Helping to Secure Your Estate in an Insecure Market

The current Administration is looking for ways to reduce the Federal deficit and is currently targeting the Estate Tax and Life Settlements among other insurance-based planning tools.  The deficit reduction package could turn the Federal estate tax clock back to 2009. 


This recent proposal could impact life insurance through two provisions: 


“One is supposed to raise $1 billion over 10 years by keeping buyers of life insurance policies from avoiding income taxes on the death benefits.


Another provision, which is supposed to raise $5 billion, would modify the dividends-received deduction for life insurance companies’ separate accounts.” 1

Understanding the role of life insurance in estate planning is critical as the U.S. continues to experience major changes in its Federal Tax policies.  Life insurance protects your family’s lifestyle in the event of your passing through the creation of an immediate tax-free estate and can also act as an excellent estate planning device.  The value for the policy owner is more peace of mind in knowing that the death of the insured will not create financial hardship and/or that his/her estate will remain intact. 


(CLICK HERE for detail in a September 19, 2011 National Underwriter article.)

(CLICK HERE to read a September 20, 2011 article in the Wall Street Journal on this topic.)


The provisions noted above would allow for more taxation of Americans’ financial and retirement assets.  Though it is uncertain if the proposal will pass legislation, it is critical to evaluate the role life insurance can play as an estate planning vehicle and to assess the potential impact of taxation on your estate if the proposed legislation passes.   


NOW is the time to meet with an experienced and knowledgeable insurance producer or advisor who understands the complexities of estate taxation and who can provide insights on the various types life insurance products available to help plan your retirement.  Through the use of appropriate strategies and solutions, you and your beneficiaries could pay significantly less in taxes and maintain more peace of mind even in the current economic environment.


If it’s been more than 12 months since you last had a tax reduction analysis completed, we strongly encourage you to schedule one now.  While current legislation is out of your hands, your estate and your wishes of what is to be done with it are still within your control.   


This material has been prepared for informational purposes only.  It is not intended to provide legal, accounting or tax advice. You are encouraged to consult a tax professional specializing in these areas regarding the applicability of this information to your situation.  If you are not currently affiliated with a tax professional, simply contact us today as we would be happy to recommend an individual for these services. 

1 Accessed Sept. 23, 2011.



Eurozone Bank Fears Assuaged – For Now

Last Thursday, September 15, 2011 the European Central Bank (ECB) announced its intent – through a joint effort with the Federal Reserve Bank, the Bank of England, the Bank of Japan and the Swiss National Bank – to provide US dollars to European banks. This will help beleaguered banks continue operations and lending efforts with adequate liquidity, and temporarily subdue the ongoing threat of defaults in the euro region.


The news of the last two debt packages the ECU granted Greece, Ireland and Portugal created concern among US financial institutions and, in particular, money market fund managers. Reaction against potential overexposure to the European financial institutions bankrolling these countries’ debt led to a sell-off, further exacerbating the ECB’s liquidity issues.


The announcement calls for three separate loan auctions by year end (October 12, November 9 and December 7, 2011) for US dollars at a fixed rate for up to three months, allowing banks to purchase up to the amount of collateral they possess. The goal is to provide banks in the region with liquidity through the end of 2011.

(CLICK HERE for more details at, September 15, 2011)
(CLICK HERE for analysis of the Euro debt situation at, September 14, 2011)

This aid to European banks is a relatively low-cost instrument in the Fed’s tool chest that can also help enable US companies operating overseas to receive loans from the local banks. The move is largely considered a short-term measure, serving to calm global markets and buy the ECB – comprised of about 15 different legislative parliaments – time to properly address and agree on a longer-term solution.


Initially, there was a cautious wait-and-see sentiment among financial analysts. The fact that these banks united to take pre-emptive action is perceived as a positive sign, although no one seems to be under the impression it would carry significant impact any further than the end of the year. One analyst pointed out that past government stimulus efforts (i.e., US quantitative easing) also provided only temporary relief.


At issue is the fact that globally, growth is slowing down even further, making it difficult to produce real earnings. This is a tough environment to actually make money and create long-term solutions. However, as the coordinated central bank action indicates, perhaps for now it’s simply enough to demonstrate a united front to ward off worse case scenarios.

(CLICK HERE for analyst reaction to ECB announcement,, September 15, 2011)

Please feel free to contact us if you have specific concerns about exposure to European financial institutions.1  We’re happy to discuss alternative options which may be better suited for your goals and risk tolerance.

1Not intended to give tax, accounting or legal advice. Please consult with those professionals to discuss the impact on your unique situation.



A Quick Reflection on the Summer of 2011

As we near the first day of autumn (on September 23rd), we thought we’d take the opportunity to reflect – both on the events of these past few months as well as a few “fun facts” about our economy in general.  Some of these may surprise you!

The S&P 500 © was down 8.9% (total return) for the 3 summer months of June-July-August 2011.  The stock index has been negative on a total return basis during the 3 summer months in 4 of the last 5 years.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market.
(Source: Behind the Numbers Research. 2011.     

The S&P 500 has been negative on a total return basis during 4 of the 8 months YTD through 8/31/11.  No calendar year has had more than 4 down months since 2008 when 8 of the 12 months were negative.
(Source: Behind the Numbers Research. 2011.     

5 of the 10 largest corporations in the USA (based upon 2010 sales) are involved either in the auto industry or the oil industry.
 (Source: Fortune

The national average price of a gallon of gasoline finished last month (8/31/11) at $3.617 a gallon – a drop of 16.3 cents a gallon during the 3 summer months of June, July and August.
(Source: AAA. 2011.  

Since every 1 cent decrease in the price of gasoline saves Americans $3.4 million a day, the 16.3 cents a gallon decrease during the 3 summer months of 2011 is equal to a daily gas expenditure decrease of $55.4 million for U.S. consumers as of 9/01/11 when compared to 6/01/11.
(Source: AAA. 2011.  

REAL ESTATE – The average single-family home nationwide peaked in value on 6/30/07 but has dropped by 19% from that maximum value as of 6/30/11.
(Source: Office of Federal Housing Enterprise Oversight. 2011.   

A family with before-tax income of at least $100,000 that had a newborn in 2010 will spend $377,000 (in 2010 dollars) to raise that child through age 17 (i.e., not including the cost of college).  After including the impact of inflation, the 17-year cost rises to $477,000.
(Source: U.S. Department of Agriculture. 2011.   

The unemployment rate in the USA as of 8/31/11 was 9.1%.  The last time the national unemployment rate was less than 7% was 11/30/08.  The highest unemployment rate ever in the country was 24.9% in 1933.
(Source: U.S. Department of Labor. 2011.   



Retirement: A Taxing Endeavor for the Unprepared

Much of the recent debt ceiling controversy has centered around Republicans’ desire not to increase taxes, but a simple glance at our growing debt would lead any sound-minded individual to anticipate the necessity for tax increases in the years to come.

In what’s been regarded by many as a “stealth tax hike” approach, the White House has proposed the notion that once taxpayers exceed a given level of earnings (Ex. $200,000), they would start forfeiting the value of the various deductions they currently enjoy according to existing tax law. The deductions could include IRS Form 1040 line items such as:

·         Personal exemptions

·         Deductions for charitable contributions

·         Deductions for state taxes paid

·         Possibly even deductions for spouse and children

(CLICK HERE for more detail in a July 11, 2011 Wall Street Journal article on this very topic.)
(CLICK HERE for “3 Stealth Tax Traps” featured on July 22, 2011.)

In addition, there is talk of health insurance benefits becoming taxable on your tax return and capital gains being eliminated, forcing individuals to pay ordinary income tax on all earnings on investments.  Should these possibilities come to pass and not be “enough,” many believe taxes will have to rise.

(CLICK HERE for a look at “Why Taxes Will Rise in the End” – an article published July 12, 2011 in The New York Times.)

What does all of this really mean for you and your loved ones?  It means that, just as with many other financial areas during this time of volatility and uncertainty, the time to take any necessary corrective action is NOW.  With proper solutions and strategy in place, you and your beneficiaries could ultimately owe significantly less in taxes – regardless of what the overall tax environment does in the future – than you are currently positioned to pay. 

In retirement, perhaps more than any other stage of life, those adjustments truly matter.  If it’s been more than 12 months since you last had a tax reduction analysis completed, we strongly encourage you to schedule one now.  While you can’t control what taxes will do in the future, you can ensure you’re as prepared as possible for whatever is to come.

This material has been prepared for informational purposes only.  It is not intended to provide accounting or tax advice. You are encouraged to consult a tax professional specializing in these areas regarding the applicability of this information to your situation.  If you are not currently affiliated with a tax professional, simply contact us today as we would be happy to recommend an individual for these services. 



So What’s Ahead for Our Economy?

Few would argue that economy is unstable.  Is the sky is falling? Not last time we checked, but there has never been a time like the present to take inventory, prepare and ensure you have a sound financial strategy for the road ahead.
1 “Federal Budget (2011 and 2012) – Obama and Ryan Budget Plans. NY Times. August 24, 2011.

If you’ve never visited it, CLICK HERE to check out  This website features a “clock” showing our government’s current budget – roughly $3.6 trillion.  In just a decade’s time, that would equate to $36 trillion, assuming, of course, that we don’t increase spending.  (With Social Security, Medicare and Medicaid for Baby Boomers all looming in the wings, the likelihood of our country NOT increasing spending seems slim to none.)

You’ll notice the Debt Clock also indicates Federal Tax Revenue of roughly $2.2 trillion per year – $22 trillion over the next decade if nothing were to change.  Let’s assume, for the sake of illustration, no major changes, as Congress has repeatedly voiced their desire not to raise taxes, our economy continues to struggle, and unemployment remains an issue for millions of Americans.

Let’s stop and consider the math.  Over the next decade, $36 trillion in ballpark spending with $22 trillion in projected revenue would leave a shortfall of roughly $14 trillion.  Even with this month’s proposed $4 trillion budget cuts over the next 10 years1, we’re looking at the very real possibility of adding another $10 to $15 trillion in debt on top of the $14.5 trillion we already owe.  (By the way, if it’s difficult to wrap your mind around the $14.5 trillion we already owe as a nation, CLICK HERE to have that number quickly put into perspective.)  In the very near future, a quarter of our nation’s budget could be used to pay interest on our debt – an alarming reality to face.

What does all of this mean?  While we certainly don’t claim to hold a crystal ball (be cautious of anyone claiming he or she does), some of the signs need no fortune teller for interpretation.  The short to medium-range outlook holds all indication of significant volatility – a roller coaster we simply don’t want our clients enduring. 

If you, your family members or friends would like a complimentary second opinion on your current financial strategy, we urge you to contact our office today.  While no one can predict exactly what the road ahead will look like, we feel certain it will be a bumpy ride for those who’ve failed to prepare.  Please don’t let that be you.



Putting the Numbers Into Perspective

Each year, the U.S. Congress sets a federal budget in the trillions of dollars. Very few individuals, ourselves included, can really wrap their minds around just much money that truly is, so we’ve broken down the 2011 federal budget into relatively simple terms to help us all gain a little added perspective1:

  • U.S. Income:                $ 2,170,000,000,000
  • Federal Budget:            $ 3,820,000,000,000
  • New Debt:                   $ 1,650,000,000,000
  • National Debt:             $14,271,000,000,000
  • Recent Budget Cut:      $38,500,000,000 (roughly 1% of the overall budget)

It often helps to reduce these numbers down into figures we can actually relate to. Let’s remove eight zeros from the figures above and pretend this is the household budget for “the fictitious Jones family.”

  • Total annual income for the Jones family: $21,700 
  • Amount of money the Jones family spent: $38,200  
  • Amount of new debt tacked onto the Jones family credit card: $16,500  
  • Outstanding balance on the credit card: $142,710
  • Amount cut from the budget: $385

So, in effect, last month the Jones family sat down at the kitchen table and agreed to cut $385 from its annual budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending? Some may say it’s a start.  None would argue it’s a solution. 

Now after years of this, the Jones family has $142,710 of debt on its credit card (the equivalent of the national debt).  You might think the Jones family would recognize and address this situation, but it doesn’t, and neither has Congress. 

With the enormity of debt facing our nation and the uncertainty surrounding the future of programs such as Social Security and Medicare, there has never been a more important time to create a sound financial strategy for the days ahead.  We say it time and time again to our valued clients, but even in the midst of such volatile economic times, some things can still be certain.  You can still put solutions in place to help ensure that your retirement income is secure, lasts throughout your lifetime and helps protect you against future inflation and rising healthcare expenses.

If you or anyone you know would like to visit about putting such solutions in place, simply give us a call today!  We may not be able to depend on Congress to right the financial wrongs of the country, but we can put strategies and solutions in place to help ensure YOU are protected – regardless of what’s to come!

1 Office of Management and Budget. August 1, 2011.


2008 All Over Again?

It’s filled the headlines and taken the “breaking news” slot on every major media outlet over the past week.  Enormous drops on Wall Street have millions of Americans, especially those nearing or currently in retirement, wondering if they’re facing a “Groundhog Day” scenario after already suffering significant losses just 3 years ago.

With unprecedented uncertainty like this facing retirees and soon-to-be’s around the country, the stance (and pulse) at our firm remains unchanged.  As we’ve said for many years now, we don’t believe that our clients’ way of life in retirement should hinge upon factors far beyond their control.  While others in our field may propose various timing strategies or pursue aggressive financial approaches to recoup from previous losses, we continue to stay the course to help you lay a foundation of guaranteed retirement income solutions.1

If you’ve already taken advantage of these strategies with us, then you know the real value of this reassurance in times like these.  While many have been glued to TV watching the Dow lose 10 percent in a matter of days2, wondering where it will stop and how it will impact their plans for retirement, those with sound, guaranteed retirement income1 solutions in place can truly breathe more easily. 

A few months ago, we published findings from a recent poll conducted by  A few of the most telling?

  • 44% of Baby Boomers surveyed aren’t sure they’ll have enough to retire
  • 25% feel they will not see the day they can retire
  • Only 11% of people feel deeply confident that they can retire comfortably

As we’ve likely said a thousand times, retirement doesn’t have to be this time of worry and apprehension about what’s ahead.  Even with the past week in our economy, you can still enjoy more economic certainty, and if you, your family or your friends would like to take advantage of a complimentary consultation to help create a more bulletproof financial future, we’ re just a phone call away!

1 Insurance and annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer.
2 “Dow Tumbles 513 Points, Putting It in Red for Year. Wall Street Journal. August. 5, 2011.
3Source: Associated Press – Poll,, April 5, 2011.



Protecting Yourself While On Summer Vacation

Heading on vacation yet this summer? Many of our clients have postponed trips, hoping to “beat the heat” later in the season.  With much of the country suffering from record-breaking temps, many have literally found it dangerous to travel.  Unfortunately, there’s another danger lurking around the corner for vacationers – the possibility of identity theft while away from home.

You can greatly reduce your risk by following these five simple tips:

1. Don’t “broadcast” your travel plans to others on various social networking sites such as Facebook or Twitter. While you may be excited about your upcoming plans, it’s best to wait until you return to post pictures or update friends regarding your adventures.  Sites such as Facebook often have virtually unlimited connections, and the last thing you want to do is invite a stranger to invade your home while you are gone, potentially leading to identity theft or other losses.

2. Be sure to put a hold on your daily newspaper and mail. Allowing these to pile up is always a sure-fire way to let others know you’re away for an extended time, serving as a perfect invitation for mail theft or home invasion.  The local post office can easily freeze delivery with a written request, and the newspaper can generally accept a similar request by phone.

3. No hoarding when packing for vacation.  If you’re not going to need it, don’t bring it because thieves can’t steal what you don’t have. Only bring the credit cards you plan to use, leave your Social Security card at home, and most importantly, make copies of the front and back of all cards and information in your wallet (keeping those copies in another safe place).  If you should lose your wallet or have it stolen, these copies will allow you to instantly notify the necessary parties to cancel cards, etc.

4. Be cautious of Wi-Fi internet.  While wildly popular and advertised as a nice perk at thousands of hotels, bookstores and coffee shops around the country, free Wi-Fi often means your information is being transmitted over open airwaves, making it relatively easy for an uninvited parties to intercept it. Look for stickers or signs indicating a Wi-Fi Protected Access (WPA) network, which provides greater protection for your information.

5. Don’t trust hotel staff.  Every year, we hear reports of clients who’ve had information taken because it was simply left out in their unattended hotel room. Use the hotel safe rather than just trusting your belongings out in the room, and if the room’s safe isn’t sufficient, request  secured storage from the hotel management in a main safe or other secure holding location.

If you’re sneaking in a vacation yet this summer, have a great time, stay cool and stay safe!  We look forward to hearing of your travels when we see you next!




Insurance Riders-What Are They and Why All The Hype?

When jumping from a plane 12,000 feet above the earth’s surface, every skydiver packs a main parachute as well as a reserve.  In other words—the typical safety feature, plus a backup – just in case.

In the world of insurance products, that ‘reserve chute’ is often referred to as rider. In a very high level explanation, insurance riders simply extend coverage beyond the standard coverage offered in a policy and protect you from risks which concern you enough to spend the added premium to purchase this additional protection. 

In many cases, consumers have been led by the media to believe that they’re generally better off paying for expenses out of pocket rather than paying for additional riders.  Consider a parallel for a moment: you buy a $600 dollar TV at most major retailers, and you’re instantly offered the “extended warranty” for another $200.  While those warranties, when purchased, may save the day on occasion, in the larger picture, many consumers believe the retailer always wins, raking in millions from the sales of warranties which are never used.   

In the case of insurance riders, the same could be surmised, but be careful.  As we all know, things happen, and when they do, the best reassurance you may have could be the insurance rider you’ve purchased.

So which insurance riders are worth your dollars?  Here’s a quick look at a few common riders that can be
well worth considering.

Guaranteed Insurability:
A guaranteed insurability rider on a life insurance policy offers you, the insured, the right to purchase additional life insurance at a future date without having to prove continued insurability (ie. without another physical exam).  As an example, a Guaranteed Insurability rider might allow you to buy additional coverage every five years.  This can be a tremendous benefit to those who’ve incurred health circumstances after initially being insured.  It’s often said that “it’s your health that actually buys life insurance,” and a Guaranteed Insurability rider may be worth considering (often at a cost of an additional10-15% of your premium1) if you have significant concerns about future health issues or are in a high-risk group for a condition which would render you uninsurable.  (Note that with many insurance carriers, such a rider only guarantees your right to buy additional coverage until you reach a certain age, so be sure you understand the stipulations of your particular contract.)

Long-Term Care:
We’ve all seen the costs of Long-Term Care in this country skyrocket.  The national median rate for a private room in a skilled nursing facility is now over $213 per day – that’s over $77K a year.  A single bedroom residence in an assisted living facility?  Nearly $40K per year on average.2 Given such high costs, many look to Long Term Care Insurance (LTCI), only to determine that it’s awfully expensive, too, for coverage one may or may not use.  A popular alternative?  More affordable Long-Term Care riders available on many of today’s life insurance and annuity products.  These ‘backup chutes’ may allow you to use the death benefit from your contract to cover long-term care expenses in the event you incur them. Depending on the particular product and rider, the Long-Term Care benefit may even exceed your policy’s death benefit – providing much more reasonably priced reassurance for the days ahead.

The bottom line?  When it comes to your financial security, the best coverage or contract is generally the one that’s in place to meet your specific needs when you need it.3 We’re passionate about helping our valued clients find such potential solutions.  We feel your financial future is far too important to simply pull the cord and cross your fingers.  If you’d like to schedule a complimentary consultation to review your circumstances as well as the most current riders available, simply contact us today!

1 “Insurance Riders: When to Say Yes to Extra Protection.” May 31, 2011.
2  Genworth 2011 Cost of C
are Survey. 2011.

3  Insurance and annuity Insurance and annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurance company


Smaller Raises on the Horizon for Seniors

Generally speaking, since Social Security’s inception in 1939, as inflation has risen, the checks received by American retirees have grown with modest increases to help keep pace.  However, with the national debt reaching its ceiling in mid-May of this year and belts tightening all over Capitol Hill, new deficit reduction strategies may have those “raises” leaving a lot to be desired.

Lawmakers are considering a change to the manner in which inflation is calculated, opting to tie it to the “chained consumer price index.”  The result?  A measurement that would undoubtedly leave inflation appearing slower than the current metric which, in turn, would result in smaller increases for seniors.1

“Seniors cannot afford this,” says Mary Johnson, a senior policy analyst at The Senior Citizens League, a non-profit seniors rights advocate organization. “This would negatively impact not just seniors, but also many families that end up helping out these seniors financially.”

Roughly 60% of the nation’s seniors rely on Social Security for at least half of their income in retirement.  To these individuals, any reduction in raises to offset inflation is noteworthy.  If the new calculation method was to pass, the average retiree would see roughly $18,000 less in benefits over a typical 25 years benefit span.  After just 10 years under this new system, a 73-year old could expect benefits roughly 3% less than if calculated under the “old system.”2  

What does all of this really mean?  First, it’s further evidence that the “road to financial recovery” for the U.S. government (and many of her tax-paying citizens and seniors) will be a long one.  Such proposed debt reduction measures by Congress might take decades to have any noticeable effect on our overall deficit.  More importantly for many approaching or currently enjoying retirement is the reality that preparation for financial certainty in retirement is a burden one must carry for him or herself.  Virtually obsolete are the days of the traditional company pension.  Uncertain at best is the future of Social Security – a leg of retirement income many have planned to rely upon. 

The good news buried amidst all of this?  While little on Wall Street or Capitol Hill or the nightly news may seem stable, your financial future still can be more stable.  While Congress contemplates measures to reduce raises to offset inflation, you can still leverage financial solutions (including fixed or fixed index annuities as part of a well-rounded financial approach) which not only help protect every dime of principal and guarantee* income you can’t outlive but offer opportunities for raises in retirement income as well. 

Whether you’re planning to rely heavily on Social Security in retirement or simply use it to augment other primary income sources, the fact remains – you need a sound retirement income strategy.  The best time to find out if you’re on the right path?  Right now.   If you’d like to receive a complimentary Retirement Income Analysis, simply contact our office today!  Your financial future is far too important to leave to chance – let us help you get where you’d like to go!

1 “As the Federal Government Hits Its Debt Limit, Lawmakers Spar Over Solution.” New York Times.
May 16, 2011.
2 “Coming Soon: Smaller Raises for Seniors?” Smart Money. July 15, 2011.
*Guarantees subject to the financial strength and claims paying ability of the issuing insurer.