Fixed for Life

Fixed for Life

More than 40% of Americans ages 36 and older are at risk of running out of money in retirement, according to a retirement readiness study.

Researchers divided working Americans into four groups, ranging from the lowest to the highest income levels. They found that, even though the risk of running out of money decreases with a higher pre-retirement income, almost one-third of people with upper-middle incomes and 13% with high incomes may not be able to pay for basic retirement expenses and uninsured health-care costs after two decades in retirement.1

The risk of running out of money doesn’t appear to be reduced for people who have more time to prepare for retirement: Baby boomers and Generation Xers are almost equally at risk.2
Fortunately, it’s possible to purchase an insurance product that could pay an income for a specified period, including your lifetime or the lifetimes of you and another person. The guaranteed retirement income available from a fixed annuity could be just the fix you’re looking for.

Fund Your Future Income

A fixed annuity is a contract with an insurance company that guarantees a fixed rate of return during the life of the contract. The type of annuity that may be appropriate for you will depend on your situation.
An immediate annuity is typically funded with a lump-sum premium. Payments start soon thereafter and continue for the duration of the contract. This type of annuity is often purchased at the beginning of retirement.

deferred annuitycan be funded with either a lump-sum premium or a series of payments over time. Payments start at some point in the future at a rate that reflects any tax-deferred growth during the accumulation period. The income amount depends on the amount of the initial contract, the contract’s rate of return, the age of the contract holder, and the number of years over which payments will be received.

Annuity Trade-Offs

Generally, annuities have contract limitations, fees, and expenses. They tend to offer more conservative rates of return than the financial markets because the insurance company is responsible for paying the contract’s stated return, regardless of market conditions. Of course, any guarantees are contingent on the claims-paying ability of the issuing insurance company.
Most annuities have surrender charges that are assessed during the early years of the contract if the annuity is surrendered. Distributions of annuity earnings are taxed as ordinary income. Withdrawals prior to age 59½ may be subject to a 10% federal income tax penalty.
If you are concerned about running out of money in retirement, it might be time to consider a fixed annuity. A stable source of income could be a welcome addition to your portfolio. Click here to learn more.
1–2) Employee Benefit Research Institute, 2010

>College Education Funding for your Children. Some thoughts to consider

>Saving for your children’s college education is important. Did you know that the current financial aid guidelines ignore any cash accumulated in the cash value of a life insurance policy? You know that you need a
strategy that will help protect your family in the event of your premature death. Permanent life insurance can help you plan for both.

Each premium payment you make builds cash value. Cash value can be used to pay college tuition and expenses. Cash value can be used for other needs during your lifetime, through income tax-free policy loans and withdrawals and can also be activated to generate an income stream that never runs dry while you are living.

Life insurance death benefit provides your family with an income tax-free death benefit that they can use to:
* Maintain their lifestyle and protect their future financial security
* Pay future education expenses for your children

Using cash value life insurance as a tool for college saving

Your goal:
Protect the people who depend on you plus save for your children’s college education.
• You want to protect the people who depend on you if you can’t be there to provide for them
• You want to set money aside that can be used to help pay college tuition costs
A potential solution:
Permanent life insurance provides death benefit protection and cash value growth.

Permanent life insurance provides:
• Income tax-free death benefit for your family if you die prematurely
• The savings component of a cash value insurance policy can be used to cover the cost of tuition
• Your money grows tax-deferred and as long as your policy stays in force, withdrawals or loans you take from your policy cash value are tax-free

>Variable Annuity? Mutual Fund? Indexed Annuity? What’s the best to choice?


Alternatives of Equity Indexed Annuities

There’s no shortage of index annuity alternatives when it comes to retirement savings, and you’ll want to examine all your options. If index annuities seem too unpredictable, fixed annuities, CDs, and money markets are a good alternative. If you prefer to manage your own portfolio and have higher risk tolerance, consider variable annuities, the S&P 500, or an IRA.

Index Annuity Alternatives Options: 

  • Fixed Annuities
  • Variable Annuities
  • CDs
  • Money Market
  • Bonds/Treasuries
  • Stock Market
  • S&P 500
  • 401(k) / IRA

Remember that in practice, the best retirement plans are diversified across multiple investment types — in no way are these alternatives mutually-exclusive.

Fixed Annuities

A fixed annuity is an interest-based contract issued and backed by an insurance company that locks in a yearly rate of return for a one-time lump-sum fee. Future rates are pre-determined at contract signing, typically ranging from 3-8% depending on the length of term. A 10% tax-penalty is levied against income withdrawals before the age of 59.5.

Generally, fixed annuities offer few benefits over their equity-index siblings. The most desirable feature of fixed annuities — the guaranteed premium — is also present in index annuities.

The one case in which a fixed annuity is preferable to an index annuity is if you require a predictable yearly return. With an index annuity, although your premium is guaranteed against loss, there’s no way to know what the account balance will be next year. It might grow by as little as 1% or jump 15%. If your retirement plan can’t handle deviations in rate of growth, fixed annuities are the way to go. Otherwise, you’ll be better with a variable rate that yields higher returns in the long term.

Fixed annuities are most disadvantaged in generating income through debt-instruments, meaning lower yields. Unless you need absolute predictability, stick with an equity-based instrument. For more info, see the Fixed Annuity Guide.

Variable Annuities

A variable annuity is a stock market portfolio contact managed by a broker for an insurance company. Sub-accounts of various risk levels are chosen by the contract owner and pay out interest depending on performance. Typical annuity terms and features apply: tax deferred growth, potential withdrawal charges, and the 10% tax penalty for withdrawal under the age of 59.5.

Variable annuities offer a slight advantage over index annuities on account of their potentially higher yields, but for a retirement savings plan index annuities arguably outweigh them with guarantees against losses. A variable annuity can be especially effective in the hands of seasoned investor who takes the time to study the markets and adjust his portfolio. If micro-managing your retirement sounds appealing and you have stock market experience, consider a variable annuity. Otherwise, most retirees would find comfort in an index annuity. 


A certificate of deposit is a bank contract that locks in a fixed interest rate for a period of 1-5 years. At the end of the term, the initial deposit + interest is returned in one lump payout. Interest rates on CDs range from 2-5% and depend primarily on Federal rates. The bank earns money on a CD by re-investing your up-front deposit in higher-yielding debt instruments like government bonds and treasures.

CDs are safe, guaranteed, offer moderate growth with marginal liquidity, and are easy to set up; they’re taxed at ordinary rates and feature no tax deferral benefits. Similar in many respects to fixed annuities, CDs are a preferred choice for younger investors, who would incur tax penalties when withdrawing from an annuity.

There should be no confusion in deciding between CDs and index annuities, as they has entirely different roles. CDs serve the purpose of sheltering your retirement plan from loss and counteract inflation. Index annuities are more aggressive instruments designed to actually grow your savings. Both vehicles have a place in your retirement plan.

Money Market

A money market is a high interest savings account run by a bank or brokerage house. Money markets are secure, FDIC insured, completely liquid, and offer interest rates in the range of 2-4% —substantially higher than ordinary savings accounts. Money markets offer lower interest than CDs and annuities. What’s more, that interest changes daily based on Federal rates.

Money market accounts have moderate minimum balance requirements ($1000+) and may limit withdrawals to several times a month. Even so, they are considered completely liquid, with no withdrawal limits or penalty fees. Money market accounts allow further investments to be made throughout their lifetime and never expire.

A money market account is hardly an alternative to index annuities. As a CD, a money market has its place along side more aggressive instruments, helping curtail annual inflation on funds that might be needed tomorrow.

Bonds / Treasuries

Bonds and treasuries are government or corporate loan contracts, including things like high-quality mortgages and federal promissory notes. Bonds backed by stable institutions like the U.S. government are very secure but offer low interest rates; typically 2-4%. Treasures come with short, medium, or long terms, but generally have low liquidity.

Bonds are solid, if not high-yield, retirement savings instruments. As alternatives, they’re closely in-line with CDs and somewhat resemble fixed annuities. As you approach retirement, it’s wise to transfer more and more of your assets into bonds, as long as you feel your nest egg is enough to cover the necessities.

Stock Market

Direct equity investment is risky business, but it is an option. Stocks offer the highest growth potential of any investment on account of their tendency to lose investors’ money. Over the very long term, stocks outperform all other investments, with an average yield of 14%+, but this figure averages hundreds of equities. There’s always the chance that you’ll stumble upon the next Microsoft or Google, but you must be mentally prepared to lose everything you invest.

The stock market is great for discretionary investment, and much less suitable for storing retirement funds — money that you’ll NEED to survive. And although a lot of risk can be hedged with a balanced portfolio and tempered investment strategy, the market often behaves irrationally. Investors with accumulated wealth and nearing retirement should not gamble with their future. Over the long-term stocks looks like a sure bet, but an unfortunate set of circumstances can wipe out our saving when you need it most.

S&P 500

The Standard & Poor’s 500 is a stock market index that tracks or averages the growth and dividends of 500 stable U.S. companies that represent a cross-section of entire U.S. equities market. Companies in the S&P 500 include 3M, Coca Cola, Exxon Mobile, and many other trusted brands. Historically the S&P 500 averages a 10-12% annual return. Indices such as these reflect the overall well-being of the U.S. economy.

Rather than purchasing a particular stock, investors can purchase and ETF (equity-traded fund) that tracks the S&P 500 or another index. Similarly, the S&P 500 can be invested into through mutual fund and 401(k) / IRA sub-accounts.

While direct index investment via ETF has the benefit of letting you pocket all the earning and pay very low fees, there is a great advantage to investing in an index annuity instead. For more real-world example of how an index annuity would have fared again a direct S&P 500 investment, see Index Annuity Performance.

For an in-depth explanation of index annuity products and to get a free comparison of quotes from the highest-rated insurance providers, Click Here




>Did you know? An outline of investing principals.


How do your retirement and investment accounts look? When you signed up for the 401k did you choose a plan that was a high growth plan? If so you have a plan with stocks and bonds in it. How are they performing you have enough income from your investment to get you through your entire lifetime?

Did you know that most Americans us pensions & 401k plans as their only form of retirement planning along side of Social Security? That disturbs me and is the root cause of retirees being in the shape they are in today. Think about taking a 40% pay cut in 2008 because the stock market crashed and there has only been modest increases in ’09 and ’10. Couple that with taxes at 20% and you have people trying to survive on pennies instead of living life without worries. 
Even the most aggressive investors with the mindsets of the Wealthiest money experts have only 65% of their total plan in the market. Take a look below and see where you fit. I think you will be surprised. 

The Conservative Client

Conservative clients have a very low risk tolerance and will place prime importance on preservation of principal. They will usually be willing to accept lower potential gains for a higher level of safety. Fixed instruments and annuities may make up the majority of their investments. The following allocation picture may best suit this client.


The Average Client

The average client is interested in some safety but also wants some of the potential gains that are associated with the equities markets. With this client, the assets allocated for retirement income would be placed in annuities and other available income would be in more aggressive investments. Equity indexed annuities may be good for the retirement income objective with this client, depending on the length of time to retirement. The allocation may appear as shown below.

The Aggressive Client

This client is willing to risk safety for higher growth potential and is more prone to invest in equity funds. Equity indexed annuities may provide safety for retirement funds and still allow for participation in the market, without the downside risk. This graph shows how this asset allocation may appear.

When these charts are measured to the Rule of 100 a person can be on the path of having enough to live on. Who is helping you with your current financial strategies? It was said that the average American will have 2 separate financial consultants. One who works on their money accumulation and another who works on their income stream for later years. I specialize n putting people on the road of financial security through time tested practices and principals that have weathered over 160 years. If you are ready to make the step into a more stable financial life you owe yourself the time and courtesy to get with me. My email, phone and office are available for you. Just reach out and ask for my time. It will be well worth the investment.


>The Rule of 100.

>Planning for your future income needs can get overwhelming to the point where most Americans tend to put off the process making it harder to meet their goals. The trend of putting off planning can cause our investments to stay in higher risk/higher gain vehicles for a longer period of time than necessary, creating a risky, stress filled retirement life or even a delay in the retirement process.

A simple plan is to follow the Rule of 100. This Concept creates a consistent process of review and transfer of your money.

Here is how it works. Take your age today and subtract it from 100. That number is the percentage of your investments that should be in the market. If your 401k is setup with 100% of your money in Growth and Income Funds, it’s time to make sure that you have money in a protected growth strategy. A $30,000 401k Balance for a 30 year old should be no more than 70% of the total holdings for the future. This amount is above and beyond the Emergency Fund you have established for Roof, Auto and Major medical expenses that may come up in the future.

Unfortunately, Americans are retiring today with 100% of their money still in the market where it can erode with a one day downturn in the Dow Jones industrial average. How does your retirement plan look? Are you in line with the rule of 100? A second opinion will cost you nothing but time but the benefits can pay dividends for a lifetime.

>When misconceptions can hurt you

>Misconception: a false or mistaken view, opinion, or attitude

If you or someone you know had a mistaken view on a topic that could cause great harm, when should they be made aware of it? 

Peoples views are shaped from the earliest years of life and become the core belief of how we end up living our lives. From the food we eat, the houses we live in to the deepest of spiritual beliefs, each one was developed and shaped from the environment we lived in. But what if that environment wasn’t the best or the right environment for a long, healthy life and even better eternity? Could life be better if someone would share with us the better way to go or better yet, if we were exposed to a different view that was a better one, shouldn’t we investigate and see if we would be better off changing our direction?

I have heard it said that all people view normal living based on what was experienced in their lives. If that is an absolute then no one is abnormal. Abnormal is nothing more than a prejudiced statement based on the observers perspective of normality. Is it abnormal to think that living in the city is relaxing? Is it normal to allow your children to run through your neighbors yard at 10pm screaming while hiding, playing flashlight tag? What about dress your 5yr old girl up to look like a 25 yr old supermodel? I am sure that someone thinks that this is normal or they would not allow it to happen.

The same is true with our views of the Bible and how it speaks to our handling of all of our daily activities. From eating, discipline, relationships to investing, working and our secular life. What we interpret as normal is filtered through eyes that were trained from our early years. The question of the day is a 2 fold one: If you had a misconception, when would you like to be made aware of it and what would it take to help you change? My blog is designed expose you to core values and ideals that are based on time proven concepts. I hope we get a chance to sit down or chat sometime so I can hear your thoughts. 

>Qualified Assets to roll over or convert?. The Why’s and When’s.


Many of us have assets in IRAs, 401(k)’s, and other types of retirement plans. Often questions turn on what to do with those assets. Leave them where they are? Convert them to something else? Lots of those decisions center around the person’s individual and tax situation. Do I pay taxes now or later? When do I need to
access the money, if ever? And, with recent positive changes in the law, it may make sense to consider rolling over those qualified assets to other vehicles and/or converting your IRAs, 401(k)’s etc. to Roth IRAs. To that end, lets examine why you may want to rollover and convert, given several different scenarios.
First, why should I roll over IRAs to Qualified Plans (like 401(k)’s) etc.?
One good reason would be creditor protection. A section of the law can protect qualified plan assets from the claims of private creditors. Other than court orders for family/child support known as Qualified Domestic Relations Orders (QDROs) and tax levys imposed by the IRS, it’s very difficult for creditors to access qualified accounts. For IRAs, general creditor protections vary by each state and are usually are not as good as the protections in qualified plans.
In federal bankruptcy proceedings, qualified plan assets are exempt, while regular IRA and Roth IRA protection is only available up to $1,000,000. However, for qualified plan assets that have been placed into a rollover IRA account, those assets do not have a $1,000,000 cap and are fully exempt from bankruptcy as well.
Lets say you want to borrow money.  In qualified plans, if allowed by the plan assets can be used for plan loans, which are not allowed in IRAs.
If you need life insurance coverage and if allowed by the plan, you can use qualified plan assets for larger life insurance premiums, particularly in qualified profit sharing plans where certain rules permit a larger portion of the assets for insurance premiums. However, Life Insurance is not allowed in IRAs.
If you are in a qualified plan but don’t own at least 5% of the business you work for, required distributions aren’t required until the LATER of age 70 ½ or actual retirement, while in IRAs (except Roth IRAs where there are no minimums required) they must begin at 70 ½, even if you are still working.
Also, if someone dies and the surviving spouse is older than the decedent, and the object is to delay distributions as long as possible, it is ok to leave the assets in the plan until the decedent would have been 70 ½ had he/she lived, which further delays the start of any required distribution.
For qualified plans and 403(b) accounts (not IRAs) there is an exception to the 10% penalty tax for premature distributions provided you first attain the plan’s early retirement age (which can’t be earlier than age 55), THEN you separate from your employer. All distributions coming out of the plan in whatever manner are not subject to the 10% penalty.
All the above reasons may also be relevant for spouses who receive distributions at death and who have the option of rolling over these assets into their own qualified plan as well as to their own IRA.
Second, why should I roll over Qualified Plans into regular IRAs?
Some plans may force distributions at retirement or some other time, which is not true with IRAs. Also, you may want the ability to choose and diversify investment vehicles and access the assets at any time. IRAs offer that level of control.
Interestingly, the following 10% Premature Distribution Penalty Tax exceptions only apply to IRAs and not to qualified plans:
Medical Expenses in excess of 7.5% of your Adjusted Gross income
Health insurance premiums for unemployed individuals
Qualified Higher Education Expenses
Qualified First Time Homebuyer Distributions
So, if you need any of them, and if the qualified plan allows, move over to the IRA!
Finally, why should I convert Qualified Plans and regular  IRAs into Roth IRAs?
There are many good reasons here. If you want to pass assets tax free to succeeding generations; are concerned with higher tax rates even after retirement; if you want to delay required distributions after age 70 ½.  and/or if you want to keep taxable income down from Roth distributions to offset other taxes due, then a conversion to a Roth IRA may be for you. Remember that at the time of conversion you pay tax on the amount converted, but later distributions are totally free of income tax.
And, for conversions occurring only in 2010, you pay no tax on your 2010 tax return. Instead, you pay half the tax due on your 2011 tax return and the rest on your 2012 return. For example, if I convert $100,000 from a regular IRA to a Roth IRA, I pay no income tax on my 2010 federal tax return. Instead, I pay tax on half the amount ($50,000) on my 2011 return and the other half ($50,000) on my 2012 return. Conversions occurring
In all other years require that all the tax be paid in that year.
Lots of good planning ideas to think about.  With assistance from your financial advisor, choose the approach that best suits your retirement and planning needs!
The views and information contained herein have been prepared independently of the presenting Representative and are presented for informational purposes only.
This information is not intended as tax or legal advice.  Please seek the advice of a professional advisor prior to making any decisions regarding your own situation.

>Investing in the hottest products? Who is making the most money?

>All the noise in the investment world is causing a similar “buzz” that we see when the Lottery reaches a new high. Everyone starts buying to get into the action. The prize of a High Return is pulling people in that they spend money that is not discretionary but rather it’s necessary to their living/

Gold prices today are at a high. But common sense still holds true. “Buy Low/Sell High” is the way to maximize earnings. So who is behind all of this Invest In Gold advertising? Is it possible the ones who will make the most money since they “Bought Low” are the ones who want you to invest today? Can you afford to buy at the top and lose money when the sell off begins? What voices do you pay attention to when you put your money back for the future? The ones who will make the “Biggest Return” or the ones who are consistently saying the same thing regardless of the “Daily Fad” economic conditions.

As a protectionist my goal is always to help you preserve your principal while maximizing your returns. Let’s sit down to review your current plan.

>Making a Charitable Gift Easier for Everyone

>If you are the director of a charity you know how important it is to raise funds. In fact, it’s vital to the lifeblood of the organization. In today’s economy more and more past donors are holding on to their cash flow for as long as possible. The major concern is that they are scared of outliving their money. Since we are living longer today I couldn’t agree with em more.

As a charitable organization you are caught in the middle. You have donors who believe in your cause and have even placed you as a beneficiary of some of their cash when they die. But in the mean time the same people are reluctant to part with any large cash donations for the above mentioned reasons.

What if could help create a lifetime cash flow for the donor while at the same time increase the amount of contributions to your organization. All this being done while you manage the organization, not the payment to the donor. Would your donor be happy seeing their cash work for you while they are living? Would they like to enjoy a steady stream of income for life if they need it? And what if a $100,000 gift could generate could provide a 67 year old male $492 a month for the rest of his life, income tax free for over 18 years, and you could use $30,000 of the gift today? There is even more to gain with more assets in the gift.  Would that be a win/win?


>Social security? Will it be enough?


It’s been said that everyone is entitled to their own opinion but not their own facts. Surely, reasonably informed people will recognize that what was intended as a “safety net” has morphed into an entitlement program. The very foundation of the Social Security system is cracked. If it makes you feel better, call it a hairline crack. In any case, that crack will not disappear, but will only grow larger and more dangerous. Let’s at least acknowledge that any insurance company operating on the same basis as the current Social Security program would have been put out of business yesterday and its executives jailed for fraud. Insurance companies are not allowed to pay out more in benefits than what is in the general fund and in fact, if reserves drop below a safe level the company’s ratings would have already dropped to a level where they would have a hard time staying in business.
Social Security has a fundamental problem. It was originally intended to provide only a supplemental retirement income source for a minority of Americans.
Instead it has become the primary retirement income source for a majority of retired Americans. Additionally, Social Security has blossomed into more than just a retirement program. Over the years, other benefits were added that covered widows, disabled workers and children.
Annuities and cash value policies by were designed to provide the bulk of the retirees income. These products offer a stable growth and during the working years and then offer an income for the life of the owner. But today people have put most of their money into a 401k plan that is invested in the stock market which,  in 2008 dropped 40%. The individual who had an income of $40,000 from their stock based plan saw their income lowered to $24,000.
A failure to properly protect their planning during their working years forced a majority of Americans to take early Social Security at age 62 for less than their full benefit because they simply “need the money”
Where do you stand today? When you ask your stock broker they will say to just hang in there, the market will come back. Did you know that a 40% decrease will require over 65% increase with no downturns just to bring the account back to even? When was the last time the market increased over 60% in one year?

>Golfing and finances. A lesson from the Golf Course.

>Some people don’t understand the power of zero when it comes to managing money. A simple way to look at it. But first, lets take a little time to discuss some golfing basics.

In the game of golf the person who makes the least amount of mistakes and shoots Par or better is on top of the leader board. These are the golfers who tend to stay on the practice range longer and study the game regularly, review their performance often and more than not meet with a coach or mentor who can help them improve their swing. Some of these golfer don’t carry the most expensive clubs and typically are not into buying the latest fad item just because it was “Seen on TV”.

Managing your money should be done the same way. Yet more and more people are persuaded to get into the latest plan offering the most “dramatic impact” to their financial plan.

The power of zero is a simple concept to understand.

Imagine playing the game of golf where the average player never scores higher than par. Their ball can go in the water, they can 3 putt and the worse they score on the scorecard is par for the hole. They never see there score go below par.
That is how a defensive strategy in your financial planning can impact you. The market can go “into the woods”, overshoot greens or worse but your money always stays equal. And when the market does better than par you get to add those earnings to your financial score card. How cool is that?


>The Six Transcendent Principles of Financial Success, Security, and Freedom:

>The Six Transcendent Principles of Financial Success, Security, and Freedom:
1. Spend less than you earn. (Proverbs 13:11)
Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase.
2. Avoid the use of debt. (Proverbs 22:7)
The rich ruleth over the poor, and the borrower is servant to the lender.
3. Build liquidity. (Proverbs 6:6-8)
Go to the ant, thou sluggard; consider her ways, and be wise: 
Which having no guide, overseer, or ruler, 
Provideth her meat in the summer, and gathereth her food in the harvest
4. Set long term goals. (Philippians 3:14)
I press toward the mark for the prize of the high calling of God in Christ Jesus.
5. Have an eternal perspective. (Psalm 24:1)
The earth is the LORD’S, and the fulness thereof; the world, and they that dwell therein.
6. Rejoice in generosity. (I Corinthians 8:8-9)
But meat commendeth us not to God: for neither, if we eat, are we the better; neither, if we eat not, are we the worse. 
But take heed lest by any means this liberty of yours become a stumblingblock to them that are weak