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Are Your Beneficiaries Protected From Fees and Taxes?

 

You've worked hard much of your life to grow your career, care for your family and build a legacy. As you get older, you may be thinking about how you will pass that legacy on to your loved ones. Your legacy could help an adult child establish a more solid financial foundation, or it could help a grandchild fund their education. That can be an invaluable gift to provide after you pass away.

If you don't take the right steps while you're alive, however, that legacy could be eroded by fees and taxes. That's especially true with assets that have beneficiary designations, such as IRAs, 401(k) plans, annuities, life insurance and more.

These assets avoid probate, which is the legal process for settling one's estate after they pass away. Probate can delay the distribution of assets and generate substantial fees. However, just because these assets don't go through probate doesn't mean they can't face fees, taxes and penalties.

Below are a few steps you can take today to maximize your legacy and make sure your loved ones receive as much of your assets as possible. If you haven't taken these steps, now may be the time to do so.

 

Take any required minimum distributions.

One of the great benefits of qualified accounts like IRAs and 401(k) plans is that you can grow your assets on a tax-deferred basis. As long as the money stays in the account, you don't face taxes for your earnings.

However, you can't keep the assets in the account forever. Most of these accounts have what are called required minimum distributions that start at age 70½. These distributions are mandated, and the amount you have to take is based on your life expectancy and your account value. Generally, the distribution amount rises as you get older.

If you fail to take an RMD, you could face a 50 percent excise tax.1 If you don't pay the tax before you pass away, your beneficiaries will have to pay it. You can prevent them from facing this cost by making sure you always take your RMD as scheduled.

 

Regularly check your beneficiaries.

If you want a certain individual to receive a share of your IRA, annuity, 401(k) or other account, that person has to be named as a beneficiary on the account. That may seem like common sense, but it's not uncommon for funds to go to the wrong person because the beneficiary designation was never updated.

For instance, a former spouse may be left on an insurance policy, or a child may be accidentally left off an IRA. Unfortunately, there's little action that can be taken to correct these errors after you pass away. Beneficiary designations usually can't be challenged in court.

Also, make sure you have beneficiaries named on all your accounts. If there is no beneficiary, or if the beneficiary is deceased with no contingent beneficiary listed, the account funds are paid to your estate. They then go through the probate process, exposing them to additional fees and delays.

 

Talk to your family about their options.

Life insurance and Roth IRAs usually provide tax-free death benefits. However, death benefits from other accounts like traditional IRAs, annuities and 401(k) plans are usually taxable. If the benefit is significant, it could leave your beneficiaries with a large tax bill or even put them in a higher tax bracket.

Many accounts offer options to spread the tax bill out over a series of years or even across one's lifetime. Talk to your beneficiaries so they understand their options. You could even bring them to a meeting with your financial professional. If they know their options ahead of time, they may avoid a large tax bill after you pass away.

Ready to protect your legacy? Let's talk about it. Contact us at Cris Financial. We can help you analyze your goals and develop a plan. Let's connect today.


1https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16357 - 2017/1/18


What Surprises Await You in Retirement?

Retirement income planning is an important part of personal financial management, especially as you get older. The whole purpose of retirement income planning is to identify potential risks, take steps to minimize those risks and prepare to reach your retirement goals.

The truth, though, is that you can't predict everything. Any number of unpredictable events could happen after you retire. Some may be pleasant surprises, such as a rekindled connection with an old friend or the pursuit of a new hobby. However, others could pose a substantial challenge and may place a strain on your finances.

Although you can't predict the future, you can expect that the unexpected will happen. With that in mind, you can boost your savings and build room into your budget to address surprise costs. Below are a few common retirement income surprises to consider:

 

Emergency Costs

Stuff happens, and often that “stuff” comes with substantial costs. Your home may need a serious repair. You may suffer an injury or illness that requires costly treatment. These unfortunate surprises don't stop just because you retire.

One important point to consider is that Medicare doesn't cover all your health care costs. Many treatments are not covered. Even when a treatment or condition is covered, Medicare usually pays only a portion of the costs. Build an emergency reserve to help fund these expenses so you don't drain your retirement assets.

 

Increased Spending

Many people assume their spending will go down after they retire. In reality, however, many retirees see the exact opposite. Their spending goes up instead of down.

Why does their spending increase? After they stop working, many retirees have more free time available than they've ever had in their life. They fill that time with costly activities such as shopping, dining out, expensive hobbies and travel.

You can minimize this risk by creating a retirement vision statement, in which you define exactly what activities and values are most important to you in retirement. How do you want to spend your time? What does your ideal day look like? Then use that information to build a budget that can guide and inform your spending decisions.

 

Boredom

You've probably been looking forward to retirement for much of your adult life. You may even think there's no way you would ever choose to go back to work after retiring. However, that's exactly what many retirees do.

While some go back to work because they need the money, others do it because they're bored. They miss being productive and having goals. They want a challenge or simply a useful way to occupy their time.

Consider a phased retirement in which you gradually taper down your work responsibilities. You could transition into a part-time consultant role for your employer. Or, if you have unique knowledge and skills, you could train younger employees part time. You could also find part-time work in a completely different field.

However, consider the possibility that you may not want to have a clear schedule every day. If so, be creative and think of ways you can use your skills and talents to be productive and still maintain a flexible schedule.

Ready to plan for the unexpected in retirement? Let's talk about it. Contact us today at Cris Financial. We can help you analyze your goals and develop a strategy. Let's connect soon and start the conversation.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16359 - 2017/1/18


 What Happens to Your 401(k) After You Retire?

If you're like many American workers, your 401(k) is your single largest retirement asset. And if you're nearing retirement, you may be facing a decision about what to do with your plan after you leave your employer.

For years, you have used your 401(k) as an accumulation vehicle. In retirement, your plan will have to become a distribution tool. Those are two very different objectives. Your retirement could last for decades, so the decisions you make today regarding your plan can impact how long it lasts after you retire.

You have several options available. Below are a few common and popular 401(k) strategies to consider:

 

Cash out.

It's possible to simply cash out and take all the funds in your 401(k) in one lump-sum distribution. This may be an appealing option because it provides a large sum of money that you can use in any manner you'd like.

Taking your 401(k) in a lump-sum payment does come with some significant drawbacks, though. First, the distribution is entirely taxable. That means you'll have to pay taxes on the total distribution amount. This could put you in a higher tax bracket, and you may find yourself paying more than you otherwise would. On top of the taxes, if you're under the age of 59½, you'll also be hit with an early distribution penalty.

Although not as obvious, but just important, a total distribution eliminates all future potential for tax-deferred growth inside the plan. Given that your retirement could be lengthy, you'll need further investment growth to support your lifestyle. Tax deferral is often a helpful tool for bolstering growth and accumulation.

 

Keep it in your employer 401(k) plan.

There's nothing that says you have to do anything with your current 401(k) plan once you retire. You can simply keep it where it is. This strategy comes with a couple of advantages. One advantage is that it's simple. Chances are you know the plan and how it works. Keeping your funds in the plan may make you feel more comfortable. You also might like the investment options the plan offers and want to keep your money there.

However, there are reasons why you may not want to leave the funds in the plan. For instance, if you have other retirement accounts, like an IRA, it can become difficult to manage investments across multiple accounts.

Also, while you may like the investment options your employer benefit offers, they might be limiting. It's possible that your plan's options worked well for accumulation but not necessarily for distribution. IRAs often have a wide range of options, so you can implement a strategy that fits your needs and risk tolerance.

It's also worth considering what may happen to your beneficiaries after you pass away. By maintaining your 401(k), you'll be keeping one more account that they will have to track down. If you have multiple accounts, it may be difficult for them to identify all your assets. By consolidating accounts, you'll simplify the process for your loved ones after you pass away.

 

Roll your 401(k) into an IRA.

The final option to consider is to roll your 401(k) into an IRA after you leave your employer. There are some appealing reasons to do this. One is that you can get the funds out of your plan and avoid a taxable distribution or early withdrawal penalties. An IRA rollover also lets you continue growing your funds on a tax-deferred basis.

Additionally, you may find investment options and a tool in an IRA that fit your goals and needs better than the options in your 401(k). This is particularly relevant to distribution. For example, you may wish to use an annuity that limits downside risk and possibly offers guaranteed lifetime income. Those kinds of tools often aren't available in 401(k) plans.

Searching for a retirement planning strategy to fit your goals? Let's start the conversation. Give us a call at Cris Financial and discuss your goals with a financial planning professional today.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16295 - 2016/12/19


Retirement Resolutions to Get Back on Track in 2017

Nervous about meeting your retirement goals? Don't worry. You're not alone. In fact, according to a recent Gallup study, 64 percent of Americans worry about not having enough money for their golden years.1

It's an understandable worry. It can be easy to get sidetracked and put your savings on the back burner. It's easy to let life get in the way with things like the cost of raising children, home repairs and medical bills, all of which can chip away at your ability to stick to a retirement plan.

The good news is it's a brand-new year, and that means it's time to make your resolutions for 2017. While some people make promises to lose weight or find their dream job, if you're nearing retirement, you may want to think about making some changes to your saving goals. It's never too late to get back on track. Below are three resolutions you can make to help you get closer to your ideal retirement:

 

Make a budget and stick to it.

Budgets are powerful financial tools. They can help you rein in your expenses and better understand how you're using your money. Despite the usefulness of household budgets, two-thirds of Americans don't use one.2 One of the best ways to get back on track is to create and use a budget.

When you create your budget, make sure you understand the difference between essential and nonessential expenses. You can't go without food or shelter, and you probably can't avoid spending money on things like utilities, clothes or automotive costs. Those general categories are likely mandatory expenses.

However, that doesn't mean you need to eat out every day, buy costly new clothes regularly or even drive a high-end car. Even though a cost category may be mandatory, you have great flexibility in how you decide to meet those needs. A budget helps you make informed spending decisions.

Also, be sure to include savings as a mandatory expense. It's important to pay yourself first. If you get in the habit of paying yourself before you pay others, you'll see your savings balance add up quickly.

 

Be careful with debt.

Debt can be a useful tool. It can give you resources to help further your financial goals and to fund major life purchases, like a new home or an education. However, it can also be a burden that can eat into your savings. It's important to remember that just because you can borrow money doesn't mean you should.

That's especially true when it comes to high-interest credit card debt. If you're struggling with high-interest debt, make 2017 the year you finally get it under control. Every dollar you pay in interest is a dollar you can't save for retirement. Consider consolidating that debt into a low-interest vehicle or cutting back on your budget so you can pay down the debt at a faster rate.

 

Plan for the unexpected.

Even the most bulletproof retirement plans are susceptible to risk. Things like property damage, unexpected medical expenses and even disability or sudden death can drastically hinder your savings goals. Since it's a new year, it might be a good time to review your insurance coverage. You may also want to consider policies that can protect you from life's unexpected events.

Also, consider building up your emergency reserves. There are many emergencies in life that aren't covered by insurance. For instance, job loss or forced early retirement could throw off your plans. By having a substantial emergency reserve, you can avoid having to drain your retirement funds too early.

Searching for a retirement planning strategy to fit your goals? Let's start a conversation. Give us a call at Cris Financial and discuss your goals with a financial planning professional today.

 

1http://www.gallup.com/poll/191174/americans-financial-worries-edge-2016.aspx

2http://www.gallup.com/poll/162872/one-three-americans-prepare-detailed-household-budget.aspx

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16292 - 2016/12/19

 


Whom Should You Name as Your Roth IRA Beneficiary?

Are you one of the millions of Americans using a Roth IRA as a retirement savings vehicle? The Roth IRA has officially become more popular than the traditional IRA. In 2013 more than $6 billion was contributed to Roth IRAs, compared with $4.61 billion for traditional IRAs.1

There are a number of reasons why the Roth IRA is so appealing to so many. While the Roth IRA doesn't allow for deductions for contributions like the traditional IRA, it does offer other tax benefits. Growth is tax-deferred in the Roth, just as it is in the traditional. Also, distributions from a Roth IRA are tax-free as long as you are either disabled or over age 59½.

Distributions from a Roth IRA are also tax-free if you are deceased. That means your beneficiaries can receive both your Roth IRA contributions and growth without facing any income taxes. For many, that makes the Roth IRA an attractive vehicle for passing assets on to loved ones.

Of course, there is always the question of whom you should name as your beneficiary. This is an important decision, as it usually can't be challenged or changed after you die. If you forget to update your beneficiary or fail to name one, it could have big consequences for your loved ones.

If no beneficiary is listed, or if the primary beneficiary is dead and there are no contingent beneficiaries, the Roth IRA balance is paid to your estate. That's a taxable distribution, thus canceling out all the tax benefits of using the account in the first place.

Take some time to think about who your beneficiary should be. Many people choose either their spouse or another loved one, like a child or grandchild. You can also name multiple beneficiaries if you would like to split the assets among several people. Below are some facts about how the death benefit is handled depending on whom you name:

 

Spouse as Beneficiary

For many people, it's just common sense to name their spouse as their primary beneficiary. After all, it's probably important to you that he or she has enough assets to live comfortably after you're gone.

If you leave your Roth to your spouse, they have a number of options. They can take the money as a tax-free lump sum, but doing so would eliminate any potential tax-advantaged growth in the future. They can start taking tax-free income from the account, too. They also have the ability to assume the account as their own, deferring distributions and letting the assets grow tax-deferred as long as they'd like.

 

Nonspouse as Beneficiary

You also may be thinking about naming a nonspouse loved one, such as a child or grandchild, as a beneficiary. There are advantages to this, too, although the distribution rules are slightly different.

Nonspouse beneficiaries can take the assets as a tax-free lump sum. They also have the option of keeping the assets in the Roth account, although they are required to start taking distributions fairly soon after your death. They can't leave the funds in the account growing tax-deferred indefinitely.

However, they also have an intriguing third option. Nonspouse beneficiaries can do a “stretch” option, in which they take tax-free distributions based on their life expectancy. If the beneficiary is young, they will have a long life expectancy, which will result in lower distribution amounts. That means more money can stay in the account, growing tax-deferred for a long period of time. The stretch option is a way to give your child or grandchild a lifelong tax-free income stream.

Not sure who your beneficiary should be? Let's talk about it. Contact us at Cris Financial. We welcome the opportunity to help you analyze your goals and needs, and then develop a plan. Let's connect today

 

1http://money.usnews.com/money/blogs/planning-to-retire/2015/05/29/5-surprising-facts-about-iras

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16238 - 2016/11/15


 How Could a Career Break Impact Your Retirement Planning?

Are you considering hitting the pause button on your career? Perhaps to raise children or to care for a loved one who is facing health challenges? Or are you thinking about taking time off to go back to school or to pursue a lifelong dream?

Whatever your reasons, pausing your career is always a big decision. It's possible that it could be the best decision for you and your family. However, it also can have consequences that may not seem obvious today.

While retirement planning shouldn't be the sole factor in your decision, it's certainly something you should consider. A break from your career to raise children or to further your education can have a ripple effect on your ability to save for retirement.

Below are three ways in which a career break can impact your planning. Be sure to consider these before you make a final decision.

 

A career break may reduce your Social Security benefit.

Social Security is likely to be a major source of income for you after you retire. The amount of your Social Security payment is based on the age at which you file for benefits and your average earnings during the 35 highest-earning years of your career.

If you take time off during a period in which you would otherwise be earning a relatively high income, those high-earning years may be replaced by lower-earning years in the benefit calculation. That could drag down the amount of your payment. Also, if you have fewer than 35 years of work history, Social Security will complete the average by plugging in zero dollar amounts for the years with no earnings. That can have a big impact on the average earnings figure.

All is not lost if you do decide to take a break. You may have the option of filing for a spousal Social Security benefit. This is helpful if your spouse has a substantial earnings history. With a spousal benefit, your payment amount is based on your spouse's earnings, not your own. So it's possible that your career break won't doom you to a low Social Security benefit.

 

You may lose out on employer retirement contributions.

Does your employer offer a 401(k) or other retirement savings plan? Does it match employee contributions? If so, those contributions could be a big boost to your retirement savings.

If you take a break from your career, you will not only lose out on your own ability to contribute to a 401(k), but you'll also lose the employer match. It's important to note that you'll also lose the growth that those contributions would have accumulated in the future. Depending on your income and your savings rate, that growth could be significant.

 

You may miss out on potential promotions and raises.

Many workers are able to increase their retirement savings rates as they get older, largely because they advance in their careers and start earning more money. If you take a break from your career, however, you'll likely lose out on that future growth.

Even if your break is temporary, you could miss out on important industry developments or learning opportunities that would've enabled you to advance your career. When you are ready to go back to work, you may have to do so at a position that is lower than the one you left.

Of course, the exception to this would be if you are leaving your career to go back to school or to pursue some other project that may ultimately make you more desirable to employers. In that case, the future growth may be worth the loss of a few working years.

Not sure whether you should take your career break? We can help you examine the decision from a financial perspective. Contact us at Cris Financial. We welcome the opportunity to help you analyze your needs and goals, and then develop a strategy. Let's connect today.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov

16238 - 2016/11/15


Tuition or Retirement: What Should Be Your Saving Priority?

If you have children, you're likely facing the same dilemma that many parents across the country face on a regular basis. You want your children to get a great education, and you want them to have the financial means to attend any school to which they may be accepted. At the same time, though, you also feel an urgent need to save for retirement.

What should be the saving priority? If you're like many families, there are only so many dollars left every month for saving. You have to pay everyday expenses such as housing costs, debt payments, utilities, food and more. There are also those discretionary costs that help you and your family enjoy life.

After you pay your regular expenses, there may not be much left to save for long-term goals. That presents the dilemma. Do you save for college or for retirement?

If your kids are older, the question may be even more urgent: Do you pay for tuition or save for retirement?

The answer depends on your own unique needs and goals. There's no universal answer that works for every family. However, there are a few points to consider. Take a look at the items below and factor them into your strategy. You may be able to balance saving for both college and retirement.

 

Other Options for College

While you likely want to be able to pay for your child's tuition, it's important to realize that your child has many more alternative funding options for tuition than you will likely have for retirement. For instance, even if you can't afford to cover tuition, your child could still access scholarships, grants, loans and more. He or she could even go to community college for two years and then transfer to a four-year school to save money.

You may not have the same alternatives available for retirement. You will likely have Social Security benefits. You may have a pension, rental income or some other source of cash flow. But a substantial amount of your expenses may have to be covered with savings. There are no scholarships or loans available if you fall short.

 

Make Saving Automatic

One helpful trick in retirement saving is to have the contributions automatically deducted from your paycheck. This often happens with 401(k) contributions. They come out pretax, so you don't have to see the funds in your take-home pay. You also may be able to set up automatic deductions from your check for your IRA.

By making your saving automatic, you won't count on receiving the money as part of your normal income. That may help you adjust your budget to accommodate retirement saving with college saving.

 

Best of Both Worlds

You can also save for both goals simultaneously by using a Roth IRA. With a Roth IRA, you don't get any tax deduction for contributions, but your earnings are tax-deferred and distributions are tax-free after age 59ÃÆ'‚½. Plus, you can always withdraw your contributions tax-free and penalty-free at any age.

Additionally, if you decide to take funds from your Roth for college expenses, you can do so at any age and not pay the early withdrawal penalty. That means you can contribute to the Roth IRA today. If you feel confident in your retirement savings when your child goes to college, you can then withdraw Roth funds to pay tuition. If not, you can use alternate funding sources and keep the money in your Roth for retirement.

Not sure how to structure your savings goals? Let's talk about it. We can help you analyze your needs and develop a strategy. Let's connect soon and start the conversation.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16160 - 2016/10/18


Why Not Having an Estate Plan Can Mean Big Problems

According to a 2015 survey from Rocket Lawyer, 64 percent of Americans haven't taken the most basic estate planning action by creating a will.1 There are a wide range of reasons why someone may not create a will. They may think wills are only for the wealthy or for those with complicated family situations. They may think a will is too costly and time-consuming to create.

The truth is, though, that a will can solve a wide range of estate planning challenges for even those with a modest amount of assets. And it's a simple and relatively affordable document to create.

There are other documents that should also be part of a basic estate plan. You may want a living will or a power of attorney to help your family make decisions on your behalf. A trust may give you more planning power and control over asset distribution, and it could help your family avoid the costly probate process after your death. Estate planning isn't just for the rich and powerful. It's important for every person who wants to leave a legacy for their children or other loved ones. If you haven't created a will or reviewed your estate plan, now may be the time to do so. Below are three risks you and your family may face without a plan in place:

 

Court-Controlled Asset Distribution

At its most basic level, a will provides guidance to your executor and to the probate court on how your assets should be distributed to your heirs. You can use a will specifically to state who should get which assets and who should not receive assets.

Without a will, the probate court will make those decisions for you, and your family may not agree with the court's choices. For example, assume that you have a spouse and also have children from a previous relationship. Without a will, the court may award all your assets to your spouse, cutting your children out of any inheritance.

Also, if you have children who are minors, your will states who should care for them after you pass away. In most cases, the other parent will retain custody of the child. However, there could be complicating factors. What if you're a single parent? What if a stepparent has played a larger role in the child's life than the other biological parent has? What if you and the other parent pass away at the same time in a car accident? A will can resolve all of these issues.

 

Probate

Most estates go through a process called probate, which is what the local courts use to settle the estate. It involves paying all debts, filing taxes, liquidating assets and notifying potential heirs. It can be a time-consuming and costly process. In fact, it can take months and can cost thousands of dollars in legal and administrative fees.

A will doesn't help you avoid probate, but other planning tools do. For instance, any assets in a trust don't go through probate. Instead, they're distributed directly to the trust's beneficiaries according to your instructions. Contrary to common assumptions, a trust can be a fairly simple and affordable document to create. If you want your heirs to get their inheritance quickly, a trust could be a wise idea.

 

Incapacitation

An estate plan doesn't just cover what happens after you die. It also addresses challenges that arise in the final months or years before you pass away. It's possible that conditions like a stroke or Alzheimer's could cause you to become incapacitated, which means you're physically unable to make or communicate your own decisions.

A living will or a power of attorney can give your family guidance on how to make health care and financial decisions on your behalf. The power of attorney actually designates a trusted individual as your decision-maker. That can prevent your family from making unwise or irresponsible decisions on your behalf.

Not sure whether your estate plan is sufficient for your needs? Or do you lack an estate plan altogether? Let's talk about it. We're happy to help you analyze your needs and develop a strategy. Let's connect today.

1http://www.usatoday.com/story/money/personalfinance/2015/07/11/estate-plan-will/71270548/

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16164 - 2016/10/18


Life Insurance as College Planning Tool? 3 Reasons Why It May Make Sense for You

If you're like most parents, you want only the best for your children. That's especially true when it comes to education. Every parent wants their child to receive the best possible education so that child can transition into a successful career and happy adulthood.

Unfortunately, paying for the best education is no easy task. The average annual price for a “moderate budget” public university was recently estimated to be $24,061, while the price for a “moderate budget” private university was estimated at $47,831.1

If you think those figures are high, just wait until you see what they are in the future. College costs are estimated to be rising 5 percent per year. At that inflation rate, the average annual costs for public and private colleges in 2030 will be $40,935 and $90,576, respectively.2

What can you do to prepare for your child's future tuition, room and board, fees, books and other costs? A wide range of savings vehicles are available, and all have their own benefits and drawbacks.

However, you may want to consider one unique strategy: life insurance. Specifically, you may look at something called indexed universal life (IUL). While life insurance is generally used to provide financial protection in the event of death, it can be used for other purposes, too. And IUL, if used properly, can be a helpful tool for saving for college costs.

Below are three reasons why you may want to consider IUL for your college savings strategy:

 

Upside Potential With Downside Protection

Indexed universal life policies offer a death benefit, but they also have a cash value component. When you pay your premium, a portion is used for the cost of insurance, but the remainder is put into the cash value account.

The cash value earns interest every year, and that interest rate is determined by the performance of an underlying index, such as the S&P 500. If the index performs well, you earn a higher rate. If the index performs poorly, you may earn less interest. However, even if the index declines in value, you won't lose money because the insurance policy has a floor, or a guaranteed minimum rate.

The unique structure of the IUL policy allows you to potentially grow your cash value based on market performance without exposing yourself to downside risk. That could be helpful if you're worried about volatility and risk in your college savings.

 

Tax-Advantaged Distributions

When it comes time to pay for your child's education, you'll need to take distributions from the IUL policy. Fortunately, there are a couple of different ways to do so in a tax-advantaged manner. One is to withdraw up to your basis from the policy. Your basis is the amount you have contributed, and it can always be withdrawn tax-free. Once you exceed your basis, withdrawals may become taxable.

Another option is to take a loan from the policy. Loans are tax-free, but they have to be repaid. If the loan isn't repaid, it's usually deducted from the death benefit when you pass away. Either distribution option may be effective, but you should analyze both carefully when you're ready to take distributions.

 

No Impact on Financial Aid

What makes IUL policies especially intriguing for college savings is that they don't count as an asset on your FAFSA, which is your application for financial aid. Life insurance is exempt from the asset review portion of the financial aid process.

Generally, the more assets and income you have, the more your family is expected to contribute toward your child's education. The higher your expected contribution, the less aid your child can expect to receive. If you can save in a vehicle that isn't counted as an asset, you could improve your chances to receive scholarships, grants, work-study programs or even low-interest loans.

Curious about how you can use an IUL to fund your child's education? Let's talk about it. Contact us at Cris Financial. We welcome the opportunity to review your needs and goals and help you develop a plan. Let's connect today.

 

1http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064

2http://www.businessinsider.com/cost-of-college-in-the-future-is-scary-2014-5

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16115 - 2016/9/20

 


How to Live a Regret-Free Retirement
 

Retirement is a time to enjoy your family and friends, travel, participate in your favorite hobbies or even just relax. For many, it's also a time to look back and reflect on one's life and career. Obviously, you'd probably like to look back on your life and the decisions you've made with fondness rather than regret.

For many retirees, though, it's not until they stop working and reach their later years that they realize they should have made different choices, especially with regard to retirement planning. They may wish they had saved more money or paid down their debt. Or perhaps they think about the job they should have taken or the business they should have started.

If you're approaching retirement, much of your savings and planning may be behind you. However, there are still steps you can take today to ensure that you won't have financial regrets later in life.

Below are three planning tips to help you create a regret-free retirement. If you haven't thought about these issues, now may be the time to do so.

 

Create a health care funding strategy.

According to Fidelity, the average 65-year-old couple will spend $260,000 on out-of-pocket health care expenses in retirement.1 That figure includes things like deductibles, copays, premiums and more.

Without a plan in place, those costs could consume a significant amount of your assets and income in retirement. Fortunately, you can take steps to manage those expenses. You could fund your health savings account (HSA) today so you'll have tax-advantaged money to pay health care costs in the future. You also may want to focus on your diet and overall health to reduce your risk of injury or illness after you retire.

 

Increase your sources of guaranteed income.*

If you're like many retirees, you will have guaranteed income from Social Security and possibly a pension. However, you will have to rely on withdrawals from your personal savings to fund the remainder of your living expenses.

Relying on savings can be scary, because the income may not be guaranteed. However, you can look at ways to convert some of those savings into vehicles that offer guaranteed lifetime income. For instance, there are a number of different annuity products that offer guaranteed income streams. One type, the fixed indexed annuity, also offers growth opportunities with downside protection. Such a tool could help you manage risk and enjoy a dependable, predictable income stream.

 

Address your long-term care needs.

According to the U.S. Department of Health and Human Services, nearly 70 percent of 65-year-olds will need long-term care at some point in their lives.2 That care could last for years and may cost a substantial amount.

Consider your potential long-term care needs now, while you still have planning options available. For instance, you may look at long-term care insurance, which allows you to pay premiums today in exchange for coverage in the future. Also, talk to your children and other family members about how they may be able to contribute if you need extended care.

Ready to plan your regret-free retirement? Contact us at Cris Financial. We welcome the opportunity to consult with you, examine your needs and goals, and help you develop and implement a plan. Let's connect today.

 

1https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-in-retirement-rise

2http://longtermcare.gov/the-basics/who-needs-care/

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16113 - 2016/9/20


What's Your Strategy for These 3 Health Care Costs Not Covered by Medicare?

Are you approaching retirement and starting to think about your future health care coverage? If you're like many retirees, you might assume that Medicare will cover most of your medical expenses. That's partly true. Medicare parts A and B provide significant coverage for hospitalizations and doctor visits. If you opt for Medicare Part D, you will also have coverage for a portion of your prescription drug costs.

Medicare doesn't cover everything, though. In fact, Fidelity recently estimated that the average 65-year-old couple will face nearly $245,000 in medical expenses in retirement above and beyond the coverage provided by Medicare.1 Those out-of-pocket costs consist of expenses like copays, deductibles and premiums.

There are other health care costs not covered by Medicare. Below are three common health care expenses that you may have to pay out of pocket. If you don't have a plan to manage these costs, now may be the time to develop one.

 

Overseas Medical Care

Do your retirement plans include travel abroad? Do you want to see the world? Or maybe even live part of the year in another country? An international adventure may be a critical component of your dream retirement, but it can create some complex health care challenges.

That's because Medicare doesn't usually cover health care provided overseas. If you will be spending extensive time abroad, you may want to look into backup coverage. Your destination country may provide government-backed care to visitors and expat residents. You may also want to buy a supplemental health insurance policy that provides coverage in that country.

 

Vision, Hearing and Dental Visits

Most employer-sponsored plans provide coverage for vision, hearing and dental at a relatively affordable price, so many retirees are surprised to learn that these services aren't included in Medicare coverage. To get this coverage, you may need to look into a supplemental Medicare Advantage plan, which is usually offered by a private insurer and bundles Medicare coverage with other protection.

There are some exceptions to this. Medicare may cover vision, hearing or dental costs if they are related to a specific medical condition. For instance, if you have cataracts, the treatment may be covered. However, don't expect Medicare to cover a regular vision check or a routine dental cleaning.

 

Long-Term Care

Long-term care is likely to be a very real need for many retirees. The U.S. Department of Health and Human Services estimates that the average 65-year-old has a 70 percent chance of needing long-term care at some point.2

Long-term care generally refers to extended assistance with basic living activities such as bathing, walking, eating and more. It's usually provided either in the home or in a facility. Medicare may cover such care on a short-term and partial basis if the care is part of a rehabilitative program related to a specific hospitalization. However, don't think of Medicare as a long-term solution.

Instead, look into other options. Consider funding your health savings account (HSA) or even buying a long-term care insurance policy. Medicaid could be another coverage option, but you have to have few assets and little income to qualify.

Do you need a more robust health care funding plan? Let's talk about it. Contact us at CRIS Financial in Houston, Texas, for more information. We can analyze your risks and your coverage, and recommend a strategy. Let's connect soon and start the conversation.

 

1https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise

2http://longtermcare.gov/the-basics/who-needs-care/

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16070 - 2016/8/31


Do You Need Permanent Life Insurance in Retirement?

If you're approaching retirement, you may be in the process of developing a budget and determining which expenses you can drop after you leave the working world. Many retirees look for ways to reduce costs by downsizing, transitioning to one car or cutting other costs.

One cost you may be looking to drop is your life insurance premiums. After all, your kids are likely out of the house, and you may have little or no debt. At first glance, it may seem like you don't need life insurance after you retire.

Additionally, you may have most of your coverage in the form of term insurance. Many people buy term insurance because it's often more affordable than permanent protection. You may have purchased your term policies when you had kids, under the assumption that you wouldn't need coverage when the kids were grown. If you have term policies ending soon, you may be tempted to let them expire.

Before you do that, though, it may be worthwhile to examine your needs. It's possible that you may have risk exposure and that a permanent life insurance policy could be an effective strategy. Not sure whether you need permanent coverage in retirement? Below are three signs that it could be right for you:

 

You want to be certain that your children and other loved ones receive an inheritance.

You've worked hard to accumulate assets and build a legacy. It might be important for you to leave that legacy to your children, grandchildren and other loved ones. If passing on an inheritance is a priority, you may want to consider a permanent life insurance policy.

Even if you have substantial assets, you can't predict what will happen to those assets between now and your passing. You may need costly long-term care that drains your resources. Your asset values may suffer a steep decline. Your heirs may have trouble liquidating property and other assets after you pass away.

With life insurance, your heirs simply fill out a beneficiary claim form and then receive their respective benefit. They don't need to worry about value fluctuations, selling property or other complications. You can be confident they will receive their share of your legacy.

 

You have outstanding financial obligations.

It would be nice to retire debt-free, but that isn't always possible. You may have a mortgage on a new home or a vacation property. You may have outstanding medical bills. Or perhaps you have debt associated with a business you own.

If so, you likely don't want to pass those debts on to your spouse or children after you die. Life insurance provides immediate liquidity that can be used to pay off those obligations. If you have outstanding debt that is likely to extend into retirement, consider purchasing insurance to cover those liabilities.

 

You're worried about the impact of long-term care.

According to the U.S. Department of Health and Human Services, the average 65-year-old has a 70 percent chance of needing long-term care in retirement.1 As you might imagine, that care can be costly, and it can be a drain on your resources.

One potential challenge is that you may require long-term care and may spend down your assets before you die, leaving your spouse with few assets to support himself or herself. Life insurance can serve as a liquidity backup, providing them with a fresh reserve of resources to generate income.

If you're not sure about your life insurance needs, let's discuss it. Contact us at CRIS Financial in Houston, Texas. We can review your needs and objectives and recommend an appropriate protection strategy. We look forward to consulting with you soon.

 

1http://longtermcare.gov/the-basics/who-needs-care/

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16067 - 2016/8/31


Think You're Too Young to Worry About Retirement?

Think Again

A recent analysis of the Federal Reserve's 2013 Survey of Consumer Finances uncovered an unfortunate statistic. The study, performed by the Economic Policy Institute, found that the average American household has only $5,000 in retirement savings.1

Why so little? The answers vary. Some workers may be at companies that don't offer retirement contributions. Others may not choose to put money into savings on a regular basis. And some may assume they don't need to worry about retirement until later in life.

That final point could be a dangerous assumption. While other financial obligations might seem more urgent today, you may have no bigger obligation than retirement. Consider that you may be retired for several decades. You'll need enough money to fund your lifestyle, pay your bills and cover any emergency expenses that arise. To meet those objectives, you'll likely need to save for a long period of time.

Still not convinced? Below are three reasons why it's important to start saving today instead of in the future. If you're not saving, now may be the time to ask yourself why not.

 

You may have to shoulder a larger share of the retirement burden than previous generations.

Today's retirees are generally burdened with funding a larger portion of their own retirement than any previous generation of retirees.

It's been well-documented that companies are shedding defined benefit plans, commonly referred to as “pensions”. A 2014 study of company pensions from NEPC found that only 28 percent of existing plans remained fully open. A third were closed to new participants, and 39 percent were frozen.2

Depending on your age, your Social Security payments could also be effected. The Social Security Trust Fund is projected to be depleted by 2034, meaning without reform the benefits may have to be cut by 21 percent once the trust fund is depleted.3 To correct the problem, lawmakers will have to consider alternative measures including  bumping up the retirement age.

With pensions and Social Security both facing uncertain futures, that means you will likely need to rely on your own savings and investments to fund much of your lifestyle. Accumulating those savings takes time, which is why starting early is likely in your best interest.

 

You may not be able to work as long as you want.

Many workers put off retirement savings because they assume they can always save more in the future. However, what if you're physically unable to work and unable to save for retirement?

It could happen to you. According to projections from the Council for Disability Awareness, one in four 20-year-olds will become disabled before they retire. One in eight workers will be disabled for five years or more. Even the average disability claim lasts more than 31 months.4

What if you couldn't work for three or even five years? Could you continue to save for retirement? Would you drain your savings to cover your current expenses? If you assume that you can always start saving later, you may be rolling the dice.

 

You'll have to pay a significant portion of medical costs.

According to a study from Fidelity, a 65-year-old couple today will have to pay $245,000 for out-of-pocket medical expenses in retirement.5 Think that figure seems high? Consider that Medicare doesn't cover everything. You could still have premiums, deductibles, copays and more that are your responsibility.

Again, that's a significant amount of money you will need to have to pay for the kind of care you likely want. Also, it's possible that number could be higher when you retire. Saving early can help you tackle these costs.

Ready to start saving for your retirement, or to ramp up your current savings strategy? Let's discuss it. Contact us at CRIS Financial in Houston, Texas. We welcome the opportunity to help you plan an enjoyable and comfortable retirement. Let's connect soon.

 

1http://www.epi.org/publication/retirement-in-america/

2http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/07/20/pensions-are-taking-the-long-lonely-road-to-retirement

3http://time.com/money/3967821/social-security-trust-fund-2034/

4http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp

5https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

 

The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov

 

15944 - 2016/8/2


How Will You Pay for Your Parent's Long-Term Care?

Much has been made of how much financial support baby boomers provide to their adult children. However, there could be another form of financial aid that is straining the budget for retiring boomers. It's financial support for their parents, specifically aid for medical costs and long-term care.

 

According to a study by TD Ameritrade, 25 percent of baby boomers provide financial support to someone outside their household. Eight percent of that support goes to parents.

Among younger age groups, the demand to support parents increases. Thirteen percent of support provided by Generation Xers goes to parents, and that figure rises to 19 percent for millennials.1

Obviously, you don't want to see your parents suffer or receive care that doesn't meet your expectations. However, you also don't want to threaten your financial stability or your retirement.

Fortunately, there may be some alternatives to help fund your parent's medical needs. Before you dig into your own bank accounts, explore all options available. Below are three strategies to consider:

 

Government Assistance

If your parent is over age 65, they likely participate in Medicare. In most cases, Medicare doesn't cover long-term care costs. However, it can in some cases. Medicare is usually applicable if the care is directly related to a hospitalization. In that instance, Medicare will often partially cover costs for a limited period of time, often several months.

Medicaid could also be a possibility. Medicaid does cover long-term care costs. However, your parent needs to have very little in assets to qualify. It's possible, though, that your parent could spend down their assets on care and then use Medicaid for funding once their assets have been depleted.

You may also want to investigate the Aid & Attendance (A&A) program offered by the U.S. Department of Veterans Affairs. The A&A program is designed to assist veterans and their spouses. It provides additional monthly income to help pay for care.

The A&A program relies on a complex formula to determine payments. Contact your local VA office for more information.

 

Less Obvious Assets

Even if your parent doesn't have a significant amount of investments or savings, it's possible they could have other assets that could be used to pay for care. Take some time to inventory everything they own to see if it could be tapped into for funding.

For example, your parent may have cars, furniture, jewelry or other items that could be sold to raise money. You may not want to sell your parent's possessions, but if it's unlikely they'll ever leave care, it may be the most reasonable option. You may even consider selling the home to raise funds.

Also, look into your parent's life insurance policies. They could have substantial cash value that could be used to pay for care. Again, you may not want to surrender your parent's policies. However, if the death benefit isn't needed, perhaps that cash value could be used more effectively by funding your parent's care.

 

Family Agreement

Do you have siblings or other family members who are willing to help? There's no reason the burden of caring for your parent should fall on one person's shoulders. Sit down with your siblings to discuss your parent's needs and how you can all contribute.

For example, there may be one sibling or spouse who has the free time and the skills to provide in-home care. Or perhaps a group of siblings could rotate in and out to provide care. If one sibling can't physically assist, maybe they could provide a share of financial assistance.

Come together as a team to develop a care strategy. Then put your agreement in writing so the strategy has a formal structure.

For more information on how to care for your parent, contact us. We're happy to help you develop a plan that protects your parent and your own financial stability. Let's talk soon to address your challenges.


1http://www.cnbc.com/2015/08/13/paying-the-price-for-supporting-adult-kids-aging-parents.html

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

15967 - 2016/8/4


4 Signs It's Time to Review Your Life Insurance Coverage

Life insurance. It may not be the most fun topic to think about. After all, it's a product put to use after you pass away. There's nothing pleasant about thinking about one's own demise.

The fact is life insurance is too important to ignore, especially if you have loved ones and others who are dependent upon you. Life insurance is an effective tool to help you meet your obligations and protect your loved ones, even if the worst should happen to you.

It's a wise idea to regularly review your life insurance to make sure it meets your needs. However, for many people, that doesn't always happen. They may be too busy to review their coverage. Or they may simply forget about it.

Even if you don't review your coverage regularly, you should almost certainly do so after a few major life events. Below are four common life events that may trigger a need for additional coverage. If any of these sound familiar, it may be time to have a discussion with your life insurance professional.

 

1. Your family has grown.

This is a common driver of life insurance need. Usually, when your family grows, that means you have one more person in the household who is dependent upon you in some way. If you recently had a child, you probably want to make sure that child has financial resources available should you pass away.

This isn't limited to childbirth, though. For instance, perhaps you entered into a second marriage, creating a blended family. You may now have stepchildren who are just as dependent on you as your biological children. You may feel an obligation to make sure they're protected.

Also, even if you're not the breadwinner, you may still need coverage. If you support the family with things like childcare, cleaning, cooking and more, you are adding value to the household. If you were to pass away, your absence would likely generate substantial costs. Life insurance can protect your family against those expenses.

 

2. You purchased property.

If you recently purchased property and used a mortgage to do so, life insurance may be an important tool for you. In fact, it might be mandatory. Many lenders require borrowers to show proof of life insurance before the loan is funded.

The reason is simple. Just because you pass away doesn't mean the loan disappears. Someone will be on the hook for the mortgage payments, and it could be your spouse or children. Consider using life insurance to pay off the mortgage if you should pass away.

 

3. You became a business owner.

Business ownership can be a rewarding and fulfilling experience. It can also be financially challenging and complicated. Your business may have vendors, employees, suppliers, lenders, partners and more, all of whom rely on you in some manner. Again, just because you die doesn't mean those obligations go away.

Life insurance can provide liquidity to keep the business going in the aftermath of your death. It can be used to pay employees, vendors and others to keep the business alive. If you have partners, they could use a life insurance benefit to buy your share of the business from your family, thus insuring your family gets value for all your hard work.

 

4. You're supporting or caring for your parents.

Are you caring for aging parents? You're not alone. More and more adults find themselves responsible for their elderly mother or father. In many ways, that makes your parents your dependents.

Consider what might happen to them if you passed away. Would any other family members step up and help? Would they have to move to assisted living? Could they afford to do so? You can use a term life insurance policy as a way to provide a temporary life insurance benefit for your parents in the event you pass away.

Have you been thinking about your life insurance needs and coverage? Contact your insurance professional to help you better protect yourself and your loved ones.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

15813 – 2016/6/17

 


4 Retirement Income Planning Steps for the Newly Single Parent

Divorce is never easy, but it can be especially difficult if children are involved. While the legal complexities may end when the divorce is finalized, you could face financial challenges well into the future.

If you are the custodial parent of your children, you may face the burden of supporting yourself and your kids on limited income. If you're the noncustodial parent, you may face the difficult challenge of making payments for child support and possibly even spousal support.

In either scenario, you may also spend a significant amount of money on legal fees and asset division. After the divorce is final, it's important that you start rebuilding your financial stability, for the benefit of both you and your children. Below are a few tips to help you get started in your new life as a single parent:

 

Budget everything.

Didn't use a budget when you were married? Don't worry. You're not alone. According to a Gallup survey, two-thirds of American households don't use a budget.1

While a budget is always a helpful financial tool, it takes on added importance for a single parent. With only one income stream to rely upon, every expense can have a major impact on whether you end up in the red or in the black.

Itemize your planned expenses and estimate how much you spend on them each month. Then add up your sources of income. If your total expenses are greater than your income, you will need to make adjustments to certain categories. Consider reducing amounts for discretionary expenses like entertainment or shopping.

Of course, a budget is useless if you don't stick with it. There are a number of websites and software packages that can help you update a budget in real time. Also, a insurance professional can help you develop and implement your budget.

 

Build a foundation of protection.

Before pursuing long-term retirement income goals, it's important that you have tools in place to protect what you already have. The first such tool is an emergency fund that you could use in the event of job loss, costly medical treatment, housing damage or some other unplanned expense. Try to set aside money regularly to build up enough savings to cover several months' worth of income.

Also, look into your insurance coverage. What would happen to your children if you passed away, or if you became disabled and couldn't work? Life insurance is an affordable and effective way to protect your children financially in the event of your death. Disability insurance may be a good idea, too, especially if you don't have disability coverage through your employer.

 

Don't forget about retirement.

In the aftermath of divorce, retirement may be the last thing on your mind. However, that doesn't mean you should ignore it altogether. The earlier you start saving for retirement, the better your chances of reaching your retirement income goals.

Even starting small and putting away a modest amount on a weekly or monthly basis is better than not saving at all. Your insurance professional can help you develop a retirement income plan that starts small and increases over time.

 

Ask for help.

You probably have a lot on your plate right now. You have children to care for. You may either have a demanding job or be in the middle of a job hunt. And there's also the emotional toll of adjusting to your new reality.

Right now might not be the time to take a DIY approach to retirement income planning. Consider working with a professional who can help you prioritize your goals, manage risks and implement an action plan.

Contact us at CRIS Financial in Houston. We welcome the opportunity to consult with you and help you establish a path to retirement income stability and independence. Let's start the conversation today.


1http://www.gallup.com/poll/162872/one-three-americans-prepare-detailed-household-budget.asp

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

15814 – 2016/6/17


Should You Buy Term or Permanent Life Insurance?

Any good financial plan has to be built on a base of sound financial protection against serious risks. Often, that protection comes in the form of life insurance. Life insurance protects your family, your business, your lenders and other interested parties from the ultimate risk—your passing.

Not all life insurance is the same, though. There are different types of policies available, and each is designed to meet different needs and objectives. Many of these policies fall into two broad categories: term and permanent.

There's no universal right or wrong answer when it comes to making a decision between term and permanent insurance. It depends on your unique needs and goals. Below are descriptions of both term and permanent, along with the benefits and important considerations for each.

 

Term Insurance

As the name suggests, term insurance is life insurance coverage that lasts for a certain term, or period of time. Terms can be as short as 10 years or as long as 30 or 40 years. Generally, the longer the term, the higher the premium.

When the term is over, you usually have the option of either renewing the policy or letting it lapse. If you choose to renew, the premium may be recalculated to reflect your age. If you let the policy lapse, you won't have any more premiums, but you also won't have coverage.

Term insurance can be a good strategy when you have a finite, temporary need. For instance, if you buy a home with a 30-year mortgage, you could use a 30-year term policy to provide coverage while you're paying off the loan.

Many people also use term insurance while they have kids in the home. Once the kids move out of the house, there may be a reduced need for life insurance coverage. Term insurance could make sense in that situation.

One of the appealing aspects of term insurance is that it is often affordable, especially when compared with similar permanent policies. However, once the term ends, the policy terminates and you may not have anything to show for your premiums.

 

Permanent Insurance

Permanent insurance is life insurance coverage that stays in effect for life, assuming you meet all the premium requirements. There are various types of permanent insurance, including whole life, universal life and others.

One big distinction between permanent and term insurance is the existence of something called “cash value” in permanent policies. When you own a permanent policy, a portion of the premium goes into the policy's cash value. This account may earn interest or dividends over time and could grow to a significant amount of money.

In time, you may be able to take loans or withdrawals from the permanent life insurance policy to help fund retirement, to pay for emergency expenses or for other financial challenges. You also may be able to use the cash value to support the cost of the insurance, eliminating the need for further premiums.

As you might expect, permanent insurance may be more suitable when you have a permanent need. For instance, you may want to offer a base level of support to your spouse should you pass away. That need may exist whether you pass away in 10 years or 50 years.

Generally, permanent policies will have higher premiums than similar term policies. Also, permanent policies can vary significantly in how they're structured and in how they accumulate cash. Take time to review a number of options before you decide on a specific policy.

Your life insurance agent can help you find the right policy and coverage to meet your needs. Contact us at CRIS Financial. We welcome the opportunity to help you develop the right life insurance strategy for your needs, goals and budget.

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

 15709 – 2016/5/31

 


3 Retirement Income Planning Tips for the Late Starter

Did you get a late start on retirement income planning? You're not alone. According to a recent GoBankingRates survey, nearly 57 percent of respondents over the age of 55 reported having less than $100,000 saved for retirement. That figure jumped to more than 70 percent for respondents ages 35 to 54.1

It's easy to fall behind on retirement income savings. There are so many other responsibilities you face in life, from owning a home to paying off debt to raising children. Many people choose to put retirement on the back burner while they address more pressing financial obligations.

However, if you keep retirement income on the back burner for too long, you may find retirement isn't a viable option for you. The good news is there are steps you can take to boost your savings and prepare yourself for retirement. Below are three tips to help you get back on track with your retirement income planning.

 

Use the Catch-Up Provisions

One of the most effective ways to save for retirement is through the use of tax-deferred accounts, such as 401(k) plans and IRAs. When an account has tax-deferred status, you don't pay taxes on your investment growth while the money is in the account. You pay taxes only when you take a distribution. In the case of the Roth IRA, you may not pay taxes at all.

Most tax-deferred accounts have limitations on how much money you can contribute every year. For example, in 2016 the 401(k) contribution limit is $18,000. The limit for Roth and traditional IRAs is $5,500.2

However, if you are over the age of 50, you can make additional contributions. You can contribute an additional $6,000 per year to your 401(k) and an additional $1,000 each year to either your Roth or traditional IRA.2

The catch-up contribution provisions could give you a powerful way to increase your savings rate. Examine your budget and your contributions to see if you can take advantage of these additional contribution opportunities.

 

Prepare for Medical Expenses

One of the biggest costs you may face in retirement could be health care expenses. According to a recent Fidelity study, an average 65-year-old couple retiring today could face more than $245,000 in out-of-pocket health care expenses in retirement.3 That figure includes costs for things like premiums, deductibles, copays and more.

You can prepare for these expenses by taking action today. One way to manage health care costs is to invest in your health. Start eating healthier and incorporate more activity into your routine. Give up smoking or any other unhealthy habits you may have. Talk to your doctor about resolving any lingering medical issues. By being healthy in retirement, you may be able to limit your health care costs.

Also, consider maximizing your health savings account (HSA) contributions. An HSA allows you to take a tax deduction for your contributions, grow your money tax-deferred, and then take tax-free distributions as long as the money is used for qualified health care expenses.

The best part is you can take your HSA with you in retirement. That means you can save today on a tax-advantaged basis for medical expenses you will face in the future.

 

Alter Your Plans

If you're still behind on your retirement goals even after increasing your savings rate, you may need to reevaluate your retirement income plans. Working longer is one effective way to overcome a retirement savings gap. Those extra years of work will reduce your need for retirement income and give you more opportunity to save.

You may also consider working part time in retirement to earn income to cover some of your discretionary expenses, such as travel and entertainment. Also, look at downsizing. Moving into a smaller home or even a condo could reduce your housing costs, including insurance, utilities, maintenance and more.

A late start doesn't necessarily mean you can't retire. It just means you may need to take a different approach. Contact us at CRIS Financial to learn more about how you can still chart a course for reaching your retirement income goals. We welcome the opportunity to consult with you about your retirement income needs and goals.

1http://time.com/money/4258451/retirement-savings-survey/

2https://401k.fidelity.com/public/content/401k/home/vpcontributionlimits

3https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise

 

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

15708 – 2016/5/31


Don't Let These 3 Expenses Erode Your Estate

 

You've spent your entire adult life working hard, accumulating assets and building your estate. Now you may be in the process of determining how you will distribute those assets to your heirs after you pass away.

However, if you don't plan properly, your loved ones may not get all of your assets. That's because there are a number of expenses that can arise in the estate distribution process. Your heirs may be forced to pay taxes, probate costs and other expenses with assets from your estate, thereby eroding the amount of money that's actually passed onto your children and other loved ones.

Fortunately, there are steps you can take to protect your assets and minimize expenses. Below are three common costs that can arise during the asset distribution process. You may want to take steps now to plan for these expenses so your heirs don't have to cover them later.

 

1. Taxes

There are a number of ways in which taxes could impact your estate after your death. The first is in the form of income taxes. Believe it or not, your heirs will likely have to file a final income tax return on your behalf after you pass away. If you have any income taxes due, that bill will have to be paid.

Hopefully your heirs will have liquid assets available in the form of bank accounts or life insurance death benefits to pay your final tax bill. However, if they don't, they may be forced to sell assets to generate cash.

If your estate is sizable, you may also face estate taxes. In 2016, there is an estate tax exemption of $5.45 million. If your estate is worth less than that figure, you won't face estate taxes. However, if your estate is worth more than the exemption amount, your heirs could face an estate tax bill.1

You can work with an estate planning professional to project your possible estate taxes. You can then take steps to either remove assets from your estate or to provide liquidity for your heirs so they can pay the estate tax bill. For instance, lifeinsurance may be one way to provide cash so your heirs don't have to sell other assets to service tax obligations.

 

2. Probate costs

The probate process could lead to another set of potential expenses. Probate is the legal process by which a court settles an estate and distributes assets. Depending on the size and complexity of your estate, probate could take months to complete.

During this time, your executor will work on identifying assets, communicating with heirs, filing tax returns, paying debts and liquidating assets if needed. The executor may also have to file court papers and possibly make court appearances.

As you might imagine, all of these steps could generate expenses. Court appearances usually have court fees tied to them. The executor may need to hire an accountant to prepare the final tax return. Some assets may need to be professionally appraised. There could be auctioneer costs to liquidate assets.

One way to minimize probate costs is to limit the amount of assets that go through the probate process. Anything with a beneficiary designation, such as life insurance, annuities, qualified retirement plans and even trusts, avoids probate. Similarly, jointly-owned assets skip probate as they are passed directly to the joint owner.

 

3. Legal fees

One would hope legal fees don't become a major expense for your heirs during your estate distribution. However, that could be possible if you don't clearly communicate your asset distribution wishes.

Emotions can run high after a loved one passes away. Feelings of frustration and loss can become even more pronounced if a person feels like they were slighted or neglected in the will or other estate planning documents. Or, if there is no will or trust, heirs may be left to fend for themselves in court to fight for assets.

In extreme cases, family disagreements can explode into full-fledged lawsuits. You likely don't want that for your heirs. Take time now to communicate with your heirs about your intentions. Draft documents that are clear and concise with regard to your instructions.

If there is someone who you feel may be unhappy with their distribution, make a point to explain your decision to them. These conversations may not be pleasant, but they're important to help avoid future discord among your heirs.

Need help planning your estate? Contact us at CRIS Financial. We can help you identify your needs, goals and areas for improvement. We can also recommend estate conservation strategies to protect your estate and your legacy.

1http://www.forbes.com/sites/ashleaebeling/2015/10/22/irs-announces-2016-estate-and-gift-tax-limits-the-10-9-million-tax-break/#17400a946a7c
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
15615 – 2016/4/28

 


3 Ways to Use Annuities to Create Predictable Retirement Income

 

One of the most important steps in developing a retirement income plan is to project your expected income in retirement. However, that's not always easy to do. While some sources of income - like Social Security or pension payments - may be fixed income, others could fluctuate.

For instance, you may have to rely on withdrawals from investment accounts to fund your retirement. And, those withdrawals may fluctuate up and down depending on the performance of your investments. If you don't know how your investments will perform, how can you accurately project what your income will be?

The good news is there are steps you can take to create a more guaranteed and predictable income stream. These steps may help you create a more reliable budget and help you reach your retirement income goals.

An annuity can be an effective tool for creating a consistent, predictable income stream in retirement. Below are three annuity planning methods commonly used to generate consistent income.

 

1. Single Premium Immediate Annuity

Also known as a SPIA, a single premium immediate annuity offers an effective way to convert a lump sum of money into a guaranteed stream of lifetime income. When you open a SPIA, you make a one-time lump sum contribution. The insurance company then converts that contribution into a regular income payment that lasts for a specified period of time, usually for life.

The amount of income you receive depends on a number of factors, including the amount of money you contributed, your life expectancy and prevailing interest rates. You should be aware there is often little or no liquidity with SPIAs. A SPIA may be a good option if your primary concern is income, but you may want to consider other options if you don't have other sources of liquidity.

 

2. Deferred Fixed Annuity

A deferred fixed annuity is one in which your premium isn't immediately converted into a stream of income through annuitization. Rather, your premium stays in the annuity contract and earns a set level of interest.

Your interest rate is usually locked in for a period of time, and after that period ends, the rate could fluctuate. However, during the period in which the interest rate is guaranteed, you can withdraw the interest as it is credited to create a regular and consistent income stream.

Also, with a deferred fixed annuity, you often have the ability to take additional withdrawals if needed to cover an emergency or other unexpected cost. There are usually penalties for surrendering a contract early. However, most contracts allow you to withdraw a portion of the contract without facing penalty.

A deferred fixed annuity is one way to create regular, consistent income while also preserving some form of liquidity.

 

3. Guaranteed Lifetime Income Benefit

Some annuities have optional features known as guaranteed lifetime income benefits. These optional features guarantee you can withdraw a certain amount of money every year for the rest of your life, no matter how your contract performs.

These benefits are often found on deferred fixed indexed annuities. In a fixed indexed annuity, your interest rate is tied to the performance of an underlying index, such as the S&P 500. If the index performs well, you may receive a higher rate of interest. If it performs poorly, you may receive little or no interest.

When you add a guaranteed lifetime income benefit onto a fixed indexed annuity contract, you give yourself a method for getting guaranteed lifetime withdrawals regardless of how the contract performs. The benefit specifies a certain withdrawal level, such as 5 percent. As long as your annual withdrawal is within the specified limits, that withdrawal is guaranteed for as long as you live.

Annuities can be effective retirement income planning tools, but they're not for everyone. Before purchasing an annuity, you should consider your own needs and goals. For more information, contact us at CRIS Financial. We welcome the opportunity to review your needs with you and help you identify the best strategy for your situation.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
15614 – 2016/4/28


What's the Difference Between a Traditional IRA
and a Roth IRA?

Posted 4/22/2016

If you're currently saving for retirement, then you may know an IRA can be an important piece of the puzzle. An IRA is an individual retirement account, and it's a savings vehicle that allows you to save money for retirement in a tax-efficient manner, which may help you grow your money faster.

There are a number of different types of IRAs available. Two of the most popular are the traditional IRA and the Roth IRA. If you're not familiar with them, you may have difficulty deciding which is right for you. Each comes with its own set of benefits and considerations, so it's important to review your unique goals and needs before making any decisions.

Below are summaries of each type of IRA. Think about how each type of IRA might serve your goals.

 

Traditional IRA

The traditional IRA is a unique savings vehicle that allows you to grow your retirement savings in a tax-efficient manner while also possibly getting a tax break today. When you contribute money to a traditional IRA, you may be able to deduct the contribution from your current year taxes.

You can then allocate your contributions among a wide range of investment classes. Your balance will grow tax-deferred as long as it is in your IRA. Tax-deferred means you don't pay taxes on the growth until a later date. With a traditional IRA, that later date comes when you take a withdrawal. All withdrawals from traditional IRAs are taxed as ordinary income.

One of the restrictions with a traditional IRA is you must wait until you are age 59 1/2 to take a withdrawal. If you withdraw money before age 59 1/2, you may have to pay income taxes as well as a 10 percent early-withdrawal penalty.

In 2016, you can contribute up to $5,500 to your traditional IRA. You can also contribute an additional $1,000 if you are age 50 or older.1 You may also be able to deduct your full contribution amount. If you don't have a retirement plan with your employer, you can deduct your full contribution. If you do have a retirement plan at work, your deduction amount may be reduced if your income exceeds certain thresholds.2

A traditional IRA may give you tax relief today and will allow you to grow your contributions tax-deferred. However, it will also create a taxable stream of income in retirement. If you're looking for a tax deduction now, a traditional IRA may be the right choice.

 

Roth IRA

A Roth IRA is very similar to a traditional IRA, but also has a few important distinctions. First, there's no deduction for your Roth IRA contributions. Your contributions still grow tax deferred. However, when you take a withdrawal after age 59 1/2, that income is tax-free.

Another key distinction involves early withdrawals. With a Roth IRA, you could still pay taxes and a 10 percent penalty if you withdraw money before age 59 1/2. However, you can withdraw your contributions prior to age 59 1/2 without facing taxes or penalties. If you think you may need early withdrawals, a Roth IRA could be right for you.

A Roth IRA also may be the right choice if you are more concerned with managing taxes in retirement than with receiving tax deductions today. Remember, a traditional IRA gives you a tax deduction today, but creates taxable income in retirement. A Roth IRA gives no tax break today, but provides tax-free income after you retire.

Still not sure? Talk to your financial professional about it. They can review your needs and goals with you and help you decide which type of IRA is right for you.

1https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits
2https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
15522 - 2016/3/30


Four Steps to Kick-Start your Retirement Income Planning

Posted 3/24/2016

Do you have little or no retirement savings? According to a recent survey from the Federal Reserve, you have company. More than 30 percent of American workers report they have no retirement savings. Nearly 40 percent of respondents said they don't believe they will ever be able to retire.

It doesn't have to be this way. Just because you haven't started saving yet doesn't mean you can't save enough to someday retire or at least scale back to part-time work. In fact, time may be your greatest asset. If you're decades away from retirement age, you still have time to save and grow a sizable retirement income.

To achieve that goal, though, you need to take action soon. The sooner you start saving, the easier it will be to reach your goals. Below are four steps you can take to kick-start your savings efforts and get your retirement income planning back on track.

Step #1: Change your habits.

For many people, the key to saving regularly is turning it into a habit. Once saving for your retirement income plan becomes a regular and automatic habit, it will become easier to stick with and you may not even notice that you don't have the money available to spend.

There are a few ways to create a savings habit. One is to set up an automatic direct deposit from your paycheck into a savings account or into your employer 401(k). Another is to set up automatic transfers from your bank account into an IRA.

Think of retirement income as a bill that has to be paid, just like your rent, mortgage and insurance payments. Consider it to be a mandatory payment. If you can change your mindset, you'll likely see your savings level start to climb.

Step #2: Contribute up to the matching level in your 401(k).

According to a study from the U.S. Census, 68 percent of American workers don't make contributions to their employer-sponsored retirement plan. Are you one of those workers? If so, you may be missing out on one of your best opportunities to save for retirement.

Many employers offer matches for employee contributions. For example, some plans may offer a dollar-for-dollar match up to a certain level, such as 3 percent. If you contribute up to that level, you also get a matching contribution from your employer.

Contributing up to the matching level is an easy way to accelerate your savings rate. Depending on your plan, you may be able to double your savings rate by capturing all of your employer's match. Contact your human resources department to find out how much your employer matches, and then consider increasing your contribution up to that amount.

Step #3: Create a tax-free retirement income stream.

Taxes may be one of your biggest expenses in retirement. However, there is one step you can take today to reduce your tax liability in the future. A Roth IRA is a popular savings vehicle that allows you to save money today, grow it and then withdraw it tax-free in retirement.

Traditional IRAs operate differently. They allow you to take a deduction today for your IRA contributions. Your balance grows tax-deferred, depending on the performance of your investments. When you withdraw money in retirement, that income is taxable.

With a Roth IRA, you don't get the tax deduction today. However, your money still grows tax-deferred, and after age 59 1/2, you can withdraw the money on a tax-free basis. That could be a great way to create an income stream in retirement and reduce your tax exposure.

 

Step #4: Protect your most valuable assets.

Your greatest asset may be your ability to generate income. If you become injured or ill and are unable to work, you may be unable to save money for retirement in the future.

One way to protect your ability to work and earn is with disability insurance. Disability insurance offers a benefit payment to replace your salary should you be physically unable to work. Your employer may offer disability insurance options, or you may want to explore individual coverage.

If you're married or have dependents, life insurance may also be an important consideration. Should you pass away unexpectedly, your spouse may not have the income needed to support the family, let alone save for retirement. Life insurance can provide a safety net should your family lose your income.

Just because you haven't started saving doesn't mean retirement is out of reach. The sooner you take action, the more attainable retirement will be for you. Talk to your financial professional about how you can jump-start your retirement income plan.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
15427 - 2016/2/29


Tax Time Retirement Review: Four Planning Steps to Take This Season

Posted 3/9/2016

It's almost that time of year again: tax time. If you're like many Americans, you've been collecting 1099s and W2s, organizing documents and getting your financial house in order.

Since you're already organizing and reviewing all of your financial documents, this could be a great time to take a fresh look at your retirement income plan. If you feel you're not on track to achieve your retirement income goals, there are a few steps you can take to boost your savings.

Review and consolidate. Today, it's rare someone spends his or her entire career with one employer. If you're like many Americans, you've probably changed employers once or maybe even several times.

Now is a good time to ask yourself whether you left any retirement plans behind at your former employers. Did you participate in any 401(k) plans, profit-sharing plans or other retirement accounts? Is it possible you were vested in those plans?

If the answer is yes, or if you don't know the answer, take some time to contact your former employers. Ask if you have any remaining retirement benefits. If so, you may want to consider consolidating them into an IRA so you or your insurance professional can manage those assets directly.

Refresh your allocation.

When was the last time you reviewed and changed the allocation in your retirement accounts? If you don't know, this tax season may be a great time to do so.

As you age, your time horizon shortens. That means you have less time to recover from serious investment losses. Many Americans  become more conservative as they age to reduce volatility and the chance of a major loss.

If you haven't adjusted your allocation recently, take some time to review your current investments. Talk to your insurance professional to see if your allocation aligns with your retirement income goals and risk tolerance. If it doesn't, make any needed adjustments.

 

Update your beneficiaries.

You may have set your beneficiary designations when you originally opened any policies for retirement income. Have you had big changes in your life since that time? If so, your beneficiary designations may be out of date. If you were to pass away, your retirement savings would be paid to whomever is listed as beneficiary, regardless of what changes have occurred in your life.

One life change that can affect beneficiary designations is divorce. If you listed your ex-spouse as beneficiary, you may wish to change that to another loved one, such as your children, parents or even a new spouse.

Or you may have had more children since you first established your beneficiaries. You probably want to make sure that all of your children are represented as beneficiaries on your accounts.

 

Play catch up.

Did you forget to make a contribution to your IRAs last year? There's good news—you can still do it by April 15 and claim last year's deduction. If you haven't made your contribution yet, you may want to take advantage of this opportunity to do so.

Also, if you're over age 50, remember you can make catch-up contributions. While most people are capped at contributing $5,000 to their IRA, you can contribute an additional $1,000 for a total $6,000 contribution.

Talk to your insurance professional about your retirement income plan. They can help you make contributions, review your allocation and refresh your beneficiary designation.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice
15465 - 2016/3/7