Eli Mizrahi."The Retirement Planning Specialist"

Have you left your most valuable asset at your previous employer?…

2017-05-04T14:43:00.003-07:00

Why roll over your 401(k)?

Do you have assets in plans sponsored by an employer you no longer work for?

Most people, when leaving a job, clear their desk, take all their belonging with them, some even take the stapler J, but they leave their most valuable asset, their retirement plan with the old employer.

Do you have assets in an employer-sponsored retirement plans (401K, 403B or profit-sharing plans) to which you are no longer contributing?

The surest way to get control of your retirement funds without the financial drawbacks is to roll over your funds into an individual retirement account. In a direct IRA rollover, the funds are sent straight from your 401(k) or other qualified employer retirement plan into an IRA without you touching the funds.

Do you want to continue benefiting from…?

 Tax deferral

 Growth potential

Enjoy the added benefits of…

 Protection from market downturns

 Guaranteed lifetime income

 Flexibility to customize income

 Creating a legacy

Potential Disadvantage of an IRA Federal law protects the money in 401(k) plans from most law suits, says CPA Ed Slott. But IRAs are protected by state law, “so you have to know what’s protected in your state,” he says. If law suits, judgments or collections are a concern, a quick phone call to your attorney should let you know if your IRA is shielded from creditors and up to what amount, he says.
A large employer may have a plan that, because of the size of its assets, has access to low-cost “institutional” funds that may not be available to individual investors. “They could buy a fund of the same name (in an IRA, for example), but it will probably have a higher expense ratio.

Achieve your retirement goals

Rolling over tax-qualified retirement assets into an IRA can help you achieve your retirement goals. You may receive additional benefits with certain plans.

A Rollover provides you with continued tax deferral.

Certain plans offer index-based growth potential and protection from market risk or losses for an income you can’t outlive.

A rollover can help if you’re looking for…

Continued Tax Deferral. Rollovers are tax-free as long as they follow IRS guidelines.

You don’t pay taxes on any growth in your IRA account until you withdraw money.

Growth Potential - Gain interest credits from interest crediting strategies based, in part, on the upward movement of a market index without exposure to market risk.
Some options also provide you with Protection from Market Downturns

Protect your retirement nest egg. Remove the risk and uncertainty from your plan.

Some plans guarantee you will not lose money due to market losses - even during economic downturns or if you have years when you have no interest credited to your contract. Your money is never in the Stock Market, you simply get credited with interest based on certain indexes performance. In exchange for this protection, indexed crediting strategies limit the interest rate you can receive.

The limit can take the form of a Cap Rate or an Annual Spread and Participation Rate. The insurance carrier declares the Caps, Annual Spreads and Participation Rates before the beginning of each term period.

Certain Rollover plans offer Guaranteed Lifetime Income.

Enjoy benefits that can mirror the lifetime income of a defined benefit pension plan and Social Security when the contract reaches its maturity date and a lifetime income option is chosen. This means that you can receive income you can’t outlive.

Flexibility-Customize your retirement income timing and amounts by adding an optional income rider, available for a charge, to your contract.

A rider may also offer additional benefits, such as inflation protection, benefits for confinement or terminal illness, and a death benefit.

A Legacy for Your Loved Ones - Offer your loved ones a quick source of funds to settle matters after your death. Your beneficiary is guaranteed to receive your contract’s full Accumulated Value or Minimum Guaranteed Contract Value, whichever is greater

3 myths.

An Individual Retirement Account (IRA) rollover most commonly involves moving retirement assets from an employer-sponsored retirement plan (i.e., 401(k), 403(b), profit-sharing plan) to an IRA.

Rolling assets to an IRA typically provides more savings choices. It also allows the individual to keep savings tax-deferred. In many instances, a direct transfer of funds from the existing retirement plan to an IRA may be the best way to preserve tax deferral.

A 2014 study from Cogent Reports found that over 50 percent of affluent investors with a balance in an employer-sponsored retirement plan expect to roll the money into an IRA within the next 12 months. The same report estimates up to $382 billion in rollover dollars in 2015.

Consider these three myths:

MYTH #1

Rollovers don’t amount to much.

Many agents think that rollovers do not bring in a lot of assets. But the reality is quite different. According to data from the Investment Company Institute, about half of households owning traditional IRAs said their IRAs contained rollovers from employer- sponsored retirement plans. Of those, 8 in 10 rolled over their entire retirement account balance.

On average, households with IRAs that include rollovers have $260,000 in financial assets. The average value of those IRAs is $87,500.

MYTH #2

Rollover opportunities are rare and difficult to predict.

Gone are the days when it was common for an individual to spend an entire career with the same company. In fact, younger baby boomers (or those born from 1957 to 1964) held an average of 11 jobs between ages 18 and 44.4.

Each job change represents a potential rollover opportunity. In 2014, 72% of households that rolled money into a traditional IRA did so because of a job change, layoff or termination.

There are many potential rollovers from recent and soon-to-be retirees. Nearly 7 in 10 IRAs opened by individuals age 60-64 are funded exclusively by rollovers. We can help these individuals effectively transition to retirement by offering retirement products, which offer growth potential, protection from market loss and guaranteed income.

MYTH #3

Individuals will opt to roll over assets to an IRA offered by their previous employer’s plan provider. It would seem to make sense. After all, plan providers have an advantage since they already have a relationship.

Staying the course is the logical path of least resistance.

But despite plan providers’ efforts to keep assets, LIMRA studies suggest that only 26 percent of retirees who did IRA rollovers kept the money with the same plan provider. Sure, many consumers may think rollovers are a chore.

We provide valuable guidance and help navigate the rollover process.

Who can benefit from a rollover?

While every ones situation is different, we have identified these common characteristics that may indicate who is appropriate and suitable for a retirement asset rollover. We can help you find a solution that best fits your needs.

People who have…

Retirement assets from one or more employer-sponsored retirement plans (i.e., 401(k), 403(b), profit-sharing plans) to which they are no longer contributing.

Such as a:

Someone who has changed jobs

Soon-to-be retiree

Recent retiree

People who are looking for…

Continued tax deferral

Continued growth potential

Protection from market loss

Guaranteed lifetime income*

Ability to create a legacy Guide

What happens if you need your money early?

Tapping an IRA early can be cumbersome and expensive. You basically have two choices: Take the amount you want and, if you’re under age 59½, pay a 10 percent penalty plus income tax on the withdrawal. Or, set up a 72(t) distribution, which mandates regular withdrawals for at least five years, but limits the amounts to a tiny slice of your savings. But if you are laid off or take early retirement at age 55 or after, you can tap your 401(k) without penalty, says Choate. “But that only applies to company plans.”

What is an annuity?

Some times annuities are used for 401K Rollover.

I’ve heard different opinions about annuities. Annuities aren’t good or bad.

Annuities are offered through insurance carriers and are designed, like pensions plans, to provide insurance against the risk that you’ll outlive your money after you retire. Annuities give you the potential to grow your retirement savings and create a guaranteed income stream to last a lifetime similar to Social Security or a pension. Some pension plans use annuities to provide retirement income for their participants. An annuity can be used for an IRA rollover when appropriate.

Annuities come in a few varieties and do not all offer the same features nor are annuities suitable for everyone and should not be used unless they work in your individual situation. We advise against using certain annuities for this reason.

Fixed annuities, like bank CDs simply provide a rate of interest for a period of time.

Variable annuities may allow you to invest directly in the stock market through mutual fund type accounts. Like any investment, you may lose money.

Some annuities however offer an opportunity to “link” your money to an index, or get credited with interest on your money based on the performance of an index. This does not require having to invest in the stock market, it avoids stock market risk and mutual fund fees. You simply get credited with interest if the index goes up and get no interest in years when the market declines. You do not lose any of the interest credited previously. The down side is that in order to get the safety you wish, you give up some of the return.

While we do not feel there is any perfect tool that fits every situation, we know there is a tool that may work in your situation.

Most financial options are not good or bad.

They simply work or do not work for in a certain situation.

No financial tool works for everyone.

Before making any financial decision, get educated! We are frequently asked to explain these issues since they can be complicated.

*Guaranteed lifetime income is backed by the assets and claim paying ability of the issuing insurance carrier.

*Always consult with a professional regarding tax issues or insurance products for suitability.

Can you use your IRA or Roth IRA to make Qualified charitable distributions?

2016-11-22T14:06:00.003-08:00

Some popular tax planning strategies that were previously not permanent in the law but had been approved on a yearly basis were finally made permanent with the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015. Most notable for the financial services industry was the provision for qualified charitable distributions (QCD) that allows individuals to send a distribution not to exceed $100,000, made out directly to a charity from their traditional or Roth IRA. The distribution will count towards satisfying their required minimum distribution (RMD). To take advantage of this, the IRA owner has to be at least age 70½. The age requirement means traditional IRA owners will have to take an RMD. The contribution to the charity cannot be taken as an itemized deduction on their tax return, but the qualified charitable distribution is not counted in their taxable income. For older individuals, donations to charities may no longer result in favorable tax treatment. Once the total of all itemized deductions has dropped below the standard deviation, taxpayers receive no favorable tax treatment for deductions that count as itemized deductions. Many older individuals have mostly or completely paid for their house, meaning the interest paid on their mortgage may no longer result in the large itemized deduction it once did. While there are many things that can be itemized, property taxes included, the interest paid on the mortgage balance is often a large percentage of itemized deductions in the early years of the mortgage. The provision in the PATH Act making qualified charitable distributions permanent provides a way for individuals and couples filing using their standard deduction to receive favorable tax treatment for contributions to charities, provided the contributions meet the requirements stated above. Individuals should consult with their tax advisor for additional details.

Allianz Life Insurance Company of North America
Allianz Life Insurance Company of New York

This article is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America and Allianz Life Insurance Company of New York, their affiliated companies, and their representatives and employees do not give legal or tax advice. Please encourage your clients to seek advice for their personal situations from their tax and legal professionals.

EGEN-1593

(5/2016)

• Not FDIC insured • May lose value • No bank or credit union guarantee • Not a deposit • Not insured by any federal government agency or NCUA/NCUSIF

2016-08-02T09:17:00.000-07:00

I regrets to inform you that I will not be publishing new blog posts until further notice due to increasing difficulty in getting posts to pass compliance approval which is a requirement by Broker Dealers for anything published to the public.
Please contact me directly with any questions regarding retirement and income planning or visit my web site: pacificgroupadvisors.net for contact information as well as information about retirement planning and segments of our radio show "Securing Your Retirement".

Eli Mizrahi

Why is it crucial for you to review your Beneficiary Designations?

2016-08-02T09:01:00.000-07:00

You should review your beneficiaries during your annual review; however, another good time to review your beneficiaries is when a life event takes place. Marriage, divorce, death, births, and adoptions are all circumstances that may cause a need for beneficiary reviews. In many instances you may no longer wish to leave your retirement account to your ex, or you may want to add a new grandchild as a beneficiary. It’s important to remember these circumstances and their potential impacts. Regardless of the estate planning you have done with an attorney, if your beneficiary designations don’t match up with your current wishes, wills, and trusts, your estate may not be settled according to your current wishes. If beneficiary designations are not kept up to date or made at all, assets that were intended to be transferred outside of the probate system may inadvertently become subject to probate. .

Furthermore, failure to keep beneficiary designations up to date may lead to unexpected tax consequences for the beneficiary. However, an advantage to properly maintaining these designations may allow you to provide future income to your beneficiaries. The checks they may get will generate fond memories of you for possibly many years to come.

Investment advisory services offered through AE Wealth Management, LLC.

Neither AE Wealth Management nor its agents or representatives may give tax or legal advice and nothing presented in this article should be considered to be tax or legal advice. Nothing presented in this article constitutes as tax or legal advice. You should consult with a qualified professional for guidance before making any investment decisions.

Was you ID compromised?. What can you do about unfamiliar debt?

2016-03-06T12:58:00.001-08:00

When you get notice about debt you don’t recognize, you may instinctively assume you’re a victim of ID theft. While this is possible, most often it is possible the debt belongs to someone else or it may be debt collection scam. There are some tips to help you sort it out.

Get as much Information as possible
When a debt collector contacts you about a debt you don’t recall, you should first gather information. Don’t make a mistake and pay out of concern or fear. You have time to verify debts before making a payment.

Few things to ask for during your initial contact:
Information About the Collector
Legitimate debt collectors will be ale to provide you with basic information like the name of the debt collector, the company’s name, address, and phone number. If they refuse to provide this information, assume the call is a scam.

Information About the supposed Debt
Make sure the debt is in your name and not someone else’s.
Find out the amount of the debt, who the original creditor is, etc.

Validation Notice
Ask for a written validation notice stating the original creditor, the amount owed, and what are your options to dispute the debt. If the collector doesn’t already have your address, or has an incorrect one that you’ve never used, don’t volunteer any information.
If the collector trys to verify your personal information do not correct any errors in their information such as wrong name, address, etc. since this can make disputing an illegitimate debt more difficult later. Do not provide any additional personal information the debt collector does not have.

Verify legitimacy
If the debt is legitimate, the collector would send you a validation notice upon request. When you receive the notice, do some investigative work to verify if it is your debt.

A few things you can check if you suspect ID Theft or a scam.
Check Out the Debt Collector– Verify the debt collection company by doing an internet search.

Look for sign of scams. Verify Information with the Original Creditor
Contact the original creditor and ask for any additional information about the debt. Often they will help you determine if the debt is real and if the debt collector is an authorized collector on their behalf.

Check Your Credit
Check if the debt appear on your credit report by pooling a credit report and seeing if the debt shows up.
With this information you should be able to determine if the debt is legitimate or not and be able to make a decision on your next move.

Good luck!

This information is provided for educational purposes only. Always verify your credit issues with credit beauros.

Are we headed toward a recession in the near future.?

2016-01-24T17:18:00.003-08:00

On the international and national level, the past few weeks have seen 2016 roll in, and along with it Chinese markets that tripped markets circuit breakers, tensions were rising between Iran and Saudi Arabia. North Korea claimed it has developed a hydrogen bomb. All these events helped create short-term (we hope) instability in several asset classes, notably equities and commodities.

We need to remember that in the United States December was a strong month for the labor market, adding approximately 292,000 non-farm jobs, and giving some hope that a meaningful increase in average hourly wages is on the horizon (which has been a missing piece of the economic puzzle for some time).

With all of the recent volatility, I wanted to give you a few points to make sense of what is going on:

Everyday investors are panicking over the most recent wave of volatility, but professional investors seem to be remaining calm for the time being.
Three key indicators tell us a lot about the mindset of professional investors, which matters because of their dominance in the U.S. equity market.
The market appears as if it may remain decoupled from fundamentals for the time being, but that in of itself will not shift the direction of the U.S. economy

The volatility is no more than a continuation of what we saw last year (China, commodities, currency, etc.). It does not indicate a material shift in our economy. This is all emotionally driven volatility.
We all need to focus on information that drives the fundamentals instead. Consumer confidence is at a high, auto sales have never been stronger (a huge deal), services data is strong in the U.S. (as recently released), unemployment is at a decade low, the Fed raised interest rates (this is a huge deal because it is a belief that our economy is getting stronger).
There have been 8 interest rate cycles since the 1950s. On average, the S&P 500 rose for 30 months after the first rate hike in each cycle. The shortest time period of stock price gains was 10 months. On average, one year after the first rate hike, the market was up 9.5%. Past results don’t guarantee that history will repeat only that it’s usually a good sign when rates rise (initially).
Although everyone may feel nervous and you may feel the urge to make big changes in your portfolio or go all into cash, often times it is best to stay the course. Cash only loses money (purchasing power) safely. On the other end going further up the risk curve will only expose you to more volatility and subsequently risk you selling into panic. Perhaps the best thing to do is focus on the yield that you are receiving and be patient.
The risk of a recession remains low.

Do you have Questions about New Social Security Claiming Rules?

2015-12-12T16:51:00.001-08:00

Five Questions and Answers about New Social Security Claiming Rules

When Congress unexpectedly eliminated two Social Security claiming strategies as part of the Bipartisan Budget Act of 2015, retirement planning got a little more complicated for people who expected to use those strategies to boost their retirement income. Here are some questions and answers that could help if you are wondering how the new rules might affect you.

What's changing?

The provision of the budget bill called "Closure of Unintended Loopholes" primarily addresses two Social Security claiming strategies that have become increasingly popular over the last several years. These two strategies, known as "file and suspend" and "restricted application for a spousal benefit," have often been used to increase cumulative Social Security income for married couples. The budget bill has eliminated those strategies for most future retirees, but you may still have time to take advantage of them, depending on your age.

File and suspend

Under the old rules, an individual who had reached full retirement age could file for retired worker benefits in order to allow a spouse or dependent child to file for a spousal or dependent benefit. The individual could then suspend the retired worker benefit in order to accrue delayed retirement credits and claim an increased worker benefit at a later date, up to age 70. For some couples and families, this strategy increased their total lifetime combined benefit.

Under the new rules, effective for suspension requests submitted on or after April 30, 2016 (or later if the Social Security Administration provides additional guidance), the worker can file and suspend and accrue delayed retirement credits, but no one can collect benefits on the worker's earnings record during the suspension period, effectively ending the file-and-suspend strategy for couples and families. The new rules also mean that a worker who files and suspends can no longer request a lump-sum payment in lieu of receiving delayed retirement credits for the period during which benefits were suspended. (This previously available option was helpful to someone who faced a change of circumstances, such as a serious illness.)

Restricted application

Under the old rules, a married individual who had reached full retirement age could file a "restricted application" for spousal benefits after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her own benefit, in order to accrue delayed retirement credits.

Under the new rules, an individual born in 1954 or later who files a benefit application will be deemed to have filed for both worker and spousal benefits, and will receive whichever benefit is higher. He or she will no longer be able to file only for spousal benefits.

The bottom line

A limited window still exists to take advantage of these two claiming strategies. If you are currently at least age 66 or will be by April 30, 2016, you may be able to use the file-and-suspend strategy to allow your eligible spouse or dependent child to file for benefits, while also increasing your future benefit. To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits or filed and suspended benefits before the effective date of the new rules.

Why did Congress act now?

Both the file-and-suspend and the restricted application strategies were made possible by the Senior Citizens Freedom to Work Act of 2000. Part of this Act's original intent was to enable individuals to change their minds in the event they determined that they wanted to work longer but were already receiving Social Security retirement benefits. However, this opened up some claiming strategies, that while legal, went beyond the original intent of the legislation. Congress used the budget bill to close these loopholes in order to save money and slightly reduce the long-range actuarial deficit faced by the Social Security trust funds.

What if you're already using one of these strategies?

If you are already using the file-and-suspend or the restricted application strategy, you will not be affected by the new rules. You have already met the age requirements.

How are benefits for surviving spouses affected?

Rules affecting surviving spouses have not changed. If you are eligible for both a survivor benefit and a retirement benefit based on your own earnings record, you can still opt to receive one benefit first, then switch to the other higher benefit later.

What planning opportunities still exist?

Even if you can no longer take advantage of the file-and-suspend and restricted application strategies, you may still benefit from considering your Social Security filing options. The age when you begin receiving Social Security benefits can significantly affect your retirement income and income that is available to your survivors.

Basic options for claiming Social Security remain unchanged. Currently, the earliest age at which you can receive Social Security retirement benefits is 62, but if you choose to take benefits before your full retirement age (66 to 67, depending on the year you were born), your benefit will be permanently reduced by as much as 30%. On the other hand, if you delay receiving Social Security benefits past your full retirement age, you'll receive delayed retirement credits, which will increase your benefit by 8% for each year you delay, up to age 70.

Determining when to file for Social Security benefits is one of the biggest financial decisions you'll need to make as you approach retirement. There's no "one-size-fits-all" answer--it's an individual decision that must be based on many factors, including other sources of retirement income, whether you plan to continue working, how many years you expect to spend in retirement, and your income tax situation. It's especially complicated when you're married because you and your spouse will need to plan together, taking into account the Social Security benefits you each may be entitled to, including survivor benefits.

Although some claiming options are going away, plenty of planning opportunities remain, and you may benefit from taking the time to make an informed decision about when to file for Social Security.

If you sign up for a my Social Security account at the Social Security website, socialsecurity.gov, you can view your Social Security Statement online. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivors, and disability benefits, along with other information about Social Security that will be very useful when planning for retirement. If you're not registered for an online account and are not yet receiving benefits, you'll receive a statement in the mail every five years, from age 25 to age 60, and then annually thereafter.
The information presented here is not specific to any individual's personal circumstances and is not meant to provide specific investment, tax or legal advice.

The information above is provided for educational purposes based upon publicly available information from sources believed to be reliable.The information in these materials may change at any time and without notice.

So you thinks Bonds are SAFE?

2015-11-07T10:34:00.000-08:00

Regulator's caution speaks volumes about bleak prospects for debt investors

Once again the Feds at their last meeting agreed not to increase interest rates and hold interest rates at bay since the economy is not strong enough yet. This brings to mind the fact that many of my radio callers or people who attend our workshops, when asked how safe their portfolio is, refer to having bonds or bond funds as a large portion of their portfolio as a sign that they are not being too risky and assume that bonds are a “safe” investment. I beg to differ.

A warning FINRA issued to investors back in Feb. 17, 2013 about the risks in bonds is still timely and still reflects the fact that according to the industry regulators, bonds are far from being safe. The Financial Industry Regulatory Authority Inc. told investors in the alert it issued that in the event of rising interest rates, “outstanding bonds, particularly those with a low interest rate and high duration, may experience significant price drops.”

Other big investors at the time ranging from Bill Gross, co-founder of Pacific Investment Management Company LLC who was manager of the world's largest bond fund, to Jim Rogers, who was chairman of Rogers Holdings, as well as The Goldman Sachs Group Inc., already have warned that risk in the bond market. According to the alert, posted on FINRA's website, a bond fund with a 10-year duration will decrease in value by 10% if rates rise 1 percentage point.

*NAPA slide

I often meets investors who don't realize they can lose money in what they think are safe bond funds.We see it all the time. We see bond funds with 5% yields and go through the holdings and see this awesome 'other' category of holdings that are difficult to evaluate. I think the FINRA warning from 2013 is helpful but he said the regulator could be more aggressive about warning investors off risky, complex products. FINRA urged bond fund investors to check on the duration in the product's fact sheet, and said individual bond investors can check with their investment professional, the bond's issuer or use an online calculator to get the figure. The FINRA alert points out that not even short-duration bonds are free of risk. “Bonds and bond funds are subject to inflation risk, call risk, default risk and other risk factors,” the warning said.

How much will YOU pay for a $1 Million piece of art? or... How to create Multi Million Dollar Income Legacy? Tax free

2015-10-24T17:30:00.000-07:00

Many Wealthy people are art collectors.

If you are one, frame your insurance policy.
Hang it among your valued pieces of art.

A treasured family heirloom.

Many of the families we serve have done well saving and investing for retirement.

They have sufficient income at retirement and do not need proceeds from their 401K, IRA or other retirement plans to live on yet they are required to take fully taxable RMD (Required Minimum Distribution). Money that is not needed, but must taken or face stiff penalty plus tax from the IRS.

These families struggle with the idea of creating a huge IRA tax bomb for their heirs.

Tax is due even if cash has to be raised during down market in a "Fire Sale".

When they have a number of children, the IRS may end up becoming their biggest beneficiary.

Is there a better way?

A way for you to Maximize your IRA, creating tax free Legacy instead of a tax Time Bomb?

There might be (a legal way), assuming you are: A. You are in reasonable health
B. You are willing to think outside the box
C. You do not mind doing the work it takes.
The solution involves using a tool many people object to and see as necessary evil. Life Insurance.

Doubling the value of a $4 million IRA.

A family like some of the families we serve who has sufficient income to live on from pensions and social security and $4 Million saved in IRA will generate $240,000 in proceeds and pay roughly $100,000 in taxes on a distribution if they can get 6% return investing conservatively.

The family can use the $140,000 distribution as premium payment to buy $10 million life insurance on the parents to be placed in a foundation (trust) for the benefit of the children.*
The example is using large numbers but the strategy works the same way with $400,000 IRA

Key words. Not needing income from IRA.

Let's look at the alternative.

Investing the money in a traditional way.
Assuming you are able to grow $4 million IRA at 7% every year will double your IRA value in 10 years and your children inherit $5 million net (after taxes and RMDs) That is if you were successful in growing a $4 Million IRA over time investing diligently and having lady luck on your side,
Or...
You can take luck out of the equation and make sure you leave your children $14 million tax free.
$10 Million in guaranteed Income Tax free*Consult a tax advisor life insurance proceeds in addition to your taxable IRA proceeds.

This strategy involves no stock market risk.

When executed properly the bequest is left to heirs free of income taxes.* Consult a tax advisor and tax attorney.
This post only explain a concept and uses examples of premium amounts and proceeds.

Recovering stock market losses

Back in 2009 a family's investment portfolio $15 million portfolio was reduced to $10 million due to poor market and economic conditions.
They made the decision to stick it out and wait for things to improve.
A decision was also made NOT to follow an advisor's recommendation to purchase life insurance.
After further market decline the family could not handle the stress and did what many panic stricken (undisciplined) investors do. They got out of market when their assets declined to $7.5 million.

A life insurance policy was purchased so that that the insurance policy death benefit would be used to recover the "lost" portfolio value of $5 million.

The thought was that it will take many years to accomplish the same result by investing conservatively to minimize risk, if at all.

Funding retirement with life insurance
This strategy employs the idea of using Human life value to help the family.

This strategy can be used when someone is trying to "catch up" if starting saving later in life or recovering from stock market losses.

Assuming you are investing $20,000 annually.
What do you hope your account value to be worth at age 65 or 70 at retirement?
Perhaps a combination of investing $10,000 and purchasing insurance with $10,000 works better.

Let's examine what happens by using insurance

A. Continue investing $10,000 a year.
What will you investment return be??? Unknown.

B. Use the other $10,000 year to buy an insurance policy with $700,000 on a 70 year old healthy parent.

Involves no financial burden on the parent.
Has a guaranteed value (Death Benefit) when needed.
Death Benefits available immediately.
Of course, you may want to start the moral and ethical conversation earlier.
Bonus points.
You also have proceeds of your invested money.

Maximizing your charitable bequest

Create a charitable endowment for wealthy families who are gifting charitable organizations.
A wealthy family gifting money annually to create a $100,000 endowment for a charitable cause.
The family is willing to keep gifting annually. I would like to raise the question:

"Why is charity only important when the donor is alive?"

Let's review a different option.

A $35,000 annual premium to fund a life insurance policy owned by the charity will have a net cost to the donor of $20,000 in after tax Dollars (write off). ***

The insurance proceeds can fund an Endowment that will pay $100,000 annually in perpetuity.

Funding your inheritence with life insurance Live... AND leave money for your family

Step number one:
Purchase a life insurance policy you can afford.
Step number two:
Do everything you want.
Spend all your money and leave an inheritance.

If the market does well you'll have enough money to live and money left over to leave.

If market doesn't cooperate and ALL your money (expected bequest to family) is spent.

Leave the insurance proceeds.

Life insurance

You DON'T (buy it because you) NEED it!

You (buy it because you) WANT it!

* Consult a tax planning professional such as a CPA and\or Tax attorney

** Proceeds are back by the claim paying ability of a legal reserve life insurance company

*** Consult a CPA and Tax Planning attorney The strategies examine are used for educational purposes only.
Not meant to promote the sale or purchase of any product or company

How to better deal with problems life throws our way?

2015-10-18T12:31:00.002-07:00

My practice focuses on the financial aspects of life leading to and through retirement, unexpected circumstances thrown at us from every direction all the time have an effect on us and our lives. We must know how to deal with the unexpected and how to best react.
This is the reason I decided to write this post even though it is not about finance or planning but rather to include information I have gleaned from a news-letter I got from a business advice Guru Brian Tracey. Brian suggests that the most important in these situations is our reaction to what happens when we face unexpected problems and having the very best attitude we can have.

A. We need to focus on the future

No matter the challenges we face, it is important that we focus on the future rather than on the past is. Worrying about who did what and who is to blame, isn't going to make a difference. We need to focus on where we want to be and what we want to do or achieve. Mentally visualize results and our successful future, then take action to begin moving in that direction. Focus our mind, our thoughts, and our mental images on the future.

B. We need to think about the Solution, not the problem

It is very important to focus on the solution rather than on the problem. Thinking and talking about the best solution to the obstacle or setback, rather than wasting time rehashing and reflecting on the problem will get us moving in the right direction rather than wasting energy on pity party. Solutions are inherently positive, whereas problems are inherently negative. The sooner we begin thinking in terms of solutions, the sooner we can turn into more positive and constructive people.

C. We need to find the “Silver Lining”

Dr. Norman Vincent Peale, a big proponent of positive thinking said: "Whenever God wants to give us a gift, he wraps it up in a problem." The bigger the gift we have coming, the bigger the problem we may receive. The wonderful thing is that if we look hard enough for the gift, we will almost always find it. Knowing that something good may be hidden within a difficulty or challenge can motivates us and make us feel more positive.

D. We need to learn a lesson from every problem

We should always assume that whichever situation we face is exactly the right situation we must face in order to be successful ultimately. Assume that the situation was sent to us in order to assist us in learning something that will help us become better and help us expand and grow.

E. We need to make the decision to be positive

A Positive Mental Attitude is indispensable to success. We can be as positive as we wish to be if we will simply think about our future, focus on the solution at hand and look for anything good and positive we can find. If we do and follow what other successful people do, use our mind to exert mental control over the situation, we will be more positive and cheerful much of the time and can reap the benefits enjoyed by successful people.

I hope this is helpful. Common sense a practicality makes life easier.

Who can contribute to a Traditional or Roth IRA and what are the income and age limits?

2015-08-31T09:09:00.001-07:00

We often get questions about Qualified plans since we focus on retirement planning. This post is focuses on contributions to an IRA or a Roth IRA.

Contributions to IRAs

If you (or your spouse) earn taxable income and are under age 70 ½, you can contribute. It's that simple.

However, determining whether your contributions are tax deductible depends on your income and if you have access to a work-related retirement account.

Here are the guidelines for 2010:

· If you have no retirement plan at work and you're younger than 70 ½, you can contribute (up to the annual contribution limit) and deduct the entire amount from your taxable income. If your spouse doesn't work outside the home, he or she can also invest up to the federal limit and deduct the full amount, so long as your combined earned income is $89,000 or less.

· If you participate in a 401(k) or other retirement plan at work, your contribution can fully deductible only if your adjusted gross income (AGI) is less than $89,000 for a married couple filing jointly or $56,000 for an individual.

· If you have a workplace retirement plan, the deduction for your traditional IRA contribution is phased out completely when your AGI is $109,000 or over for married couple filing jointly. The limit is $66,000 for individual, or $10,000 for a married person filing separately.

· If you're not covered by a workplace plan but your spouse is, your contribution is fully deductible if your combined income is less than $167,000 and gets phased out at $177,000 or more.

· A 6% excise tax is imposed each year on excess contributions to an IRA. Similar rules apply to a Roth IRA.

Contributions to Roth IRAs

Any individual can make annual nondeductible contributions to a Roth IRA in amounts up to $5,500 for 2015 and an additional $1,000 for those 50 and older, or 100% of compensation, if lower, reduced by the amount of contributions for the tax year made to all other, but not reduced by contributions to a SEP or SIMPLE.

The allowable contribution phases out over the following levels of modified adjusted gross income (AGI):

· The phase out if your spouse and you file jointly is for 2015, $183,000 to $193,000

· For married persons filing separately, $0 to $10,000 for 2015

· Single taxpayers and heads of household phase out for 2015 is$116,000 to $131,000

A $200 contribution can be made if the phase-out lowers the contribution limit to under $200 but more than $0.

AGI for purposes of the Roth IRA contribution phase-out is defined as it is for traditional IRA purposes except that it excludes income resulting from the conversion from a traditional IRA to a Roth IRA Roth.

Advisor Observation: Modified AGI based contribution limits for Roth IRAs apply whether or not the taxpayer is a participant in a qualified retirement plan.

Roth IRA contributions for a year must be made by the un-extended tax return due date for the contribution year. Unlike traditional IRAs, contributions are permitted after age 701/2.

Only one tax-free rollover contribution can be made to a Roth IRA during any one-year period.

This post is not meant as an offer to sell or an offer to buy any financial product and is meant to educate only. Always consult with a financial advisor and\or CPA whenever making financial decisions or contemplating issues involving tax law.

How well are you dealing with stress?

2015-06-04T10:50:00.001-07:00

Everyday life involves stressful situations. It's unavoidable since we are humans and have emotions.
Although I almost always write about things that affect us financially, at time these financial issues end up causing a fair amount of stress so I wanted to mention a couple of things I find helpful in overcoming stress. I hope these tips can be useful to you too.

Overwhelming anxiety and empowerment are mutually exclusive.
Any time you are overcome with enough stress/anxiety that causes your stomach to produce successive acids, or make you feel like you have a notch under your belt buckle and limit your performance, try follow the steps listed below to empower yourself and regain control.
Remember, if someone or something causes your blood pressure to increase, you are unable to control the person or the event, all you can do is control how you react to it. Getting upset, angry or stressed only effect you and your health. The sooner you get over it, the faster you'll feel better and move on with your life and be productive again. It takes too much energy to stew over things that no one else (trust me about this) cares about except for maybe your Doctor or your clergy.
So, here are two out of many ways to deal with stress.
Stop Negative Self-Talk. It is not productive.
A big step in managing stress and anxiety is stopping negative self-talk in its tracks. The more you ruminate on negative thoughts, the more power you give them.
Most of our negative thoughts are just that—thoughts, not facts. Stop inflicting self pain.
When you find yourself believing the negative and pessimistic things your inner voice says, perhaps you should write them down.
Literally. Stop what you’re doing, and write down what you’re thinking.
Once you take a time to slow down the negative momentum of your thoughts, you will be able to be more rational and clear-headed in evaluating their veracity.
You can clearly see that your statements aren’t true any time you use words like “never,” “worst,” or “ever.” If your statements still look like facts once they’re on paper, take them to someone you trust and see if he or she agrees with you. The truth will come out and you can determine how to either act or react. Remember, you are in control of yourself and what you do.
Your brain’s natural threat tendency is to inflate a perceived frequency or severity of an event when you feel like something always or never happens. Identifying and labeling your thoughts as thoughts by separating them from the facts can help you escape a cycle of negativity and anxiety and move toward a positive new outlook.
Count Your Blessings
Take the time to think about and write down what you’re grateful for isn’t merely the “right” thing to do; it also lessens anxiety because it reduces the stress hormone cortisol by 23%.
Research conducted at the University of California, Davis, found that people who worked daily to cultivate an attitude of gratitude experienced improved mood, energy and substantially less anxiety due to lower cortisol levels. Another study I heard about years ago involved two groups of college students. Both were given a diary to record things in. One group was instructed to write down daily things they were grateful about. Anything no matter how trivial. The other group wasn't instructed to do so. The results showed that the first group was proven to be happier and more productive.
Another thing you can do is imagine things that give you pleasure and make you happy.
Our brain can not differentiate the thoughts or the events. This also works the opposite way.
One lust thing.
Forgive and forget
Much stress is self inflicted. When we feel someone wronged us or caused us stress in any way, many tend to hold on to these feelings. It only hurt us.
Forgive the person, or better yet, if you are the one regretting something you did, forgive yourself. I heard this on a Conant\Nightingale self help tape (yes, I know it dates me) long ago.
It's good advise however hard it is to actually do it. Forgive, forget... and move on.

3 in 4 will need more. The problem with living longer...

2015-05-16T23:34:00.000-07:00

There's no doubt about it...
Today's boomers and younger need to take a serious look at this issue.
It is no longer, and hasn't been for a long time, an old person problem.
According to Social Security Administration Actuarial table numbers: At age 30, the decrease between 1900 and 2001 was 83 percent for males and 92 percent for females, reflecting the rapid decline in childbearing mortality experience for females. Over the period 2002-2100, further decreases of 58 and 51 percent for males and females respectively, are projected. http://www.ssa.gov The latest life expectancy insurance charts show that between 2000 and 2012 life expectancy has increased even more.

What to do is challenging. But I believe everyone over the age of 45 or 50 should be taking a serious look at how to deal with the potential cost.
Why? The simple reason is that people need it. There are a whole lot of baby boomers - about 70 million - who have reached retirement age or are close to it. And according to the U.S. Department of Health and Human Services 70 percent of people who reach age 65 will need LTC services at some point in their lives.

When most people think about LTC and people with disabilities, they most often think of the older population. However, people of all ages including children and young adults with disabilities may need LTC. The LTC population includes people with a wide range of conditions such as birth defects, developmental disabilities, mental illness, AIDS, Alzheimer’s disease, spinal cord injury, stroke, muscular degeneration, broken bones, surgical recovery, or accident victims. A very significant portion of the disabled population, approximately 45 percent, is under the age of 65. Even within the elderly population, there are different levels of disability. for those over 85 years of age, the disability rate skyrocketed to 52.7 percent. Studies show that individuals suffering from Alzheimer’s disease require, on the average, 6+ years of LTC services.

The number of people needing care is expected to significantly increase over the next 50 years. Because of continual medical advances resulting in the prolonging of life, the chances of having to deal with a disabled family member are much higher now than at any other time in history. In fact, LTC may become an issue that individuals are going to have to deal with as part of the normal course of life. Working Group Report on LTC

None of us expects to end up needing Long Term Care but according to the one non profit organization trying to educate people 3 in 4 will need some care at some point.
you can contact us for a planning guide or click on the link 3in4needmore.com

With the cost of nursing home care surpassing $85,000 per year, it's easy to see how most people won't be able to pay for care out of their own pockets. Medicare does not pay for Custodial care and had limited benefit for Skilled Care. According to a Report of the Working Group on Long-Term Care November 14, 2000 cites that Medicare was never intended to pay for extended LTC and should not be considered as a dependable resource to meet LTC needs and while Medicaid may provide financial resources for certain people who can meet categorical eligibility, income, and resource requirements, it cannot be considered a reliable resource for meeting every American's LTC needs Working Group Report on LTC That makes an LTC planning a valuable addition to your plan for retirement and good way to help pay for the care if needed.

We assist people with explaining the options available such as leveraging your money. Most often this problem is solved in one of three ways.
1. Traditional or pay as you go insurance. Works well but can be very costly if purchased after mid 50s or early 60s and is subject to underwriting.

2. Asset Based planning made possible by provisions in the Pension Protection Act of 2006

3. Self insuring or setting aside enough cash to take care of future bills. Remember this money can not be invested in a risky way or used as a slush fund for other needs.

When facing a situation where a spouse is in need of long term care, it is best to consult an Elder Law attorney. Some one who specializes in Medicaid planning in order to protect assets for the at home spouse.

This post is for information only and not meant as an inducement to buy or sell LTC insurance. Always consult an advisor when planning.

IRS Rollover Chart

2015-03-10T16:19:00.001-07:00

Are you uncertain about whether funds may be rolled to another type of account?

We get these type of question all the time and sometime what you do not know can hurt you.

Recently the question was posed asking whether a SIMPLE IRA could be rolled to a Traditional IRA and commingled with other Traditional IRA funds.

In this instance, the answer is maybe and the IRS rollover chart is a great piece to reference.

If the SIMPLE IRA has been in place for 2 years then you can roll it to an IRA and it may be commingled with other Traditional IRA money.

If it hasn't been in place for two years it can't be rolled to a traditional IRA.

To help navigate this issue please refer to the IRS Chart included below.

Roll To

Designated

Qualified

Roth Account

Traditional

SIMPLE

Governmental

403(b)

Roth IRA

SEP-IRA

Plan

(401(k),

IRA

457(b)

(pre-tax)

403(b) or

457(b))

YES

T r a d it io n a l

YES

YES, after
two years

YES

YES, after
two years

YES

Governmental

YES

Roll

Q u al i f i ed P l an

YES

(pre-tax)

YES

(pre-tax)

YES

R o th A c c o u n t

(401(k),

or 457(b)

IRS changes rules on IRA to IRA rollovers

2014-12-10T17:03:00.002-08:00

Well if you are going to Rollover your IRA, make sure you are doing for the right reason.

Perhaps you want to get from under an old employer you are no longer working for 401K plan to reduce the cost in fees. Perhaps you simply want more control or more options by being the king of your domain. Some people rollover into programs or products with guarantees. These are usually offered by insurance companies and are back by the full clam paying ability of the carrier and the money set aside in reserves for this purpose.

Whatever the reason, you need to know what you are doing since there are rules and regulations, and they change from time to time so you better educate yourself or getting a good advisor to assist you. What you don't know can hurt you!

If you want to avoid doing the wrong thing and end up with a result that may surprise you, or might not be the one you hoped and planned for, you need to know about the "new additions" or the changes you need to know about.
So in the spirit of the holidays, here are the recent changes the IRS came up with, since they are always there to help (?)

In a recent United States Tax Court case, Bobrow v. Commissioner, the Tax Court ruled that all IRAs of a taxpayer should be looked at in aggregate when it comes to the one-rollover-per-year rule. Prior to this ruling it was widely accepted, as well as published in IRS publication 590, that the one-rollover-per-year applied to each IRA independently.

How it currently works

This example is provided for illustrative purposes only.

For instance, if an individual has two IRAs – IRA #1 and IRA #2 – and takes a distribution from IRA #1 that is rolled over into a new IRA (IRA #3), then no further rollovers can occur from IRA #1 or IRA #3 in the next year (as both IRAs "participated" in one rollover in a 1-year period already), but the taxpayer could theoretically still engage in a rollover from IRA #2 and still be eligible for the 60-day rule.

How it will work in January 2015

This example is provided for illustrative purposes only.

However, the new Tax Court decision says you cannot involve IRA #2 (or any other IRA) in an income-tax-free rollover within the one-year period that begins on the date the distribution from IRA #1. If the rule is violated, the contribution to the receiving IRA will be treated as regular contribution rather than a rollover contribution. This may result in an excess IRA contribution for the respective tax year.

Following the court decision the IRS issued Announcement 2014-15, stating their intention of enforcing the new aggregated one-rollover-per-year rule. However, they are allowing a grace period until January 1, 2015 before enforcement will begin.
As a reminder, the one-rollover-per-year rule applies only to indirect (60-day) IRA to IRA rollovers.
Information in a March 2014 IRA newsletter implies that the limit will apply separately to indirect Roth IRA to Roth IRA rollovers.
It appears that traditional, SEP, and SIMPLE IRAs would be aggregated for purposes of the rule. Please also keep in mind:

There is no limit on the number of rollovers between an IRA and a qualified plan.
There is no limit on the number of IRA to IRA transfers.
It appears that there is no limit on the number of indirect traditional IRA to Roth IRA conversions.

Since this looks a bit confusing, I suggest to have an Advisor who is familiar with these things assist you.
Everyone has a specialty, we are not expected to know everything, so why don't you do as we would when faced with other problems.
When the car breaks down, you take it to a mechanic. If you get are sick you get an appointment to see a Doctor. When considering a Rollover, you need to consult a specialist. An advisor who deals with IRAs and Roth IRAs on a regular basis and know about rollovers.

This information is provided for educational purposes only and isn't meant to promote the sell or purchase of any product.
I am not a CPA and do not intend nor dispense tax advise and these information is available on the IRS web site.

Roth IRA. Why not pay Taxes on the Seed instead of the Harvest?

2014-12-02T13:10:00.004-08:00

The old farmers use to say:
"I'd rather pay taxes on the Seed, not on the Harvest".

It makes a lot of sense doesn't it since current tax laws allow us to contribute to a Roth IRA and pay the current tax rate which some consider to be a bargain, since historically rates were much higher at some point. No matter how large your Roth IRA gets, you will never, based on current law, be required to take any distributions, not pay taxes on the account again. Niether will your heirs if you didn't get to enjoy using your money.

Her's how it works.

Roth IRA contribution eligibility
If you have earned income, or your spouse has earned income and you file your taxes as Married Filing Jointly.

You can contribute at any age as long as your modified adjusted gross income (MAGI) falls below or within the limits below:

If your filing status is...	And your modified AGI is...	Then you can contribute...
married filing jointly or qualifying widow(er)	< $181,000	up to the limit
	> $181,000 but < $191,000	a reduced amount
	> $191,000	zero
married filing separately and you lived with your spouse at any time during the year	< $10,000	a reduced amount
	> $10,000	zero
single, head of household, or married filing separately and you did not live with your spouse at any time during the year	< $114,000	up to the limit
	> $114,000 but < $129,000	a reduced amount
	> $129,000	zero

How much can I contribute to my Roth IRA?

You can contribute 100% of your compensation – up to the annual contribution limit.

Those age 50 and older can make additional catch-up contributions.

These limits, however, are reduced by any amount contributed to a traditional IRA.

Contribution Limits for 2013 and 2014
Individuals	$5,500
Age 50+	$6,500 ($5,500 + $1,000 catch-up contribution)

You can contribute to a Roth IRA anytime during the year and up to your tax-filing deadline (generally April 15).

Keep in mind that you must make contributions to your Roth IRA in cash, not with investments.

A Roth IRA Offers Two Kinds of Flexibility

1. How and When Money Is Withdrawn

You can withdraw your contribution dollars at any time tax and penalty free:
You can also withdraw earnings tax and penalty free, as long as you have owned a Roth IRA for at least five years and have reached age 59½.
The five-year clock starts with the first contribution.
2. No Required Minimum Distribution RMD:
Unlike a traditional IRA, a Roth IRA has no required minimum distributions (RMDs) when you reach age 70½.
You control when you want to withdraw money.
If you don't need the money in your Roth IRA for living expenses, you can leave it so that it can continue to potentially grow tax free.
Sometimes it is beneficial to re-categorize your IRA or a portion of it into a Roth IRA, but remember, it is a taxable event and you will be required to pay the taxes due for the amount that was re-categorized (converted) to a Roth IRA in the year it was done.
I am not a CPA. This information s provided for educational purposes only. You should always consult a tax professional when dealing with tax issues. Roth-IRA-Contributions-That-You-Can-Make-for-2014

Did you know Washington StateTransfer on Death Deed Legistlation allows for Probate Free transfer of Real Estate?

2014-12-02T10:42:00.002-08:00

As of March 2014, the Washington State Legislature passed new legislation that will allow for the transfer of real property by deed effective upon the grantor's death.
This type legislation already existed in a number of other states.

One benefit of this new legislation is the ability to simplify things and avoiding probate by allowing the transfer of real property at death directly to intended beneficiaries which may save time and cost.

Prior to this law, Real Property could only be transferred at death without a probate in very limited circumstances.

One major drawback to the act is a provision giving DSHS the right to file liens against a "transfer on death” property for up to 24 months after death of the decedent for long term care services he or she received.

Currently, if Special Notice to Creditors is given in the manner prescribed in RCW 11.42.020 or RCW 11.40.020 the agent or executor of an estate can limit the filing of creditor’s claims to a 4 month window. If a creditor fails to file a claim within this period, their claim is forever barred.

The new "transfer on death” deed legislation does not reference this limited creditor’s claim period. This leaves open for interpretation whether DSHS can still file a lien against a "transfer on death” property past the four months bar when notice to creditors is properly given.

I am not a lawyer, nor do I play one on TV. The above information is for educational purposes only. Always consult with an attorney prior to making any legal decisions.

Were you informed about Wall Street's NEGLECTED FACT that could save so much worries???

2014-11-26T17:53:00.003-08:00

This post is about hopes, dreams and expectations.

The hopes, dreams and expectations of all of us who make our living working for our money and need a place to put our hard earned savings to work for us until our retirement years.

Facts:

*Money is only good for what it can do (for us).

*A large portfolio is good for a stream of income it can provide.

*There cannot be a retirement without income.

Most of us try to make investment decisions that improve our position in life and care for the people we invited into our lives. Almost always making those decisions is difficult at best since we are faced with a lot of conflicting information.

When try to do "research" on the web we can get "Google slapped". What I mean in plain English is that too much information is available. A simple Google search yields hundreds pieces of information, some are misleading or just the opinion of the person writing them who may not be an expert.

Many times this volume of information is enough to make us feel like we are trying to drink from a fire hydrant.

We can't possibly take it all in and as a result, we freeze,

…and DO NOTHING!

Always remember that our station in life should play a big part in making those investment decisions.

What worked at age 20, when time was on our side, may not be prudent at age 60 when approaching retirement.

In order to make my point and explain the BIG NEGLECTED FACT, let's take a closer look at one of the ways most of us deal with the money we saved.

Most of us invest in the stock market in one form or another.

Since there are many ways to gauge market performance, we'll take a look at a one of them, The Dow Jones Industrial Average and how it performed over time. This information is available to all of us on the web.

A good place to start is the Dow Jones Industrial AverageTM Fact Sheet

Stated Objective

To represent large and well-known U.S. companies. Covers all industries with the exception of Transportation and Utilities.

Key Features:
—The index is maintained by the Averages Committee.

—Components are added and deleted on an as-needed basis. For the sake of continuity, such changes are rare, and typically occur following corporate acquisitions or other significant changes in a component company's core business. When one component is replaced, all of them are reviewed.
—While stock selection is not governed by quantitative rules, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors. Maintaining adequate sector representation within the index is also a consideration in the selection process. —The index is price weighted.
—The Dow Jones Industrial Average TM was first calculated on May 26, 1896.Mean, median, largest component and smallest component values are based on float-adjusted market capitalization.

It seems Wall Street has done a pretty good job selling the "hope" of getting big returns investing in the stock market, And some people do just that.

What do I mean?

Just a few years ago, Wall Street had many believing that the stock market regularly average 10% per year rate of return.

…Then the 2000's came along and did much to debunk that myth.

However, I find when you talking to people, that many still hope that their market-based portfolios will double over 10 years.

That’s not asking too much is it?

Only a 7.2% return. Per year.

They aren't asking for 10% only 7.2% per year.

That's enough to "double" what you have in ten years. Right?

Let’s review how history lived up to these odds?

Let's compare our hope and expectations to... Wall Street actual performance and uncover the BIG NEGLECTED FACT.

Let’s examine how the hope and the hype measured up to real life by reviewing a chart I got by visiting one of the best known names in the investment world. One of the largest sellers of Mutual Funds. Vanguard's Group web site.

The information might come as a surprise to some.

Vanguard Total Stock Market Index Fund Admiral Shares

Average annual performance

	1Year	3 Year	5 Year	10 Year	Since Inception 11/13/2000
Total Stock Mkt Idx Adm	17.76%	23.07%	15.83%	8.61%	5.50%
Spliced Total Stock Market Index**	17.77%	23.08%	15.85%	8.62%	5.52%

Total Stock Mkt Idx Adm

* Most recent data available. © 2014 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; (3) does not constitute investment advice offered by Morningstar; and (4) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

For the 10-year period ended September 30, 2014, 10 of 10 Vanguard money market funds, 46 of 51 Vanguard bond funds, 17 of 18 Vanguard balanced funds, and 105 of 113 Vanguard stock funds—for a total of 178 of 192 Vanguard funds—outperformed their Lipper peer-group averages. Only funds with a minimum 10-year history were included in the comparison. Source: Lipper, a Thomson Reuters Company.The competitive performance data shown represent past performance, which is not a guarantee of future results.

**Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) through April 22, 2005; MSCI US Broad Market Index through June 2, 2013; and CRSP US Total Market Index thereafter.

What led me to doubt the conventional wisdom and the belief in 10% stock market yield is an associate of mine is a bit of a spreadsheet nerd.

When he gets bored he starts running numbers on his nerdy spreadsheets.

A couple of Thanksgivings ago, he pulled together some information that I think is worth taking a note of. He put together a spread sheet of the performance of the Dow Jones Industrial Average over the last 110 years or so and compared it to a hypothetical 110 year CD returns.

The results showed that 4.75% is the comparable CD rate of return which represented the equivalent rate of return the DJIA had. In other words, if we owned a CD paying 4.75% annually we would replicate the Dow Jones returns forgoing all the stress and hard ache.

THIS is Wall Street’s BIG NEGLECTED FACT

THAT’S RIGHT! Over the last 110 years, the DJIA has averaged about 5% return.

Do you think Wall Street wants the public to know that? I don't think so!

More important is how those returns break down decade by decade since it effects us most when we are closer to retirement.

This information is vital for all retirees and for those soon to retire. We should not plan on getting much more from the markets when those returns and levels of return aren't backed up by history... and aren't guaranteed.

I know, you must be asking yourself: where can you get a CD that pays 4.75% nowadays. You can’t, we have access to something else.

*Note: Yes, this doesn't include dividends.

However, it doesn't include fees for investing either.

All we truly need when we approach retirement, or once retired is a vehicle that delivers reasonable return, allows for a dependable stream of income we that can count on year after year and not be concerned about market conditions effecting our income stream.

The solution could be boring, yet reliable instrument backed by the claim paying ability and vast resources of multibillion dollar companies

An underutilized option that proved itself through recessions and the ups and downs of the stock market.

The same thing that Babe Ruth and Charles Barkley used as well as the chairman of the federal reserve to rely on for income during their own retirement.

Yes, and it is also the same thing currently used for providing retirement benefits to most Federal Retirees in the form of monthly retirement check.

What is this thing you are asking?

Perhaps an annuity can serve as the solution to creating income to last during your retirement is just the right fit when it comes to reliable source of guaranteed income for life.

*Premium deposits to fixed and index annuities are backed by the full claim paying ability of the insurance company issuing the contract and subject to each state guarantee association

Annuity Disclosure Model Regulation Insurance Guaranty Associations

Today's Equity Indexed annuities provide us the ability to "link" our returns to an index without taking on any stock market risk.

Obviously nothing is this simple

There is a cost associated with getting the safety and guarantees provided. The tradeoff is the fact that we are not credited with all of the gains when market conditions are favorable and the index goes up. In return we do not lose any of our account values when the market goes down. Any interest gains credited to our account gets locked in every anniversary.

We can only gain or retain gains. When market conditions are poor and the index loses ground, we get credited with $0. So in a sense ZERO is our HERO.

Also, no one solution is going to work for everyone.

People may have preconceived notions about annuities since annuities have been misunderstood and misused.

There are a number of types of annuities and many annuity products, so it is a good idea to always consult with an Advisor who specializes in income retirement planning issues, as opposed to an accumulation specialist and find out if the use of an annuity is beneficial in our circumstances, and if it is, which type of an annuity is the right choice for our needs.

This information is provided for educational purposes only and is not a solicitation to buy or sell an annuity or any financial instrument. Always get educated prior to purchasing any financial instrument. Annuities have surrender charges during the first few years and are not suitable for everyone.

Have you considered these 5 Investment Risks?

2014-07-06T19:48:00.001-07:00

Everyone knows investing can be risky, however somehow we believe that we have the knowledge and awareness or simply pure luck to avoid the vast majority of risks.

Any investment decision we make should be proceeded by much consideration before plunking down our money. If like most people, you don’t have the time or the expertise, it shouldn’t prevent you from asking questions and getting real answers. Let’s consider these five types of risks that may have not come to mind.

1. Concentration risk or Overlap: Even we invest in multiple mutual funds that have different investment objectives we may find that we invest in the many of the same companies.

Retail Fund managers have a similar goal; the highest performance possible regardless of where they invest. It isn't uncommon to find small cap holdings in a large cap fund or a growth company in a value portfolio. Overlap creates additional risk by reducing diversification and putting more weight on those companies in higher concentration, therefore creating a greater risk overall.

This may not be always obvious without really digging to find out the level of overlap. One way to avoid it is when we’ve reach a certain level of assets or station in life that merits having an institutional service where our chosen assets managers are using separately managed accounts instead of simply choosing mutual funds. By doing so we can benefits from lower trading costs and more importantly, our asset managers can be aware of any overlap.

2. Interest rate risk or duration risk: Most people assume that Bonds are safe!

Bonds are safe. Right? Well, not always. In order for mutual fund managers to get better returns (higher rates), they may choose fixed income securities with longer durations.This might sound like a reasonable strategy, however when ever there is an upward trend toward higher interest rates, it will create devastating losses in those seemingly “safe” investments.

Investors do not get paid back for the risk involved in buying long-term bonds.

Research shows that over the long term the amount of risk is disproportionate to the expected return. This may be especially true now since the Feds may decide at any time in the near future that the economy has strengthened enough to put a halt to purchasing their own debt and suppressing interest rates, which in turn they hoped with stimulate business growth.

3. Hidden Costs: Broker are required to deliver a prospectus, but unless we read it carefully, it’s very difficult to determine exactly what an investment really costs. If we buy a fund that does a lot of hedging and derivatives, our costs may increase a notch or two. The farther we get from plane Vanilla flavored fund like an S&P 500 Index, the higher the expected costs can rise in order to account for increased research and operational costs. We need to ask whether our expected return is great enough to take on the greater costs involved.

We may find additional hidden costs. According to a 10/1/2010 Wall Street Journal article by Anna Prior quoting a study co-written by Richard Kopke, an economist at the center for Retirement Research at Boston College, trading cost not that are reported in mutual funds expense ratio averaged 0.14% to 2.96%. according to the study, four components added to the cost:

Brokerage commissions, Bid\Ask spreads, Opportunity cost and Market cost impact.

The study looked at the 100 largest stock funds held in defined contributions plans.

Some of us measure value by how much we put in our pocket however the bottom line may not be the only way we should judge value the closer we get to retirement. This is when our need for safety and preservation may outweigh our younger year’s need for accumulation. However how much we gain is still part of the consideration.

4. Taxes: More people can expect to pay more in taxes with the Medicare surtax of 3.8%.

This increases the importance of tax conscience investing.

Investors who participating in actively managed mutual funds might find an expected and unpleasant result when managers who are eager to show wins produce short-term gains regardless of the nature of the fund we choose and we only uncover the true cost when our tax bill is due.

Funds with higher turnover are more likely to produce more short-term gains.

If we are at or near the higher brackets, we may need to be more aware of the consequences or the short term wins since they may create a big (tax) loss.

5. Subjectivity can be a hazardous: Fund managers like us, have biases. They might be looking at the world through a small cap perspective or they may tend to lean toward value investing, but a personal or a professional bias can lead to a skewed result. If all you have in your tool box is a hammer, everything may look to you like a nail. When choosing a mutual fund, we need to be aware of the biases and attitudes that fund managers possess towards stock picking. If we want to have wide diversification and the experts we use see the world in the same way, our portfolio might lack dimension and breadth. This means, we need to be asking questions before investing and make sure the actions of the funds managers match the words or the answers we got.

Risk is unavoidable and it is everywhere. It makes knowing the types of risks that exist and it requires that we have greater understanding in order to help us make informed decisions that are in line with our needs, wants and goals in order to reach our objectives.

Graphic from forbes.com/billharristhesevendeadlyinvestorsins2/7/13

Can the market predict upcoming Up\Down turns?

2014-06-30T09:42:00.000-07:00

Equity markets are anticipatory, meaning they often predict an economic upturn or downturn months before one occurs because investors will buy or sell stocks in anticipation of a move.

The Dow Jones Industrial Average (DJIA) is a popular stock index in the U.S. and it has predicted the last eleven recessions as well as each economic expansion coming out of these downturns.

The DJIA also falls an average of 20% every five years without the economy ever going into a recession, so there are times when the economy and the stock market are out of tune. Equity Markets Anticipate Change.

The worst periods for investment returns have clustered around major economic downturns such as the Great Depression, the high inflationary 1970’s, and most recently the Great Recession in 2008.

Equity markets tend to predict these economic downturns months before they occur because investors will typically sell stocks in anticipation of a move.

The data in Bloomberg published charts support this notion.

The performance of the Dow Jones Industrial Average (DJIA) Index prior to each of the last eleven recessions.

It shows that stocks dropped an average of 8% leading up to the start of every recession since World War II, so it does appear that investors correctly anticipated an economic downturn prior to its arrival.

On the flip side, stocks also tend to move upward prior to the end of an economic downturn in anticipation of the return to future growth.

The data shows that stocks increased by an average of 24% before the end of the last eleven recessions.

Just as the DJIA predicted every recession since World War II, the index also rallied prior to each upturn.

But you simply cannot sit around and wait for the economy to get better when in the midst of a recession. Investors that wait to participate until the economy is fully recovered will miss out on much of the upside in equities.

Equity Markets Aren’t Always Right!

Although equity markets are anticipatory, they are not always right.

In fact, the data shows that we’ve had thirteen instances of the DJIA selling off in excess of a 10% loss (commonly referred to as a “correction” on Wall Street) with no recession in the following twelve months:

It also shows that the market falls an average of 20% every five years without the economy ever going into a recession.

Although stocks are forward looking, they do not always see the economy through a clear lens.

The reason for such inaccuracy is due to the emotional component to the stock market.

Participants often have conflicting goals, time horizons, tolerances for risk and ability to control these emotions.

Therefore, markets can move in directions that do not accurately represent the future path of our economy. Implications for Investors.

Paul Samuelson, one of the most well respected economists in modern history, once famously said:

“Wall Street indexes predicted nine out of the last five recessions”

Sarcasm aside, this statement is quite intuitive because it drives home one of the most important concepts for investors to remember, and that is the economy and the stock market are not the same.

This commentary is not intended as investment advice or an investment recommendation. It is solely the opinion of our investment managers at the time of writing. Nothing in the commentary should be construed as a solicitation to buy or sell securities. Past performance is no indication of future performance. Liquid securities, such as those held within DIAS portfolios, can fall in value.

From an article by Mike Sorrentino, CFA Chief Strategist, Aviance Capital Management

Global Financial Private Capital is an SEC Registered Investment Adviser.

Data quoted from charts courtesy of Bloomberg.

Social Security facts. Is "file and Suspend" right for you?

2014-06-30T09:41:00.002-07:00

"Life wise" thoughts about Social Security file and suspend.

There are at least three types of retirement income available under Social Security.

The workers benefit
The Spousal benefit
The survivor benefit

for the proposes of this post we'll focus only on the workers and spousal benefit.

I'd like to actually write about the item that came under fire recently by The Obama administration who wants to go after the wealthy for "aggressive" moves to "manipulate" their Social Security claiming decisions, according to the fiscal 2015 budget released by the White House earlier this month.
Before 2000, if a worker delayed collection of Social Security benefits, the spouse could not collect spousal benefit nor get "delayed retirement credits", which usually is thought of as being the greater of the individual account amount or half of the spouse's benefit, if it is bigger. someone at "full retirement age" could get to choose between spousal benefit or the workers benefits if bigger.
The individual can also file a "restricted application" and take one or the other benefit while deferring the other benefit.
The reason to defer benefit past normal retirement age would mean that the deferred benefit get cost of living adjustment in addition to growing at 8% per year until age 70 so the worker can get a much bigger monthly Social Security monthly payment at age 70.
In addition the retiree can collect between ages 66 and 70 one half of the a spouse's benefit.
Not a bad deal, if you live long enough, sometimes referred to as "free spousal benefit."
We must remember three things:

it only works if both husband an wife attained full retirement age of 66 or else the younger than full retirement age spouse (say age 62) will be "stuck" with lower benefit permanently.
Spousal benefits do not earn "delayed benefits credits" so they will not get any advantage for them in taking their own worker benefit at age 66 and waiting to age 70 to switch to the "spousal" benefit.
Current law says that a spouse can't claim "spousal" benefit, unless the other spouse claims benefits first, so if the wife for instance wishes to retire and collect benefits and the husband wants to keep working til age 70 it could be an issue.

fortunately as of 2000, a worker is allowed to "file and suspend" benefits once they reach "full retirement age." This permits the spouse to collect "spousal benefits" based on the worker's account while the worker continues to gearn "deferred retirement credits."so under current rules, when a worker arrives at "full retirement age", he or she can file for for benefits and right away suspend the benefits til age 70. Can can than collect the spousal benefits and have the other spouse keep working and have their monthly Social Security benefit account grow til age 70 at 8% per year plus cost of living adjustments. Which means a much larger check at that age, if you live long enough to make it be worth while.

Although it's technically available to anyone, the White House feels that this strategy is being used unfairly by high-income seniors and wants to shut it down because of the added benefit cost it will impose on the Social Security program.
Any change to " file-and-suspend" would require congressional action, so don't expect anything soon. But words like "aggressive" and "manipulate" are unusually strong for a federal budget document, so let's inspect what "file-and-suspend" is about - how it's used and whether it makes sense to eliminate.

Anyone can boost their annual Social Security benefit through delayed filing.
Benefits are calculated by using a formula called the primary insurance amount, or PIA.
Workers who wait to start receiving Social Security until their full retirement age (currently 66) receive 100 percent of PIA while choosing to take benefits at 62, the first year of eligibility, gets 75% of PIA. The higher benefit is enhanced by Social Security's annual cost-of-living adjustment, which would be added back in for any years of delayed filing.

Filing later means higher annual income for life, which can be a wonderful hedge against the risk of running out of money in old age. But it can mean fewer years of benefits depending on longevity. There are several ways to use this feature, but we usually recommend it in order to lifetime benefits for married couples.
Here's how it works: The spouse with the higher PIA - typically the husband will file for benefits at his full retirement age, then immediately would file to suspend payment of those benefits. This will permit the lower PIA spouse to file for spousal benefit, which is equal to half the husband's benefit.
This strategy will get some benefit flowing to the household while the husband continues to accrue higher benefits until he files to start payments as late as age 70. The wife can then convert to her own full benefit.Remember: The wife can only convert to her full benefit if she waits until she is at "full retirement age" of 66 to file for a spousal benefit.
The couple can benefit from higher individual benefits for the rest of their lives. If the husband dies first, the widow gets the survivor benefit, or the higher of the two benefits.
How much can this strategy be worth? Consider an example of of Bob and June, a married couple both turning 66 this year. Filing this year at their "full retirement age", Bob can get a PIA of $2,000, while June collects $1,600 per month. If Bob survives to 83 and June lives to age 95, their cumulative lifetime Social Security benefit will amount to $1,032,384, according to the T. Rowe Price Social Security Benefits Estimator (http://trowe.com/1iwbrKE).
Should Bob "file and suspend", and June immediately files for a spousal benefit, she'll collect $12,000 per year. When they both turn 70, Bob can file to start payments and June may convert to her own full benefit. Their cumulative lifetime benefit would increase by $136,088, to $1,168,472.
More importantly, June would maximize her benefit toward the end of life, when she is most likely to have used up her other resources. Her annual benefit in 2042, at age 94, will be $31,680or $7,360 higher than if she and Bob had simply filed at 66.
Smart enough to collect 50% in additional benefits? Perhaps, however it is completely legal, approved by the United States Congress and signed into law by President Bill Clinton as part of a broader law called the Senior Citizens' Freedom to Work Act of 2000.
The main point of the law was to give people incentives to work longer by allowing them to work and receive full Social Security benefits after they have reached their "full retirement age."
The law's "file and suspend" provision permits married couples to start receiving some benefit to meet their living expenses while they wait in order to collect more later.
The law didn't get much attention until a few years ago, when the media started writing about it.
A growing number of Advisors are recommending this strategy to the families they service. It's also getting exposure through online services that help people maximize benefits.

"File and suspend is still a small phenomenon, and the Social Security Administration doesn't have enough data on its cost to the system's finances, but the Obama administration seems interested in nipping it in the bud and makes the case that benefits flow to wealthy households that need it least.
"These strategies are sometimes marketed by financial advisors to upper-income beneficiaries who can afford to wait until they are older to claim their benefits," a White House official said.
The jury is still out on whether "file and suspend" works only for the wealthy. Research by the Center for Retirement Research at Boston College found that 46 percent of "file and suspend benefit flows to the top 40 percent of households, as measured by wealth. These are the households that are able afford to work with financial advisor, or able to "leave money on the table" while they delay a portion of their benefits by using their own retirement accounts to generate income to meet living expenses.
At the same time, delayed claiming strategies - of any sort - should benefit lower-income households most, since they rely most on Social Security as a source of "replacement income" during retirement.
"It's not just for rich people," says William Meyer, co-founder of Social Security Solutions.com, a fee-based service that helps people maximize benefits. "For many middle-income American couples, it's a great strategy for the highest earner to get the delayed credit as high as possible."
We will see much more debate and discussion on this than a single paragraph in the federal budget - perhaps as part of a broader discussion of Social Security reform before things settle on this issue.

The opinions and information shared are not meant as a recommendation to postpone collecting Social Security benefit or as a recommendation to purchase any service or product and are meant for eduction purposes only. When determining your own Social Security eligibility and filing for benefits you should consult the Social Security administration or a qualified financial advisor.

What you do not know about the IRS One Rollover Per Year Rule may effect you

2014-06-17T10:12:00.002-07:00

I thought this rule is important and may effect many potential rollover seekers.
The text is taken directly from the IRS web site: IRA-One-Rollover-Per-Year-Rule
You may also wish to review the Form-5498 IRA-Contribution-Information

Beginning as early as January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own (Announcement 2014-15). You can, however, continue to make as many trustee-to-trustee transfers between IRAs as you want. You can also make as many rollovers from traditional IRAs to Roth IRAs ("conversions") as you want.

Current law

You don’t have to include in your gross income any amount distributed to you from a traditional IRA if you deposit the amount into another (or the same) traditional IRA within 60 days (Internal Revenue Code Section 408(d)(3)). Under Internal Revenue Code Section 408(d)(3)(B), only one IRA-to-IRA rollover can be made in any 12-month period. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii), published in 1981, and IRS Publication 590, Individual Retirement Arrangements (IRAs) interpret this limitation as applying on an IRA-by-IRA basis, meaning a rollover from one IRA to another would not affect a rollover involving other IRAs of the same individual.

U.S. Tax Court decision

The Tax Court recently held that you can’t make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding 1-year period (Bobrow v. Commissioner, T.C. Memo. 2014-21). Following the holding in this decision means:

you must include in gross income any previously untaxed amounts distributed from an IRA if you made an IRA-to-IRA rollover in the preceding 12 months, and
you may be subject to the 10% early withdrawal tax on the amount you include in gross income.

Additionally, if you pay these amounts into another (or the same) IRA, they may be:

excess contributions, and
taxed at 6% per year as long as they remain in the IRA.

Prospective application

The IRS intends to follow the Tax Court’s interpretation of Internal Revenue Code Section 408(d)(3)(B). However, to give IRA owners and trustees time to adjust, the IRS will delay implementation until January 1, 2015, at the earliest. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii) will be withdrawn and Publication 590 will be revised to reflect the new interpretation.

Only rollovers will be affected

This change won’t affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn’t a rollover (Revenue Ruling 78-406, 1978-2 C.B. 157). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers.

Avoid credit card fraud during your travel

2014-03-31T07:15:00.000-07:00

Things you can do to protect yourself when you are traveling

The travel season is coming, and thieves are preparing for it as much as you are. Don't have your vacation ruined by having your credit cards a stolen. You may not be liable for fraudulent charges made on your card, the hassle factor is not fun, especially if the compromised card is the primary debit or credit card you use.

The good news is that card issuers have systems in place to catch unauthorized use before it happens. Marina Hoffmann Norville, a spokeswoman for American Express says "We have sophisticated monitoring to detect fraud activity, so we do a lot of this on the back end". "We can see a granular level of detail, so we can pick up cards with unusual activity."

You should not however only rely on the card companies to catch fraudulent transactions. You can take a few simple steps before, during and when returning from you your vacation to help protect your personal information.

Minimize the content of your wallet

You do not need to bring all of your credit cards on vacation. It only increases your risk of having one of them lost or stolen. Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling advises to "Unload your wallet. Only take the cards with you that you intend to use".

Choose one card you plan to use for everything during the trip. it is best to choose a card with a high credit limit just in case you have unforeseen expenses, and if traveling overseas, it should be a card with a low or zero percent foreign transaction fees. It may be wise to bring also a backup card. You may not want to bring your debit card, unless you anticipate having to visit ATMs to take out cash.

Have copies made of the cards you bring

Make copies of the front and back of all cards you bring bring with you, and make sure the account number and the toll-free customer service number are legible. If you travel outside the U.S., check if you have the number you can call to reach customer service from outside of the country on the back. If you don't have it, call your credit card company and ask for it. Make two copies. Leave one with a friend or family member, and bring one on your trip.

Adam Levin, chairman and co-founder of Identity Theft 911, suggests bringing digital "copies" if you're tech-savvy. He advises: "I would have a copy of my critical documents that would identify me if money is being wired to me. I would scan in my credit cards, my passport and driver's license. I would scan that into my computer and save it on an encrypted thumb drive".

Make sure to store these in a safe place, but not in the same place as your actual cards, as you would do with paper copies. Levin suggests wearing the thumb drive on a lanyard around your neck, tucked under your shirt.

Contact the issuers and inform them about your travel plans

You want to do this for your convenience as well as for your protection. If you live in Seattle and your credit card company sees charges coming in from Barcelona, they might conclude that your card has been compromised and freeze the account for your protection. This could easily become a huge headache if you're actually in Barcelona.

Alert the card companies with as much detail about your itinerary as possible. Going to Europe? Tell them the countries and cities you'll be visiting and on what dates. If you know your budget, perhaps you should even tell them how much spending you expect to do.

Also inform them of a mobile phone number you can be reached at if something goes wrong, suggests Norville. "For a fraud alert, we'll contact you on the number we have on file. Putting your mobile number as one of the numbers we can contact you is a good idea," she advises. If you'll be traveling in an area where your cellphone doesn't get voice service, you may consider buying a locally compatible phone and give the issuers and your family at home that number.

Set up text alerts when possible

Norville also recommends taking advantage of any type of alerts you can get when on a trip. If you'll be able to receive text messages at your destination, find out what options your credit card company offers as far as text alerts.

Some companies allow you to set an alert that will send you a text message if a purchase over a certain dollar amount is made. You might want to be alerted alerts by email if you plan on bringing a laptop or smartphone.

Norville says alerts can be helpful i sticking to a budget. You can set an alert that will contact you if your balance goes above a certain Dollar amount. When you return, you can stop those alerts as easily as you set them up.

Don't keep all your eggs in the same basket

Keeping everything together is a mistake. Keep your copied account data in a separate location from your credit cards since it doesn't make sense to keep everything in your wallet or handbag. You'll need that info if you get pickpocketed or fall victim to purse snatching.

You may want to bring your "main" card with you and leave the backup card in the in-room safe. John Sileo, a professional speaker and consultant on the topic of ID theft, advises not to leave valuables in a central safe by the hotel's front desk since a large number of hotel employees may have access to it, which can make your information susceptible to theft.

When bringing digital copies of your information, make sure to encrypt the folder or drive in which they're stored, so even if it is stolen or lost, your data can't be accessed.

Periodically check your account

If you access to a computer or a smartphone, you can monitor your accounts from your hotel room or even the pool. Make sure you have a secure Internet connection (have a password to get online) and make sure you recognize your transactions.

Under no circumstances, should you do this at a shared or public computer in a hotel's lobby or business center. "The instances of tracking software on public computers are so high it's like playing Russian roulette," says Sileo. If a public computer is the only option you have, you may be better off calling your issuers to verify that your accounts have not been compromised.

Do not let your cards out of sight

Whenever possible, don't let your credit cards out of your sight. There are many instances where service professionals taking a card to process it and copying the data via a handheld skimmer in the process. Cunningham says "Waiters and waitresses can have skimmers, and all they have to do is run it through and they have your information".

Keeping your card in view may not always be practical, although some establishments may allow you to bring your card up to the front to pay your bill. If you're in a store or market, you may be able to observe the transaction. If you're really concerned, plan to pay in cash. Levin says there's nothing wrong with letting your instinct guide you. If something seems fishy, go elsewhere.

Lastly follow up when returning home

When your vacation is over, monitor your accounts for a while. Professional scammers may not use or sell the numbers they collect right away. Review your statements carefully because thieves will sometimes run a tiny purchase through to see if the card number is still active.

If you think your account may have been compromised, you may want to have the card company cancel the card and issue a new card with a new number. If you do so, remember to update the merchants with which you've set up recurrent billing.

Based on Bankrate article posted on 6/6/2011

Important Steps to follow when creating an Estate Plan

2014-03-25T17:01:00.001-07:00

Having an estate plan—designating what should happen to you and your assets if you should die or become incapacitated—is extremely important in order to meet your financial goals and provide for your loved ones.
I recommend consulting with a financial advisor or an estate planning attorney for assistance in designing a plan that works for your specific circumstances. After all, we are all different and have different needs, wishes and desires.
Here are some of the key steps involved:

1. Take Inventory of What You Own, What You Owe and to whom.
Compile a comprehensive list of your assets and debts, including account numbers and contact information for financial institutions and advisors. Keep this list in a safe place. Include original copies of important documents and don't forget to give a copy to the executor of your will.

2. Make a Contingency Plan. Remember Murphy's law. Any thing that can go wrong, will.
Plan ahead and make provisions to protect your future and your retirement income. Don't forget to include documents that allow your family to handle your affairs if you became incapacitated.
This includes having disability insurance and a strategy to cover potential care-giving expenses.

3. Make arrangements for Children and Dependents. Find a suitable guardian for children under age 18 and provide for dependents who might not be specifically addressed if you plan to leave assets to a current spouse. This might include any children you have from a previous marriage or someone with special needs.

4. Protect Your Assets. Maintain your assets for heirs and your legacy by minimizing expenses, cover estate taxes and outline strategies for transferring or disposing of family owned business, real estate or investment property. Many people use find that using permanent life insurance allows you to leverage your money. Some create different types of trusts for this purpose trusts to handle this.

5. Document Your Wishes in writing. Make certain your wishes can be carried out by creating the necessary legal documents, including an updating your will to dispose of your assets, make sure you have a living will specifying your end-of-life wishes, and powers of attorney for health care and financial matters. Very important step is to confirm beneficiaries for your life insurance policies, retirement accounts and other assets, and ownership of personal possessions such as automobiles and property by making sure they are properly titled. Having your estate as your beneficiary will cause delays and probate costs while having a named beneficiary may avoid hassles.

6. Appoint Fiduciaries. You need to designate someone to act on your behalf as executor of your will, a trustee for your assets, a legal guardian for your dependents and/or power of attorney if you became incapacitated. If not, the courts will have to make that decision for you and it may not be according to your wishes. Do not assume, check with your fiduciaries to make sure they agree to be appointed and remember where you can find your original estate planning documents.
All that preparation is useless if no one knows where those documents are.

Whether you are very young and just starting out or you have accumulated great wealth over a lifetime, an up-to-date estate plan can help you minimize the impact of unexpected events on yourself and on your family by preserving, protecting and helping to manage your estate.
A good financial advisor and an estate planning attorney can provide the required expertise to help you in creating a plan that meets your financial and estate planning goals that can impact you well into the future.

Additional things to consider: Is a trust right for you?
Call an advisor or consult with an estate planning attorney.

Baby Boomer may need to work longer to boost long range retirement security

2013-12-31T10:45:00.001-08:00

Due to the fact that fewer Americans have access to Defined Benefit plans, or pensions, I believe business owners and other employers may make some changes geared toward getting employees to save more - and plan more for retirement over the next few years.

A recent study, sponsored by Transamerica asked industry experts to predict what changes are expected for the next five years.
It seems the biggest change will be in placing more emphasis on retirement readiness, rather than just getting employees to join a plan and to contribute and focusing on actual retirement outcomes. To me it reflects the apprehension I see of many people who come to our workshops. Many feel they are approaching retirement unprepared. This may also the result of the fact that many advisors only focus on accumulation and growing of asset. They mostly work with younger clientele and don't have a lot of experience in planning for the distribution part of retirement.

If not being prepared for retirement is something you're worried about, you are not alone. Many Americans share your concern.

Based on number of studies released this year, less than 15% of employees believe they are prepared for retirement and only 12% of employers believe their employees will be financially ready to retire.

A number of current baby boomers will be unable to retire at what they always considered a "normal" retirement age, what is sometime referred to as Aging Worker Syndrome.
The federal Age Discrimination in Employment Act (ADEA) pretty much ruled out mandatory retirement ages.
Since the recent recession many Americans saw their retirement saving plummet. Some were put into inappropriate asset classes that did not include enough safety measurements. Many who were within a few years from retirement invested large portions of their retirement savings without considering their current station in life.
This is one of the reasons a rising number of older workers may be forced to stay on the job longer.
Than there are those who simply like working, but many need to keep working because they nned the money or the benefits.

One study found that 36% of workers expect to stay on the job past age 65, up from 11% in 1991.

About 25% of workers expect to retire before age 65 - just about half as many as expected to do so in 1991.

Working longer is one of the best ways to boost long-range retirement security. This fact causes Employers to be concerned about productivity issues, higher healthcare costs, and their ability to attract future talent to the business.

Since defined-contribution plans are likely to be the main source of retirement income for many workers, it is probably a good idea to set specific goals for your 401(k) and track your progress and how much you need to be saving to make certain you're on track to meet your retirement goals. You can be the master of your destiny and be able to fund a comfortable retirement...and at the age you wish to retire. If you plan right.

In our practice we recommend that you calculate what your monthly expenses may be at retirement as close as you can, and start preparing plans that can enable you to generate the amount of income you will need on a monthly basis. These plans should include instruments that can be depended on regardless of market conditions. This is especially true if you are within five to ten years of retirement,

Depending on your station in life, risk tolerance, family situation and other variables, you can set aside a portion of your savings and or 401(k) in an instrument that links returns to market performance but isn't invested in the stock market.

Ask your advisor which programs are approved in your state and fit your situation. Make sure you find out about all the features and limitations as some of these programs require a time commitment in order to be beneficial or may have costs associated if you change your mind and decide to do something else.

Another trend you might want to examine may be to incorporate funding a portion of your retirement income through a defined benefit plan partially funded with a life insurance policy.
This may be an especially good way for business owners to set aside larger contributions toward their own retirement although anyone can benefit from it. When done properly, it can potentially reduce the amount of taxes paid by the business.
Contributions to such plans may also be more substantial than the limits permitted by traditional qualified plans guideline and allow you to discriminate when making contributions.

Some studies show certain trends developing:

-Increased professional advisors.
-More Employer provided advisory services similar to ones that have been around for a number of years.
-Expect advisors to encourage participants to consolidate retirement assets, IRA's and 401(k)s to create more accurate picture of readiness.

-Increased automation. Automatic enrollment of new employees has raised participation rates in recent years. The trend may continue and employee enrollment contribution rates may rise as high as 6% from a current average of 3%, which I call: a "good thing".

-More mobile platforms apps. Retirement planning apps copycatting online games, can provide retirement readiness alert messages, and offer access to your plan balance on your mobile devices.

The opinions and information expressed in this post are only meant to be helpful in educating and preparing you for retirement and are not meant as a recommendations to purchase or an offer to sell any product. Whenever considering an investment or making a financial decision, always consult with an appropriate Advisor, legal or tax consultant.

Eli Mizrahi."The Retirement Planning Specialist"

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