Thursday, March 21st, 2013 | | |
Here are some statistics that should give you some concern. According to a new report from the Employee Benefit Research Institute (EBRI), almost one in five elderly American households outspent their income by more than 50% in 2009 and some (14%) outspent their income by more than 175%. Those most vulnerable were singles, households with no pensions, African-Americans and Hispanics.
This should be a heads-up that you need to pay attention to your financial situation and start taking personal financial responsibility. Do you really want to depend on Social Security and family for your retirement?
The EBRI report showed that Social Security remains the primary source of income for all adults over the age of 65. In 2009, households ages 65 – 74 and households with members over 85 received 54% and 66% of their total household incomes, respectively, from Social Security.
According to the report, elderly Americans rely more on social security as they age. For households that had members ages 65 – 69 in 2001, the share of household income derived from Social Security rose from 47% in 2001 to almost 60% in 2009.
How many years do you have until retirement? Have you reviewed your investment and retirement plans? Are you adjusting your spending to allow more savings for your Golden Years? Have you looked at all your alternatives and reviewed these with your agent or financial advisor? Do you have adequate life insurance to protect your spouse if you die too soon and don’t have time to complete your plans?
The time to take personal financial responsibility is now. Call your agent of financial advisor today. Don’t put off until tomorrow what you need to do today!
Tuesday, March 19th, 2013 | | |
When Brittney was 20, her mom passed away from a pulmonary embolism. When she died, she had only $300 in the bank, and no life insurance.
In an instant, Brittney had to become a mother to her two younger sisters and the family’s sole breadwinner, all while continuing her college studies. “I work full time, and I go to school full time, and I take care of my sisters full time,” she says.
Watch her moving story.
But this struggle has not stopped Brittney from working to achieve her dream. With the help of a $10,000 scholarship from the LIFE Lessons Scholarship Program, she is able to continue her studies to get a Bachelor of Science in social work.
Brittney says, “My dream for the future is … help people who are in similar situation like me. … I’m going to be the first one in my family to graduate college. I always wanted to make my mom proud and do it for her.”
This year the LIFE Lessons Scholarship Program will be awarding 24 scholarships totaling $125,000.
So, if you’re a student who is struggling like Brittney, having lost a parent who had little or no life insurance, check out the application process for this year’s program.
Or if you are a reader who knows of a young adult who could use this assistance, please pass along the link to the application: www.lifehappens.org/scholarship.
But please hurry, as the deadline is March 31, 2013.
Thursday, March 14th, 2013 | | |
If you are a business owner, the business you’ve built is your pride and joy, and most likely your source of income. So it’s critical to think about the future of your business—one that doesn’t include you.
You might think that if you die, your family could maintain their income by running the business themselves or by hiring someone to handle the day-to-day management. The fact is, your loved ones may not have the skills or the desire for the job, and your co-owners may not welcome the idea of an unintended partner.
That’s why a buy-sell agreement is important to consider. This is a legal agreement among owners to buy a deceased owner’s share of the business at a previously agreed upon price.
There are four ways to fund a buy-sell plan at an owner’s death. They include:
1. Cash method: The purchaser(s) could accumulate sufficient cash to buy the business interest at the owner’s death. Unfortunately, it could take many years to save the necessary funds, while the full amount may be needed in just a few months or years.
2. Installment method: The purchase price could be paid in installments after the owner’s death. For the purchaser(s), this could mean a drain on business income for years. In addition, payments to the surviving family would be dependent on future business performance after the owner’s death.
3. Loan method: Assuming that the new owner(s) could obtain a business loan, borrowing the purchase price requires that future business income be used to repay the loan PLUS interest.
4. Insured method: Only life insurance can guarantee that the cash needed to complete the sale will be available exactly when needed at the owner’s death, assuming that the business has been accurately valued.
With a properly structured buy-sell agreement funded with life insurance, your business partners won’t have to scramble to come up with the money to buy out your share of the business and you’ll be guaranteed that your survivors will be compensated fairly and promptly.
This issue is important enough that you should talk to your advisor today about how you can start the process to implement this important strategy.
Monday, March 11th, 2013 | | |
People routinely insure their valuable assets, but many do not insure their ability to generate income. During your working years, your most valuable asset is often the ability to work and generate income.
The two main risks to being able to generate income are premature death and disability. You can insure yourself against the impact of these risks.
Life insurance can replace your income if you die too soon, while disability income insurance can replace income lost due to illness or accidental injuries that keeps you from working.
When planning for retirement, your most valuable asset may be the savings from which you will generate a lifetime of retirement income. But there are three significant risks to being able to generate that income:
- longevity risk (living too long)
- market uncertainty (market risk and fluctuations)
- an extended period of low interest rates such as we are currently experiencing
The impact of these three risks can be severe, and retirees can find themselves with a substantial income shortfall should their assets be exhausted too early in their retirement.
The good news, however, is that you can help protect yourself against the impact of these kinds of risks as well. Guaranteed lifetime income products (annuities) can provide this protection, and, like other types of insurance, they can also help provide peace of mind.
While goals and needs may change over your lifetime, income can be—and should be—protected at every step along the way.
Wednesday, March 6th, 2013 | | |
What would happen if you suffered a catastrophic medical event, such as a stroke or an accident that leaves you unable to communicate. How would you “have a say” about the type of care you receive—or don’t receive. The answer is an advance directive.
Every adult should plan ahead by completing an advance directive that specifies his or her personal preferences regarding what are acceptable and unacceptable medical treatments. There are two types of advance directives:
A living will: This legal document states your preferences regarding the type of medical care or treatment you want to receive (or don’t) in different scenarios if you are incapacitated and cannot communicate.
Medical power of attorney: Also known as a durable power of attorney for health care or a health care proxy, a medical power of attorney names another person, such as your spouse, daughter or son, to make medical decisions for you if you are no longer able to make medical decisions for yourself, or you are unable to communicate your preferences. Note that a medical power of attorney is not the same as a power of attorney, which gives another person the authority to act on your behalf on matters you specify, such as handling your financial affairs.
Here are some important points to remember:
- Each state regulates advance directives differently. As a result, you may wish to involve an attorney in the preparation of your advance directive
- You can modify, update or cancel an advance directive at any time, in accordance with state law.
- If you spend a good deal of time in several states, you may want to have an advance directive for each state.
- Make sure that the person you name to act for you—your health care proxy—has current copies of your advance directive.
- Give a copy of your advance directive to your physician and, if appropriate, your long-term care facility.
Be sure to contact your agent or financial advisor for more information.