Retirement Planning
Sequence of Return Risk By The Numbers
Sequence of return risk refers to the phenomenon by which a few bad years early in a retirement portfolio can cause havoc for the life of the portfolio. Sequence of return risk is only relevant if the portfolio amounts are changed by either an annual addition or withdrawal. Consider the following annual returns: We begin…
Read MoreParts ABCD of Medicare Plans
Medicare was launched in 1965 to provide health insurance coverage for America’s seniors. It has become a very popular program with seniors and insurance companies. Like most government programs, it has grown and become far more expensive than ever envisioned. Roughly 60 million people are insured under Medicare. In this article I will walk you…
Read MoreDefined Benefit Plans for Small Businesses and the Self Employed
Retirement savings plans fall into one of two classifications: defined benefit (DB) plans or defined contribution (DC) plans. Hybrid plans, such as cash balance plans that contain characteristics of both, are considered defined benefit plans. Pension plans and Social Security are two examples of DB plans. Pension plans were once common among larger employers and…
Read MoreESOPs as an Exit Strategy
When a business owner begins to consider an exit strategy, the universe of strategies includes several options: Give the business to the children Sell the business to the children Sell the business to company management Go public Sell to a financial buyer (private equity or private investor) Sell to a strategic buyer (competitor, supplier, or…
Read MoreLife Insurance in Pension Plans Q & A
Life Insurance in a Pension Plan Q. Are unisex rates required when life insurance is bought in a pension plan? Yes, these are required. Unisex rates are the same rates for men and women. Q. Should I ask for an estimate of the economic benefit I will have to realize each year as taxable income?…
Read MoreLongevity Annuities
What are Longevity Annuities? Longevity annuities are a type of deferred fixed annuity. They are specifically designed to provide income guarantees to people who might outlive their savings. These annuities target people approaching retirement. They simplify the process of retirement financial planning by eliminating concerns with a possibly very long lifespan. Longevity annuities target people…
Read MoreOptimizing Your Social Security Benefits
Social Security was signed into law in 1935 to become America’s retirement program of last resort. The original program was an annuity program based on the demographics of the time. Since its founding, the program has been enhanced and modified several times. The country’s demographics have changed. What was once a relatively simple and basic…
Read MoreRetirement Plan Required Minimum Distributions
The US Government has established multiple retirement plans allowing one to save money on a pre-tax basis. Consider a person in the 40% marginal tax bracket (federal and state combined). If someone can move $10,000 from salary to a qualified pre-tax money savings program, this person can save $4,000 in immediate taxes. The money can…
Read MoreReverse Mortgages
Depending upon who one talks to, reverse mortgages are either a way to unlock equity in a retiree’s house or an even worse idea than the worst annuity. Financial planners are rarely ambivalent about reverse mortgages. They have their supporters and their detractors. What is a Reverse Mortgage and How Does It Work? As the…
Read MoreRole of Annuities in Retirement Planning
History The recession of 2000 – 2001 convinced many corporations to eliminate their defined benefit programs for their employees. Declining stock prices, compounded by ERISA requirements that companies catch up with unfunded plan liabilities, devastated company earnings, and valuations. The shift from defined benefit programs to defined contribution shifted the risks of retirement income, longevity,…
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