According to Jeff Diercks, Managing Director, “the emX Pro platform allows us to do two things.  First provide our clients with a world-class digital wealth portal where they can see their financial lives and holdings in one place and that is updated continuously.”

“Secondly it provides a world class financial planning platform, whereby, we can use that updated client information to make real-time financial decisions with the client, including looking a various scenarios and their chances of success on the fly.”

“This is yet another powerful tool that allows us to serve our clients better and allows them to have access to world class technology anywhere and on any device they choose to use,”  continued Jeff Diercks.

InTrust Advisors hopes to have this tool rolled out to all its clients by the end of the current quarter.

This popular exclusion lets a taxpayer give to charity directly from their IRA, treat the distribution as part of their Required Minimum Distribution for the year and avoid tax on that distribution.

The downside is you don’t get an itemized deduction for the charitable gift and you cannot receive anything in return for the gift from the charity as quid pro quo for your contribution.

There are a few other restrictions such as the gift cannot go to a donor advised fund, private foundation or supporting organization.  Also you cannot make the gift from a Simplified Employee Plan (SEP) or a Savings Incentive Match Plan for Employees (SIMPLE plan) if an employer contribution was made that year.

Who is this be best for?

Anyone who wants to give cash to a charity.

What would possibly work better?

The only one we could think of was a gift of appreciated property whereby you avoided the capital gain on the gift to charity.

For more information, check out this article on Forbes/Personal Finance.

According to Jeff Diercks, Managing Director, “ModestSpark provides an integrated wealth reporting, document management and digital service platform for our clients that integrates with our existing portfolio management system.”

He went on to say “ModestSpark is very visual, integrated and powerful.  It allows our clients to view their account and performance information on the go and from any desktop, handheld or mobile device.”

“We are very excited to roll out this client reporting enhancement.  This is just the first of two client portals we will be releasing in Q1 2016.”

In a perfect world, returns would always be up and returns would be highly stable.

As I like to joke, “I can’t wait to go to Heaven someday where markets always go up for advisors.”  Unfortunately, this earth is not heaven and we must deal with the realities that markets don’t always go up as expected and where volatility of investment returns is the norm.

So with that in mind, here are Three things to ponder when you review your investment statements this month:

First, focus on your goals, not your returns.  Your long-term goals are why you invest in the first place so focus on whether you are progressing towards those goals and not on whether you kept up with the S&P 500 or NASDAQ Indexes.

Second, realize that being diversified can actually hurt your returns in some markets.  This is one of those markets where being diversified is actually hurting investors as a narrow group of stocks are really driving most returns for the major indexes.

However, also realize when a narrow group of stocks is driving market returns this is not healthy and this usually signals we are in the final innings of this up move for the market.  In the future, you will be glad to be diversified as those who chased performance in these few stocks get their heads handed to them.

Third, not all ways of managing money do well all the time.  Institutional investors know this and therefore include differing styles of money management in their portfolios.

As an example, actively managed portfolios have struggled with the Central Bankers’ constant intervention in the market.  The danger is that you start chasing investment strategies that rely on Central Banks continuing to intervene in the markets only to see them exhaust their monetary tools or even back away from their support.

It’s not easy to make money today!  Patience and a long-term focus is required.  However, if you can stay the course, you will be rewarded!

Please let us know if we can help you stay focused on the goal.  We offer a free Second Opinion if you think you may be off course.

Courtesy www.patientnavigatortraining.org

In this post, I am going to suggest three ways to manage the risk of living longer and the strain it puts on financial assets while in retirement. So let’s get started!

1) Off-load the Risk of Living To Long

So how can you do this?  Simple, there are literally dozens of insurance companies that will trade your check for a guaranteed stream of income for life.

But Jeff, you say, can’t I do better with these assets if I manage them myself.  To which I say maybe.

However, study after study has shown the biggest risk is out living your assets.  Wouldn’t you rather release that risk to an insurer who has a whole pool of persons to work with which gives them a definitive advantage over you trying to do this yourself.

The pool guarantees that some annuitants will die earlier and some will live longer than expected.  The mortality credit (funds saved) from those annuitants who die early pay for the guarantees that allow the person living longer to continue to receive a annuity payment.

You cannot do this with your assets and certainly if you mess up the distribution of your assets, you could be in a world of hurt.

2) Tie Up The Biggest Cost Risks

We mentioned longevity risk, but do you know what the number two risk in retirement is?  Would it shock you to know that medical and long-term care expenses are the number two risk in retirement?

Now the medical risk at present is pretty well covered by Medicare, Medicaid or your private health insurance.  However, the cost of Long-term care is not covered at all unless you were previously in the hospital and discharged to a nursing home in most cases.  It still only covers these costs for a limited number of days.

The biggest health care related threat of increased longevity is long-term care costs.  So why not cover the risk the way you do other risks, like your car or house, with insurance?

Yes, pure long-term care insurance can be costly, but today’s linked products can serve multiple purposes without the cost.  Linked products basically take a life or annuity policy and add riders to reimburse the costs of a terminal, critical or chronic illness out of the annuity value or the ultimate death benefit for the life policy.

Most Americans have life insurance of some kind.  So this is really a different way of using what you may already have.

3) Make Money by Managing Investment Risk

Another big threat to your retirement is investment risk.

It is ok to make big gains, but this usually means you are also carrying a big risk of loss.  It’s the big losses can kill your planning, especially if you are close or in retirement.

Let’s say that as you hit retirement with your magic number for retirement of $1,000,000 in equity investments.  The next year, the stock market goes into a 40% bear market.  Your retirement plans just took a 40% hit.  That is too risk much to bear.

So how do you manage this risk?

First, diversify your assets and holdings.  I would say this includes converting some assets to guaranteed income streams as I suggested previously.

Second, diversify the way your remaining marketable assets are managed.  This is not just holding bonds and stocks and maybe other asset classes, although this is a good start.

No, this is diversifying the way some of your money is managed.  Some passively using a buy and hold philosophy and some actively managed using strategies like trend following that tend to be non-correlated to the stock markets.  (See our post Five Ways to Diversify Your Investment Risk for more information.

This should produce smoother returns and maybe higher returns over complete market cycles.  It will also allow you something that is priceless….peace of mind!

There you have it!  Our three ways to manage the risk of living longer.

If you need help managing longevity risk, please feel free to reach out to us for a free consultation.

Today Americans are more obsessed than ever with living longer.  There are billion dollar industries devoted to nothing but making you look younger and more shapely.  Medical advances have also allowed us to actually live longer, while looking better longer.

According to the Census Bureau, the U.S. average life expectancy at birth increased 62% from 47.3 years in 1902 to 76.8 in 2000, with expectations it will reach 79.5 in 2020.

Think about your family or friends, I bet you know someone in their nineties or maybe even hundreds? This longevity is both a blessing and, quite frankly, a curse when it comes to planning your financial future.

How can living longer be a curse?

The concept of retirement was originally cast where you would live a limited number of years in retirement.  The risks therefore of outliving your resources were in theory less.

Now if you retire and, as many Americans do at age 62 (early), you live to age 100.  This means you could spend as many years in retirement as you did working.  The length of retirement today puts a real strain on the retirement funds of all but the upper class.

This is why those commercials on TV about your number in retirement reflect such big numbers.

Courtesy of ING Financial

So what if your number is not so big?

Well if you are like most American’s your number is certainly not that big!

According to the Bloomberg and National Institute on Retirement Security analysis of 2013 Consumer Survey of Finances, most American’s have actually saved a small fraction of those big numbers (see chart).

This study showed the Average American approaching retirement had only about $104,000 towards retirement.

Thankfully, there is Social Security or there would be a lot of starving retirees!

So going full circle, living longer equals longevity risk.  Longevity risk is defined as the potential risk attached to the increasing life expectancy of pensioners and policy holders.

Longevity risk equals the potential you run out of assets before you run out of breath!

So what are some possible ways to manage this risk in your planning?

I will discuss a few in our next blog post.  So stay tuned!

Quite frankly if it were not for trillions of dollars in U.S. government stimulus whatever growth we did see in the economy and the markets would be non-existent.  As it is the markets seem detached from  the realities of a sputtering job market and economy.  Certainly not a time for great confidence if you are a student of history!

So how can a prudent investor protect themselves?  Here are five easy steps to diversify your investment risk and sleeping better no matter what happens:

Step #1 – Diversify

Never has this concept been more important than today.  With uncertainty everywhere it is more prudent than ever to spread your investments around and diversify.

Tip – No one knows the future so diversify by putting some assets in many different buckets.  Put some funds in permanent insurance, some in the markets and some in hard assets like gold or silver.

Step #2 – Diversify by Strategy, Not Just Assets

Some investment strategies do better in tough markets, while others do best in good markets.  It is important today to have some of each in your portfolio so that you can realize smoother returns regardless of the market’s direction.

Tip – Many asset class correlations will all rise to 100% when the next market event occurs.  Make sure you have investments in non-correlated investment strategies that have a proven track record of being excellent performers in bad markets, such as a managed futures or equity trend followers.   Along with more traditional buy and hold investment strategies these managed futures and equity trend following strategies will help smooth and increase returns over complete market cycles of 5-7 years.

Step #3 – Get Some Guaranteed Money

Here is an idea!  Diversify your source of funds with guaranteed money.   This does three things 1) it provides another basket of diversity, 2) it guarantees you funds even if you live a very long time (called longevity risk) and 3) provides an opportunity for you to tie in long-term care planning with these funds.

Tip – Did you know that with improvements in medical technology people are living much longer.  Many believe that within the next 10 years it will become common to live to 100 years.  If American’s continue to retire in their 60s, this is a lot of non-productive years for your investments to support.  The best way to hedge your bet on this longevity risk is to off-load some of this risk on the insurers through guaranteed annuities.  Best of all many of today’s annuities will also allow you to use the proceeds of the annuity to cover long-term care costs without taxation on the profits earned in the policy.  Annuities are definitely something that should be in your portfolio today!

Step #4 – Get Hard!

No, not what you are thinking!

What I mean is it is important to have some of your assets in things you can actually touch and feel.  You know the type of assets I mean, the type that when you drop them on your foot, they hurt.

So I am talking real estate, gold, silver, farm land, etc..

Why?  Again we are looking to diversify risk and the risk is that the Federal Reserve gets it wrong and we end up with hyper-inflation or a crash in our currency (or global currencies) down the road.

Tip – If you are not in retirement, sweep the dividends and interest from your taxable investment account(s) and dollar cost average into a stash of gold and/or silver coins or bullion.  A good rule of thumb is that these assets should be no more than 5-10% of your overall investment portfolio value.

Step #5 – Put Your Treasure Where Your Heart Is!

This step is primarily for those of faith, but it can apply to anyone.  The bible says to store your treasures in Heaven where neither moth, rust or crooks can get to it (my paraphrase).  This principle applies now in multiple ways 1) it is a good time to give to your favorite charity; 2) it is also a great time to pass along inheritance to your kids or family who have a much longer time horizon.

Tip – Consider giving appreciated stock or mutual funds to your favorite charity today at historical market highs.  You will get a charitable deduction for the fair market value of the gift and avoid the tax on the appreciation.  Now that is win / win!

We then discussed the new Asia Infrastructure Investment Bank (AIIB) and why this was just the latest sign that the U.S. dollar’s rein as the current reserve currency might be coming to an end.

In part two of this article, I would like to layout a few ways that the loss of the U.S. reserve currency might effect you.

First, as you can tell from part one of this article, losing our reserve currency status, whether overnight or over time, is going to change things here in the U.S. These changes could include a substantial reduction in government services, price increases in items we use every day, rising public sector unemployment and tax increases to cover the cost of available government services.

Second, all the above consequences will likely have a negative effect on both equity and bond prices. Thankfully for many of you, our investment solutions are all about downside protection, which is sometimes easy to overlook in the current bubble market.

Third, we could experience temporary dislocations as news of these consequences becomes main stream or is reflected in our daily lives. These dislocations could result in runs on banks, food and water shortages, a spike in the value of hard assets (such as gold and silver) and maybe even civil unrest.

As a result, I would suggest that you consider preparing for this eventuality and hope (and pray) it is not necessary.

So here are a few questions that you may want to consider asking yourselves and a possible solution for each:

What if cash is not available as a result of an overnight announcement or sudden global reserve change? Answer – have some cash on hand at your house or in your personal safe (not in the bank’s safe).

What if there is some civil unrest? Answer – you may want to consider some form of protection for you and your family.

What if there is a temporary food shortage? Answer – prepare by stocking up on some staples so you have an extra 10-30 days of food. Don’t forget to store some water as well.

What if the price of gold and silver spikes? Answer – make sure you have some gold and silver coins as part of your overall investment allocation. I recommend up to 5% of your total allocation. These gold and silver coins may become the only accepted form of currency during this possible dislocation.

I could go on and on with “what ifs,” but the idea here is not to be an alarmist. It is not to ask you all to become survivalists. It is purely to warn, educate and suggest you take some basic actions in the event the worst case scenario unfolds.

If you desire to educate yourself further on what this change may mean to us as Americans. I would suggest that you read Jim Rickard’s book, The Death of Money, as a starting point.

Our course, we are also happy to talk with you further about this possible eventuality if you want to call our offices. 

We also have investment solutions that we believe can help you weather the investment side of this possible scenario.

So why is this happening?

It is the massive amount of debt being generated by the U.S.  and other developed countries around the world, which you can see below.

Country Debt to GDP Ratios

Courtesy Wikipedia

Let me start with a little history before I isolate the developing problem and some possible solutions that I believe you should consider. Throughout the advent of modern money, there have been world powers whose currency has functioned as a de facto “reserve” currency for world or regional trade. The reason for this is it allowed for trade in a common currency and in a perceived hard or safe-haven currency. It is really the equivalent of all nations on earth speaking the same language with regard to trade by picking the language that is the most dependable and easily spoken as the common language.

The advantage of being the reserve currency is that the reserve nation can purchase imports and borrow across borders more cheaply than people in other nations because they don’t need to exchange their currency to do so. The U.S. dollar has been that de facto reserve currency since the end of World War II. We were not the first and will not be the last, but as economist Avinash Persaud, once said “reserve currencies come and go.”

This is evidenced by the fact that such reserve currencies have included the Chinese Liang and Greek drachma, coined in the fifth century B.C., the silver punch-marked coins of fourth century India, the Roman denarii, the Byzantine solidus and Islamic dinar of the middle-ages, the Venetian ducat of the Renaissance, the seventeenth century Dutch guilder and of course, more recently, the pound sterling and now the U.S. dollar. However, the U.S. currency’s reserve status is under attack due to our burgeoning debt levels and it is only a matter of time till we have a much smaller role in global trade.

You don’t have to search the news very hard to find headlines like these:

The most recent attack is the development of the Asia Infrastructure Investment Bank (AIIB) whose stated purpose is to finance infrastructure projects in the Asia region. However, the AIIB is regarded by some as a rival for the IMF, the World Bank and the Asian Development Bank (ADB), which are regarded as dominated by developed countries like the United States. In other words, this bank is meant to continue the process of moving away from the U.S. dollar as a major trade currency. The AIIB members now include not just China and Russia, but some 40+ member countries including recent members, the U.K. and Australia (our staunchest allies).

The U.S., of course, is opposed to the AAIB. The U.S. reaction to the AIIB is typical of a country that is losing its grip on their reserve currency status. They attempt to hold power by any means necessary. What the rest of the world sees is a currency that is no longer stable and a safe haven. You may not remember this, but at one point prior to 1971 you could actually exchange your dollars for fixed amount of gold. In 1971 we completely dropped the so called “gold standard” and allowed our currency to float without any kind of hard asset backing. This historically has led to what we have today, which is a lack of fiscal discipline and rising debt levels. Watch what Dr. Paul Craig Roberts, former Assistant Secretary of the Treasury, has to say on the possible End of the U.S. Dollar on an interview on InfoWars.com.

If the U.S. loses its reserve currency status, it will have substantial consequences.

First, we will not have a global market to absorb our excess dollars. This means that we will either need to get our fiscal house in order or the excess currency creation will likely result in inflation here at home. Rising inflation may drive costs higher almost overnight, causing shortages and runaway price increases.

Second, our cost of borrowing will almost certainly rise. This will mean higher interest rates for all of us and a greater share of the federal budget devoted to debt service and interest costs.

Third, my guess is that we do not have the resources to pay higher interest costs, let alone repay our debt to other countries. So we really have three courses of action should we lose our reserve currency status: First, we could try to inflate our debt away through continued currency creation. This effectively makes those debts worth less in inflated dollar terms. Second, we could default on our debt. Finally, we could revalue our currency, which would essentially be a combination of the first two options. No matter which of these options is ultimately chosen, it could drive everyday costs higher, isolate us from the rest of the world and could require us to make some very tough and painful fiscal choices.

Fourth, when past reserve currency nations grappled with the issues we now face, it many times ended in global war. This consequence may have the highest probability this time around as the issues of excess debt and poor fiscal policy are not unique to the U.S., but is rampant throughout the developed world.

Losing the reserve status obviously has some significant consequences for us as a country, but here is how it may affect you.   In part two of this article, I will go into how it may affect you and how you can possibly take action to prepare for the short-term fall out that may occur if the dollar does lose its reserve currency status.

In early retirement this is really not too big a cost, but as one ages and lives longer, this cost becomes a bigger and bigger part of the pie.

As an example, Medicare may cover a substantial portion of the retirees medical costs, but the cost of supplement insurance and non-covered prescriptions continues to rise and at a rate much higher than the reported inflation rate.

Then there is the cost of long-term care!  This is something that Medicare does not cover except for short periods following a hospital stay.

I don’t know how many couples tell me that they have good genes and will never need such care.  However the statistics tell us otherwise!

Did you know that more than 3 in 10 Americans will need some sort of care in a nursing home between age 65 and 70, but that number increases to more than 6 in 10 as Americans approach age 85, according caregiver.org.

So a married couple has a better than average chance that one or both of those persons will need nursing care!  At more than $225 per day on average for skilled nursing care in Florida (over $82,000 per annum per SeniorHomes.com)…..that is a big cost!

The average person who needs nursing home care stays for over 2 and a half years.  That is the average person!  Your stay could be shorter or much longer and costly.

Are you starting to see that this cost can be substantial and you have no control over its need since its all in the genes.

So what can you do about it?

The bad news is stand alone long-term care policies have become very expensive and there are fewer and fewer insurers who are providing this coverage.

The good news is that insurers have found new and innovative ways to provide for this coverage in ways that are much more affordable.

This month, I would like to tell you about one way that I think is as close as one can get to having your cake and eating it too.

The Solution

So many Americans have saved for retirement using annuities.  Annuities provide tax deferred build up of principal and earnings, which is great for accumulating retirement funds.  The problem is that when you withdrawal the funds, the earnings are taxable.

What would you say if I told you that they did not need to be taxable?

Sound good?

Well let me explain.

I mentioned above that more than 6 in 10 Americans were going to need nursing cares (i.e. long-term care).  This cost is a certainty for most couples.

Instead of paying for those costs with after tax dollars wouldn’t it make sense to pay for them with tax deferred dollars from the annuity?

Good news, now you can!  The Pension Protection Act of 2006 opened the door to just that.

Imagine doing a tax free exchange of your current annuity for an annuity that will grow in value, pay your long-term care costs if necessary and then payout the remaining annuity value to you or your heirs.

Imaging paying for 20-40% of your long-term care costs on Uncle Sam’s dime!  That is exactly what happens with this solution!

Plus you get to leverage your annuity value by 2x or more to pay for those continuing costs beyond the value of the annuity assets.

Sound good!

Yes, but there must be a catch you say!

The only catch is your annuity likely will not grow as fast as a traditional annuity or it’s value may just tread water due to the cost of such coverage imbedded in the annuity.

My suggestion is just exchange enough of your current annuity to cover a reasonable amount of those projected costs.  Leave the rest in your annuity until such time as you need it.

The bottom line is this is a simple way to get the long-term coverage you need.  Save a few tax dollars and pay for long-term care cost with pre-tax dollars.   Plus if you never utilize the coverage you or your heirs have access to the tax deferred value.

In my mind, this is certainly getting your cake and eating it too! 

Let us know how we can help you with this by giving us a call.