National Save for Retirement Week

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It’s National Save for Retirement week! Along with life insurance, disability, and long-term care plans, we are also in the business of retirement plans. I want to take this moment and highlight some resources we have available for you regarding retirement plans.

For more information on what we do to help you with your retirement goals, go here.

We also have some great calculators on our website. They include:

We also have economic newsletters and just came out with 2014’s Q3 newsletter.

Lastly, I just read an article on USA Today that discusses how middle-class adults have $20K saved for retirement. They list the findings of a new study that was conducted by Harris Poll for Wells Fargo.

Take this moment to think about whether you’re doing enough to prepare for your retirement.

September is Life Insurance Awareness Month

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Did you know that September is Life Insurance Awareness Month?  This 2013 survey by Nationwide Financial showed that 98% of Americans of who are married, partnered, or have dependents have less than adequate life insurance.  The study found that while many people had some life insurance, the coverage was generally insufficient to replace their income over the long term.

We encourage you to take this opportunity to examine whether you and your clients have enough life insurance coverage to ensure financial security for loved ones.

Please contact any of us here at Greenberg, Wexler & Eig, LLC to assist with your insurance “check-up.”

Long-Term Care Insurance… Does It Pay?

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YES.

Last year, long-term care insurance companies paid nearly $7.5 billion in claims to 273,000 individuals. Total payments increase by 13% over the prior year and the number of claims increased by 3.4%. Over 7,000,000 Americans own a long-term care policy. Approximately 70% of claims begin in the insured’s home or an assisted living facility. “Today a long-term care policy is really a nursing home avoidance policy.”

Contact Keith Eig for more information on long-term care insurance and if it’s right for you.

Planning Retirement in a Rising Tax Environment

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Francis J. Lojewski wrote an article for The Wealth Channel® Magazine’s Spring 2014 edition titled, “Planning Retirement in a Rising Tax Environment“. In his article, Frank discusses challenges that retirees face and steps that may prove helpful for your clients and practice. The actual article seen from The Wealth Channel® can be found here.

Francis is a partner of Atlas Advisory Group, LLC, an M Member Firm.

60 is the new 40

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The other day, a friend of mine said, “Don’t you know that 60 is the new 40?” Well, if that’s true – and I hope it is – then there is good news and bad news. The good news, of course, is that we can look forward to enjoying active lifestyles for a longer period of time. The bad news is, if we’re going to live longer, how will we pay for “stuff” if we outlive our retirement savings???

Now – and I mean right now – is the time to focus on increasing wealth through tax-saving strategies and maximizing qualified retirement plan savings. And guess what? They go together.

If you are a business owner, partner in a firm or tax advisor, listen up! There are three things you can adopt today that can really have a significant impact on the success of your qualified retirement account above and beyond a traditional 401k plan. And thus, increase the odds of having a successful outcome to secure your lifestyle through retirement.

First – make sure your current 401k plan is running at maximum efficiency. Are you able to put away every dime you can up to the limit? Or are you restricted by low employee participation?

Second – think about using flexible profit sharing plans that allow you to put money into your retirement account even if other partners or colleagues don’t share your retirement goals. Your retirement contribution wagon does not need to be hitched to theirs!

Third – use a defined benefit or cash balance plan to supercharge your retirement account. This will allow you to stockpile significant, tax-deductible, contributions today for use in retirement.

Contact Greenberg, Wexler & Eig today to see how we can help you develop a successful retirement outcome. The success of your future is our business today.

This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intednded to replace the advice of a qualified attorney, tax advisor or plan provider.

Attention To Detail

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In today’s post, I would like to focus on a contractual provision of term life insurance contracts. In today’s marketplace most of the major carrier’s term insurance contracts have a contractual provision called the “conversion option”. In its simplest form, this provision allows the policy owner to exchange his/ her term life policy for some form of permanent life insurance coverage without medical evidence of insurability.

The consideration is that not all conversion options are created equally and their language can differ substantially. The following are things that we consider when comparing contracts:

1. How many years / what age you may convert the contract to permanent coverage

2. What types of permanent coverage you are allowed to convert to in the carrier’s portfolio of products

For example, certain carriers only permit you to convert for the first ten years of the policy, some carriers for the full length of the term, while others may restrict the conversion to a specific age (such as 65 or age 70).

While these differences seem subtle at the onset of policy during the purchasing phase of the process, for longer term planning and flexibility, they can prove to be quite substantial.

We at Greenberg, Wexler, & Eig take pride in paying attention to the details for our clients. Contact us today to find out more information about converting your existing term life policy.

Personal Financial Security – Life Insurance As A Risk Management Tool

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This is part 1 of a series discussing life insurance as personal financial security. You can find part 2 here.

 

The primary purpose of life insurance is the transfer of financial risk of death to a life insurance company in exchange for premium payments.  This is simple in concept.  However, life insurance products, contract forms and how they are designed for use are deceptively complicated.

In the simplest of terms, there are two type of life insurance policy forms: temporary coverage called term life insurance and permanent coverage.

  • Term life insurance is coverage that pays a death claim if you die during the term of coverage.  For example a 10 year term policy provides coverage for 10 years and terminates at the end of 10 years.  Term coverage does not accrue any cash value.
  • Permanent life insurance pays a death when you die.  It also accumulates cash value.

The first planning tenant for personal financial security is “it is more important to have the right amount of life insurance than the right kind of life insurance.”   For personal financial security, the amount of life insurance is determined by quantifying objectives for final expenses, paying off debts, educating children, replacing lost wages and family members with special needs.  Then liquid assets are deducted from the quantified objectives and the gap is filled with life insurance.  This gap is frequently filled with term life insurance on the theory that over a long period of time debts get paid off, children complete their education; wealth is created by savings, investments, retirement plans and business interests.

Over time, if enough wealth is accumulated then the family may have sufficient resources to self-insure their financial security and the need to life insurance may become superfluous.  However, if the accumulated wealth is insufficient, then it would be prudent to continue life insurance coverage (more on coverage continuation options later).

Please contact David Wexler, CLU, ChFC, AEP to find out more about planning for Personal Financial Security

Personal Financial Security – Life Insurance As A Long-Term Asset Class

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This is part 2 of a series. View part 1 here.

 

As tax rates on individuals and trusts increase, people are looking to life insurance as a tax preferred asset accumulation vehicle.

Life insurance is treated differently than other asset classes for tax purposes.  Some of the tax treatment advantages include:

  • the annual increase in cash value is income tax deferred
  • a withdrawal of cash value is tax free up to basis
  • policy loans are generally income tax free
  • the death benefit is income tax free

Depending on the type of policy it is possible to do a tax free exchange of the accumulated cash value for an annuity that provides lifetime income.

Determining the best design and most suitable product for a client’s objectives is a process.  For those looking to shield investments from current taxation or for a non-qualified vehicle to accumulate supplemental retirement income, life insurance may be worth looking at.

Please contact David Wexler, CLU, ChFC, AEP to find out more about planning for Personal Financial Security.

Do you rent or own your life insurance?

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Let’s take a look at the two basic types of life insurance.
 

YOU’RE A RENTER

 if you have a term insurance policy. Term insurance, such as level premium tern insurance, provides temporary coverage for a specific period of time (i.e., 20 years) and only offers death benefit protection. There is no cash value component. Premiums for term insurance coverage are initially lower than permanent insurance for the same amount of permanent coverage, so it is popular for families or new businesses.
 

YOU’RE AN OWNER

 if you have a permanent insurance policy. Permanent insurance, such as Whole Life and Universal Life, offters lifetime protection, which means that your beneficiaries will receive a death benfit when you die, not if you die. Permanent life insurance usually has a cash value accumulation component that can be used to offset future premiums, act as a personal or corporate sinking fund, or help out when life throws you a financial curveball.
 
In the end, life insurance is simply a financial tool to help you build the best plan for your family and/or business. Many people find that a combination of both permanent and term coverage helps provide the insurance protection and asset accumulation they need, at a price they can afford. Just remember, it is more important to have the right amountof insurance than the right type.

For more information on renting or owning your life insurance, contact us at info@gwellc.com or reach out to Scott Greenberg.

Making good decisions for retirement

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Baby Boomers are retiring every day and have important decisions to make.  Last year, the Government Accountability Office (GAO) offered two pieces of advice for retirees:

1. Delay the age when you elect to start receiving Social Security payments

Most people should avoid the temptation to begin payments early. While it may be tempting to start receiving Social Security payments early, you are most likely to receive a greater lifetime income if you wait until your full retirement age. Statistically if you live 12 years of more after you retire, delaying payments would make sense. Remember that Social Security does not provide enough income for most retirees so it is important to accumulate assets in other plans (i.e., IRAs and employer sponsored plans).

2. Convert your cash-balance defined benefit pension into a lifetime income annuity rather than take a lump-sum payment upon retirement

Only one third of Americans are covered by a defined benefit plan.  The rest are accumulating assets in a retirement plan and will receive a lump sum distribution.  Of course, even if an employer retirement plan only offers a lump-sum payment, retirees can go to an insurance company and buy their own annuity. However, statistics show that most retirees who are required to put in the effort themselves to find an annuity do not do so.  Converting at least a portion of a lump-sum retirement-plan payout into a lifetime income annuity may substantially increase the odds of achieving a comfortable retirement.

You can read the full article about the GEO report here.