Great Recession and the last bear

market. They may feel this is a prudent move with the thought that a dollar will always be

worth a dollar in America, and that the money is out of the market and backed by deposit

insurance.

This is all well and good, but the problem is the earning potential. Even with interest rates

rising, many high-balance savings accounts are currently yielding less than 0.5% a year. The

latest inflation data shows consumer prices advancing 2.3% a year. The data suggests the

money in the bank is not outrunning inflation and may likely lose purchasing power over

time.

Consider some of the recent yearly advances of the S&P 500. In 2016, it gained 9.54%; in

2017, it gained 19.42%. Those were the price returns; the 2016 and 2017 total returns (with

dividends reinvested) were a respective 11.96% and 21.83%.

Yes, the broad benchmark for U.S. equities has bad years as well. Historically, it has had about

one negative year for every three positive years. Looking through relatively recent historical

windows, the positives have mostly outweighed the negatives for investors. From 1973-2016,

for example, the S&P gained an average of 11.69% per year. (The last 3-year losing streak the

S&P had was in 2000-02.)

Your portfolio may not return as well as the S&P does in a given year, but when equities rally,

your household may see its invested assets grow noticeably. When you bring in equity

investment account factors like compounding and tax deferral, the growth of those invested

assets over decades may dwarf the growth that could result from mere checking or savings

account interest.

At some point, putting too little into investments and too much in the bank may become a risk

– a risk to your retirement savings potential. At today’s interest rates, the money you are

saving may end up growing faster if it is invested in some vehicle offering potentially greater

reward and comparatively greater degrees of risk to tolerate.

Having an emergency fund is good. You can dip into that liquid pool of cash to address

sudden financial issues that pose risks to your financial equilibrium in the present.

Having a retirement fund is even better. When you have one of those, you may confidently

address the risk of outliving your money in the future.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and cannot be invested into directly.

Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any

investment.

«RepresentativeDisclosure»

Citations.

1 - valuepenguin.com/average-savings-account-interest-rates [10/4/18]

2 - investing.com/economic-calendar/ [10/11/18]

3 - money.cnn.com/data/markets/sandp/ [10/11/18]

4 - ycharts.com/indicators/sandp_500_total_return_annual [10/11/18]

5 - thebalance.com/stock-market-returns-by-year-2388543 [6/23/18]

Let's Think "Outside the Box" Ways to Save

Tip #2

Get Out of Debt.

It's time to stop borrowing, pay off debt and regain control of where your money goes. Without car, student loan, credit card and installment loan payments that likely total $800-$2,000 per month, it would be easy to save for purchases and a secure retirement.

Start now. It won't happen overnight, but you can be debt-free and financially secure - regardless of your current income and debt levels.

If you have adequate equity in your home, you may want to consider refinancing your mortgage and using the equity to eliminate the other debt. The interest rate is likely much lower, and mortgage interest is tax deductible. If this is not a viable option for you, the following debt elimination strategy is effective. First, save $500-1,000 in an emergency fund so you have a small safety-net during the debt-elimination process. Second, tackle debt using the "snowball" approach, as follows: 

 

  • List all debts in ascending order, from smallest balance to largest. (You may also order them by highest to lowest interest rate, if you prefer.)

  • Commit to pay the minimum payment due on every debt.

  • Determine how much extra can be applied towards the smallest debt. (The more you can commit, the faster you will be out of debt.)

  • Pay the minimum payment on the smallest debt, plus the extra amount, until it is paid off.

  • Once a smallest debt is paid in full, add the amount you were paying on the first debt to the minimum of the second smallest debt, plus any extra you can afford.

  • Repeat until all debts are paid in full.

By the time the final debts are reached, the extra amount paid toward the larger debts will grow quickly, similar to a snowball rolling downhill gathering more snow. 

Let's Think "Outside the Box" Ways to Save

Tip #1

Change Your Tax Withholdings.

Are you giving the federal government an interest-free loan every year? If you get an annual refund from the IRS, the answer is yes. Your employer deducts federal income taxes from each of your paychecks based on the number of “allowances” you claim on your W-4* (the form you filled out when you were hired). Many people claim zero allowances—having the maximum amount of taxes taken—and then file their return with exemptions and other deductions to receive a tax refund. Essentially, they are overpaying their income taxes. Why not pay an amount closer to your actual taxes and increase your weekly discretionary income and have more to save and invest?

People love getting a tax refund. Who wouldn’t love having $1,000, $2,500 or even $5,000 deposited into their checking account each spring? Many even argue that their tax refund IS their savings account. They use their annual refund for larger purchases, vacation, to pay off holiday debt, etc.

But here’s the brutal truth: It’s not smart savings and if you are not in a position to handle an unforeseen circumstance, you don’t need to be going on a vacation or buying a big screen TV. Above and to the right is an actual example of how one person began investing over $6,000 per year without feeling a strain on her day-to-day living or monthly budget.

By simply changing the allowances on her W-4 from zero to two, she was able to start investing 10% of her income ($166.67 bi-monthly), but her take-home pay only decreased by $45. Plus, her company—like many companies—matches her contribution up to five percent. Hence, her actual annual investment is $6,000.

*This example is intended as an illustration only and does not reflect the performance of any specific investment and should not be considered financial advice.

What are the Elements of a Healthy Financial Plan?

One of the most important things you can do for yourself and your family is to develop and stick to a financial plan. In doing so, it is strongly recommended that you consult an experienced financial planner who can help you understand your current situation, identify your goals, and put strategies in place to reach those goals. Regardless of your individual goals-whether to live a comfortable retirement, educate your children, travel the world, live a debt-free life, or leave your loved ones a significant inheritance-the foundation of any healthy financial plan must encompass strategies for building wealth and strategies for protecting your wealth.

 

Strategies to Save and Build Wealth

There are two distinctive types of savings to which a healthy financial plan gives consideration.

Cash Reserve - Establish a cash reserve for larger purchases, vacations and emergency situations, e.g., job loss, car/house repairs, etc. Your cash reserve is the money by which you live. A fully-funded cash reserve-approximately three month's salary-gives you the ability to handle unforeseen expenses and plan for the things you want to buy and do, without threatening your monthly expenses or investments. A financial planner can help you establish a cash management plan to maximize your discretionary income (after bills), prepare for emergencies, and save for the things you want.

Investment Portfolio - The second type of savings plan is an investment portfolio-the money by which you grow. An investment portfolio is absolutely essential to your meeting your long-term financial security goals. There are many factors that should be considered when establishing an investment portfolio, including how much you will need to retire, how much you expect your pension and/or Social Security to contribute, how many years until your retirement, and so on. With this information, your financial planner will help you make the right kind of investments.

 

Strategies to Protect Savings and Investments

A new transmission for your car or having to replace a leaky roof will probably not put you into financial ruin, especially if you have a fully-funded cash reserve. However, disability and death have the potential to wipe out your entire savings and retirement income very quickly. In addition to the standard insurances that most people carry, e.g., health, auto, homeowners, etc., the following types of insurances are critical to a healthy financial plan.

Life Insurance - Life insurance protects those who depend on your income - your spouse, children, etc. Upon your death, your life insurance policy will pay your beneficiary a lump sum that can replace your lost income, pay off outstanding expenses (house, car), cover funeral expenses and/or provide an education for your children. The various types of life insurances will be explored in a future article.

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Disability Insurance - Disability insurance is often one of the most overlooked forms of insurance, but is extremely beneficial when needed. Disability insurance replaces a portion of your lost income if you become unable to perform your job because of injury or illness. Many companies offer disability insurance as an employee benefit, but typically it only covers 60 percent of base salary, minus taxes. Discuss whether you may need additional coverage with your financial planner.

Long Term Care Insurance - Seven in 10 people will need some type of long term care. There are two ways to pay for long term care - either out of your own pocket or with long term care insurance. Neither personal health insurance nor Medicare will cover many long term care expenses, as many of the needed services (bathing, dressing, and eating) are not medically necessary in nature. Medicaid is the government program that covers long term care expenses, but as the payer of last resort, you will not be eligible for Medicaid until you have nearly depleted all of your income and savings.

What are the Elements of a Healthy Financial Plan?

One of the most important things you can do for yourself and your family is to develop and stick to a financial plan. In doing so, it is strongly recommended that you consult an experienced financial planner who can help you understand your current situation, identify your goals, and put strategies in place to reach those goals. Regardless of your individual goals-whether to live a comfortable retirement, educate your children, travel the world, live a debt-free life, or leave your loved ones a significant inheritance-the foundation of any healthy financial plan must encompass strategies for building wealth and strategies for protecting your wealth.

 

Strategies to Save and Build Wealth

There are two distinctive types of savings to which a healthy financial plan gives consideration.

Cash Reserve - Establish a cash reserve for larger purchases, vacations and emergency situations, e.g., job loss, car/house repairs, etc. Your cash reserve is the money by which you live. A fully-funded cash reserve-approximately three month's salary-gives you the ability to handle unforeseen expenses and plan for the things you want to buy and do, without threatening your monthly expenses or investments. A financial planner can help you establish a cash management plan to maximize your discretionary income (after bills), prepare for emergencies, and save for the things you want.

Investment Portfolio - The second type of savings plan is an investment portfolio-the money by which you grow. An investment portfolio is absolutely essential to your meeting your long-term financial security goals. There are many factors that should be considered when establishing an investment portfolio, including how much you will need to retire, how much you expect your pension and/or Social Security to contribute, how many years until your retirement, and so on. With this information, your financial planner will help you make the right kind of investments.

 

Strategies to Protect Savings and Investments

A new transmission for your car or having to replace a leaky roof will probably not put you into financial ruin, especially if you have a fully-funded cash reserve. However, disability and death have the potential to wipe out your entire savings and retirement income very quickly. In addition to the standard insurances that most people carry, e.g., health, auto, homeowners, etc., the following types of insurances are critical to a healthy financial plan.

Life Insurance - Life insurance protects those who depend on your income - your spouse, children, etc. Upon your death, your life insurance policy will pay your beneficiary a lump sum that can replace your lost income, pay off outstanding expenses (house, car), cover funeral expenses and/or provide an education for your children. The various types of life insurances will be explored in a future article.

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Disability Insurance - Disability insurance is often one of the most overlooked forms of insurance, but is extremely beneficial when needed. Disability insurance replaces a portion of your lost income if you become unable to perform your job because of injury or illness. Many companies offer disability insurance as an employee benefit, but typically it only covers 60 percent of base salary, minus taxes. Discuss whether you may need additional coverage with your financial planner.

Long Term Care Insurance - Seven in 10 people will need some type of long term care. There are two ways to pay for long term care - either out of your own pocket or with long term care insurance. Neither personal health insurance nor Medicare will cover many long term care expenses, as many of the needed services (bathing, dressing, and eating) are not medically necessary in nature. Medicaid is the government program that covers long term care expenses, but as the payer of last resort, you will not be eligible for Medicaid until you have nearly depleted all of your income and savings.

How can life insurance help pay for college?

 

*The information being provided is strictly as a courtesy. When you link to any of the web sites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided on these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through this site. By clicking on the link above you will leave our web site and assume total responsibility and risk for your use of the site you are linking to. The information provided on these sites is not intended to provide specific advice and should not be construed as a recommendation for any individual. Before making any investment decisions you should consult with a financial, tax and/or legal professional. Products advertised may or may not be approved for purchase through NPC. Please note any and all guarantees made are contingent upon the claims paying ability of the insurance company.

Three Key Ingredients to Building a Satisfying Financial Solution

Now, more than ever before, there is incredible turbulence and chaos in the economy.

But, there is hope, and it comes in the form of a solution far too many Americans ignore...

 

 

*The information being provided is strictly as a courtesy. When you link to any of the web sites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided on these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through this site. By clicking on the link above you will leave our web site and assume total responsibility and risk for your use of the site you are linking to. The information provided on these sites is not intended to provide specific advice and should not be construed as a recommendation for any individual. Before making any investment decisions you should consult with a financial, tax and/or legal professional. Products advertised may or may not be approved for purchase through NPC. Please note any and all guarantees made are contingent upon the claims paying ability of the insurance company.

Estate Planning with Life Insurance

How to plan an estate using Life Insurance

Having a will in place will only get you so far

 

*The information being provided is strictly as a courtesy. When you link to any of the web sites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided on these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through this site. By clicking on the link above you will leave our web site and assume total responsibility and risk for your use of the site you are linking to. The information provided on these sites is not intended to provide specific advice and should not be construed as a recommendation for any individual. Before making any investment decisions you should consult with a financial, tax and/or legal professional. Products advertised may or may not be approved for purchase through NPC. Please note any and all guarantees made are contingent upon the claims paying ability of the insurance company.

Annuity Maximization

Get the most out of your Annuity. Life Insurance can help.

 

*The information being provided is strictly as a courtesy. When you link to any of the web sites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided on these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through this site. By clicking on the link above you will leave our web site and assume total responsibility and risk for your use of the site you are linking to. The information provided on these sites is not intended to provide specific advice and should not be construed as a recommendation for any individual. Before making any investment decisions you should consult with a financial, tax and/or legal professional. Products advertised may or may not be approved for purchase through NPC. Please note any and all guarantees made are contingent upon the claims paying ability of the insurance company.

Using Life Insurance to Maximize Your Pension Benefits

When you think of life insurance you often think of something that you ‘should’ have and you may not have fully taken part of this level of peace of mind.  Life insurance can help you as you approach retirement and prepare your estate; it will allow you to maximize your defined benefit qualified pension plan.  While some employers are moving away from using pensions, many people who are approaching retirement age may still be contributing to a pension plan.

This method of using life insurance while coupled with a pension plan is known as pension maximization. This strategy of maximizing a pension payout is specifically for those who are married. Pension maximization allows the holder of the pension plan to maximize pension payouts while gaining the death benefit protection for their spouse.

Steps for taking advantage of Pension Maximization

  1.  Read the parameters of the pension plan and discover what it includes.  Does it include health insurance or other similar benefits?
  2.  Are you healthy enough to take out a life insurance policy?
  3.  Make the decision that you will use the “Life Only Benefit” payout option.
  4.  Take out a life insurance policy to supplement the “Life Only Benefit” payout before the time of retirement.
  5.  List your spouse as beneficiary of the life insurance plan.

Pension Maximization strategy will allow the holder of the pension plan control, protection, and peace of mind that their spouse will be secure after their passing.  Upon the passing of the plan holder the spouse will receive death benefit from the life insurance policy, which is generally income tax-free but will not receive any more funds from the pension plan.  

 

 

*Products or strategies advertised may or may not be approved for purchase through NPC. Please note any and all guarantees made are contingent upon the claims paying ability of the insurance company.

 

 

Maximizing Your Pension

When you’re approaching retirement age, you not only worry about replacing your income but also ensuring that your spouse is taken care of should you pass.  For those people who have a traditional pension plan, also known as a defined benefit plan, they have a difficult decision to make as they approach retirement.  Should an individual receive the maximum payout of the pension plan known as a “Life Only Benefit” or should you receive a joint pension payout known as a” Joint and Survivor Benefit”, so that the payments will continue beyond the passing of the primary person?

While it is important to understand what type of provisions your pension plan has, it is also important to determine your family’s budget needs at the time of retirement.  If you believe that you may need a higher income and you are in good health then you may want to make the most of your pension plan while you are living.

One way people maximize their pension payout is to accept the single-life pension payout or “Life Only Benefit”, generally this would give the owner a larger pension amount every month while foregoing the payout to their spouse after their death.  If the primary owner chooses the “Life Only Benefit”, they should obtain a life insurance policy naming their spouse as the beneficiary.  Their spouse would receive the death benefit from the life insurance policy, tax-free, essentially replacing the pension payments that will stop at the time of the primary owner’s death.  Their spouse can then invest the lump sum of money to provide income for later years.

Prior to making any pension decision, the primary owner should determine if; they can qualify for a life insurance policy and that the life insurance policy it is an appropriate amount to cover expenses as well as invest.

Questions to ask yourself prior to taking part in pension maximization:

  •  Do you need a larger monthly payout amount at the time of retirement?
  •  Is your retirement health insurance coupled with your pension?  If so, will health insurance carry over to your spouse once you pass?
  •  Are you healthy enough to take out a life insurance plan on your own?
  •  What is your tax bracket?  Pension payouts are considered fully taxable.
  •  Will your spouse be financial stable when you pass?
  •  How long is your spouse projected to live past you?
  •  How much life insurance would your spouse need to ensure that your spouse is taken care for the rest of their life?

Benefits of selecting the pension maximization strategy are:

  •  Should your spouse predecease you then your heirs will receive the remaining life insurance benefits upon your death.  With a pension, often heirs will not receive any funding upon your death.
  •  You have financial control of how much benefit your spouse will receive upon your death by selecting the appropriate amount of death benefit from the life insurance plan.
  •  If you select the “Life Only Benefit”, you have the potential of accessing any accumulated cash values of the pension plan, such as accepting the funds as a lump sum.

 

Sources:

http://www.investopedia.com/ask/answers/09/what-is-pension-maximization.asp

http://www.investopedia.com/articles/personal-finance/071813/pros-and-cons-pension-maximization.asp

https://www.northamericancompany.com/documents/434862/5721980/NAM-1687.pdf/ccc01325-f262-44da-b40c-908817c0d894

 

 

 

Using Life Insurance for Pension Maximization (Video)

Do you want to maximize your pension benefit, but still provide for your spouse?

Click Here to learn more about Pension Maximization using Life Insurance

 

 

 

*The information being provided is strictly as a courtesy. When you link to any of the web sites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided on these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through this site. By clicking on the link above you will leave our web site and assume total responsibility and risk for your use of the site you are linking to. The information provided on these sites is not intended to provide specific advice and should not be construed as a recommendation for any individual. Before making any investment decisions you should consult with a financial, tax and/or legal professional. Products advertised may or may not be approved for purchase through NPC. Please note any and all guarantees made are contingent upon the claims paying ability of the insurance company.

New Budget Law Means Changes to Your Social Security and Medicare Benefits

Social security is economic security for retired, disabled people or families of retired, disabled or diseased workers. Many people today are engulfed with promotions and invitation of benefits and security system seminars on how to maximize their social security income. On November 2nd, 2015 the president signed into law the, Bipartisan Budget Act of 2015 which has put an end to loopholes used in the past while filing forbenefits and made significant changes to the benefits system. Now what has changed according to new budget act?

The biggest change for claiming Social Security benefits is that the “File and Suspend” strategy has been abolished. Previously, married couples could maximize their Social Security benefits by having one spouse file for retirement benefits, then suspending the benefits shortly after filing. Typically, the person who is suspending the benefits is the individual who has had a higher earnings record. This strategy allowed married couples to file spousal benefits and receive higher benefits based on the lower income of the spouse.

Under the Bipartisan Budget Act, when a person files for suspension of benefits, not only does the individual not receive any benefits during the suspension period but, his or her spouse also does not receive any spousal benefits. Any current retirement benefits claims will not be affected, however the Bipartisan Budget Act will apply towards new file and suspend benefit claims.

Another benefit strategy that has been eliminated is using the process of restricted applications. This strategy is mainly used to increase the overall longevity of one’s Social Security benefits. When an individual reaches full retirement age and is eligible for both the spousal benefits and his or her own benefits, they can file a restricted application to only receive the spousal benefits. By doing so, they delay receiving their own retirement benefits in order to earn the delayed retirement credits. These delayed credits increase Social Security benefits by 8% a year.

Under the rules of the Bipartisan Budget Act; when you file for Social Security benefits, you are simultaneously filing for both your spousal benefits and your individual benefits. For those people who turn 62 after 2015, they will have two options for claiming their Social Security benefits; either they can start claiming benefits anytime at or after turning 62 and receive a lower total amount of benefits. Or they can delay receiving benefits until they are older, as late as 70, in order to maximize their benefit amount, but not receive any benefits until that time.

An additional benefit of the Bipartisan Budget Act is that it sets the premium rates for people who receive Medicare Part B coverage and there will not be an increase for most people in 2016. People who have their Medicare premiums deducted out of their Social Security benefits will not see an increase in rates for 2016. This is roughly 70% of Americans who are covered with Medicare Part B. However, the other 30% of people will see their premium rates rise from $104.90 to approximately $119 per month. This is due to the fact that there was no cost-ofliving increase, the premium increase is considered a relief for those people who fall
under the 30% category; otherwise they would have had to incur the full load of the Medicare increase, which would have been higher than 50%.

 


Sources
USA Today -
http://www.usatoday.com/story/money/columnist/powell/2015/11/12/socialsecurity-
medicare-changes-budget-law-retirement/75164246/

Loveland, Ohio magazine
http://lovelandmagazine.com/2015/11/the-bipartisan-budget-act-of-2015/

FedSmith
http://www.fedsmith.com/2015/11/02/bipartisan-budget-act-of-2015-signedinto-
law/

NBC News
http://www.nbcnews.com/politics/congress/house-passes-sweeping-two-yearbipartisan-
budget-deal-n453226

Long Term Care Insurance

Plan for you future, today

Why Long Term Care Insurance?

  • Allows you to stay at home for home care, instead of being forced into a nursing facility.

  • Keeps retirement assets to be used as they were intended, your retirement.

  • Removes the burden placed on your Family and Friends

    • Presently, the cost for long-term care in NJ may exceed more than $65,000 a year.

    • The current average length of stay in a long term care facility is 2½ years.

Benefits include: home care, assisted living, nursing homes, adult day care or Hospice

  • Financial protection against the cost of care

  • Extensive coordination of care

  • Coverage when recovery is longer than 90 days or ambiguous

  • Pays for out of pocket expenses for each day the insured is confined in a care facility

* Nationwide, Medicare only pays approximately 5% of all LTC expenses.

Coverage becomes active based on the inability to perform Activities of Daily Living
If you are unable to do two or more of these six activities, your long term care insurance will
assist you financially: Eating, dressing, bathing, continence, toileting and transferring.

Help protect your assets, your loved ones, and your independence.
*http://www.state.nj.us/dobi/ins_ombudsman/ltcguide.htm

November is Long Term Care Awareness Month

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We will spend the rest of November posting LTC (Long Term Care) information, answers to these common LTC questions and much more!

 What does long term care mean and how can it effect you and your family?

 What is LTC? What does LTC include? What Does LTC Cost? What are options to pay for LTC? What is the likelihood you will need LTC? Does Medicare cover LTC costs?


  Keep an eye on our social media pages and our website for more information

 Visit our website: beaconfinancialgroup.net

Contact: MichelleJacoby@beaconfinancialgroup.net to assist in learning and planning for LTC needs.

 

Resources We Recommend:

longtermcare.gov

http://www.state.nj.us/dobi/ins_ombudsman/ltcguide.htm

Long Term Care Facts

Did you know that significant advances in medical technology and healthcare means that people are living longer than ever before?

 

The government predicts that 70 percent of people over 65 will need long-term care for some period, so it’s likely it could happen to you.

 

Please visit longtermcare.gov and beaconfinancialgroup.net and contact MichelleJacoby@beaconfinancialgroup.net to assist in learning and planning for LTC needs.