Viewing posts categorised under: %s
07Aug
Should I Name Individuals or a Trust as the Beneficiary of My Qualified Retirement Plan/IRA?
Investing

As opposed to leaving money outright to an individual, many of you have asked us regarding whether you should designate a revocable living trust as a beneficiary of an IRA.

While this is a legal question as opposed to a financial planning question, I do want to offer reasons why people may choose one or the other beneficiary designations.  Please note that I am referencing an article called “Designating a Trust as an IRA Beneficiary” written by Brian Dobbis, Director, Retirement Solutions for Lord Abbett, May 11, 2018.

  1. Because qualified retirement plans and IRAs are typically not subject to probate because of the beneficiary designations, many individuals simply choose to leave these qualified assets to their heirs outright.  With proper use of the beneficiary designation, you do not need to use a trust to have a qualified asset bypass probate.
  2. The primary reason for naming a trust over an individual as the beneficiary of an IRA or qualified plan is to provide post-death control over the assets.  This means that the individual or individuals named as the beneficiary of the trust do not have total control over the asset.  Rather, the terms of the trust control the distribution of the asset and/or its earnings.

If you choose to use a trust as the beneficiary for qualified assets, here are a few key points for your consideration:

  • Confirm with your attorney that the trust qualifies as a “look-through” or “see-through” trust.
  • Talk with your tax advisor or estate attorney regarding the income tax implications of using a trust versus an individual as beneficiary.
  • Be sure that trust documentation is provided to the IRA custodian no later than October 31 of the year following the IRA owner’s death.

Please note that the trustee of the trust is responsible for overseeing and implementing the terms of the trust.  Therefore, another key decision has to do with who you choose to name as trustee.I hope this provides some helpful information for those of you who are considering changing beneficiaries for your existing retirement plans or IRAs as well as for those of you who are naming beneficiaries within the near future.

 

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Read More
25Jun
How to Plug 3 Retirement Leaks
Retirement

As more people flock to low-fee funds and inexpensive investment advice — including robo-advisors and target-date funds — investors need to be mindful that there are other potential leaks in their portfolios. “There are a lot of inefficiencies in money management, and in fact, those inefficiencies collectively are actually much more
impactful on your long-term financial health than the fees that you pay for financial products,” says Matt Fellowes, CEO and founder of Washington, D.C. based investment advisory United Income.

In a report published earlier this year, Fellowes and his colleagues noted that while investment management costs for retail investors have dropped by more than 50% over the past 35 years, the benefits of lower prices may be undermined by other costs that aren’t tied to fees. They include taxes, mismanagement of Social Security, and subpar investment returns.

United Income found — after analyzing 62 different retirement solutions and more than 26,000 potential combinations of future market returns — that reducing these portfolio leaks generated seven times more wealth in retirement for a typical retiree than would saving 1 percentage point on investment management fees.

Put another way: Investors who plug these other leaks have a 42% better chance of generating enough money for retirement than those who focus exclusively on minimizing fees.

Here are some of the biggest leaks retirement savers need to plug.

Read More
12Jan
The Psychology of Change
Issues of Aging

Credit for many of the ideas shared in this blog goes to Whitney Johnson. Johnson was interviewed for the January 2018 Insurance NewsNet Magazine. Her thoughts appear in an article called “The Success Curve of Disruption.”

Johnson states that one of the reasons it’s so hard for people to deal with disruption/change is because it seems very unpredictable at a very basic level. Johnson sites work done by Everett Rogers in 1962. Rogers created “the S-curve” to gauge how quickly an innovation would be adopted. Johnson believes that S-curve is valid today and has pointed out seven steps that anyone can take to deal successfully with change in our lives.

Here’s a brief comment on each of the seven steps:

  1. Take the right risks: This is an essential and fundamental step to mastering change.
  2. Play to your distinctive strengths: focus most of your time and energy on what you naturally do well that other people around you do not do well.
  3. Embrace constraints: people are successful not despite, but because of, their constraints. The law of physics says that we need friction. We must have friction to climb a mountain, to drive a car, and to climb the “S-Curve of Change”.
  4. Battle entitlement: rather than getting too comfortable with our current situation, a key question to ask ourselves is, “what could I be doing differently?” By doing, we choose to create necessary and desirable change in our lives.
  5. Step back to grow: Johnson suggests that “a way to get ourselves to step back to grow is to recognize that there really is no such thing as standing still. If we’re not moving forward, we’re actually moving backward.”
  6. Give failure its due: we must get rid of the shame that we sometimes feel when things don’t work out, because when we allow a mistake to become a referendum on us, our identity-the core of who we are-that’s when we lose. It’s the feeling of shame that limits change. Johnson suggests that “it’s shame that limits moving forward; it’s actually not failure.”
  7. Be discovery driven: this is the willingness to take a step forward, gather feedback, and adapt.

Now, for the good news… Johnson says that we do not need to master each one of these seven steps to be successful. Rather, she says discover which of the seven attributes/attitudes you do naturally and well. Then, “lean into using them when it comes to change.”

If you would enjoy knowing more about this topic, please consider Whitney Johnson’s book, Disrupt Yourself.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Read More
26Dec
Inflation Risk & Impact on Retirement Assets – Part 2 of 2
Economy

This is the second part of a two-part blog on inflation. May I encourage you to read Part One if you have not yet done so?

What is the Primary Risk of Inflation?

The primary risk in inflation is that you lose purchasing power over time.  Therefore, this is a topic we choose to emphasize and thoroughly explain to clients and their families.

Here are some examples I hope you will find interesting:

Year   What $1 buys                                          Money Supply*

1907     1 pair patent leather shoes                       $7 Billion

1913      1 Woman’s house dress                            $13 Billion

1930     16 Cans of Campbell’s Soup                    $46 Billion

1940     20 Bottles of Coca Cola                            $55 Billion

1960     2 Movie Tickets                                       $211 Billion

1987     1 Bottle Heinz Ketchup                             $1,560 Billion

2000    1 Wendy’s Hamburger                              $4,917 Billion

2010     1 Song on iTunes                                 $13,291 Billion

 

* the total amount of money in circulation or in existence in the U.S.

(Source: Jeff Desjardins Visual Capitalist 4-9-2017)

Retirement assets need to increase in value beyond inflation levels.  Those retirement assets need to last 18.8 years for a 65-year old male and 21.2 years for a 65-year old female.  (Source:superlike.com)

Of course, these are average life spans…. What does this mean for the person or couple who live into their 90’s?

Planning for longevity and the increased cost of health care is critical.  The assumptions made for inflation and portfolio return have a huge impact on planning outcomes.  If you do not yet have a retirement plan in place, please make it a priority.  The peace of mind and sense of security a plan provides is priceless.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Read More
15Dec
Inflation Ahead: Beware! – Part 1 of 2
Economy

One of the observations I have from creating projections for funding future goals such as college or retirement is that it is often very hard for clients to understand the impact of inflation. So, I decided to write a two-part blog about inflation. Part One covers the causes of/and multiple definitions for inflation. Part Two discusses the risk and impact of inflation, because we are living longer.

What causes inflation?

There are several possible answers.  The recent damage caused by Hurricanes Harvey and Irma and California wild fires results in higher prices because there is a temporary shortage of goods.  Therefore, prices are bid up as people compete to obtain what they need.  Fortunately, these situations are temporary.  Inflation is also caused when businesses purposefully restrict supply thereby artificially raising prices.  This happened in the 1970’s when OPEC agreed to limit oil production in an effort to increase oil prices.

The primary cause of inflation is an increase in the money supply.  You have probably heard the phrase, “Too much money chasing too few goods and services increases prices.”

What is the difference between inflation and the Consumer Price Index (CPI)?

The CPI is an index… or “a number used to measure change”.  It measures the change in prices paid by consumers for goods and services.  It reflects the spending patterns of urban wage earners, consumers and clerical workers.  Interestingly, the CPI does not include the spending habits of people living in rural (non-metropolitan) areas, people in the Armed Forces, and anyone incarcerated or a patient in a mental institution. (Source:InflationData.com)

Price Inflation (what we simply call inflation) is the “percentage increase in the price of the basket of goods and services over a specific period of time”.

The key to this definition is knowing what is in the “basket” that is being measured.

Interestingly, it is “all items less food and energy”.  This means the basket includes goods and services such as transportation, medical care, vehicles, clothing, and housing.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Read More
24May
What the Worldwide Aging Population Means for Women: Part 3
Health Care Costs

The first two parts of this blog provided the information supporting the fact that women face an unfair disadvantage in terms of planning for a successful retirement.

If you’ve not yet read parts one and two of this blog, please take a few moments to do so.

Here are the action steps that women can take to help prepare themselves for healthcare and retirement costs.

  1. Tell your story and expect to be heard and honored. You and your planning needs are unique.  You deserve the opportunity to “share your story as well as your hopes, fears and dreams”.

Regardless of your current life experience and financial knowledge, you deserve to be listened to without judgment.

You deserve to have all of your questions answered honestly and completely.

You deserve transparency around fees, commissions, and any other form of advisor compensation.

  1. Create a plan and follow it. Again, this is “your plan”.  It needs to be designed specifically for you to get you from “where you are to where you want to be”.
  1. Invest with appropriate risk level. Again, your investment portfolio needs to be designed specifically for you and what it is you want to accomplish.
  1. If you are of a pre-retirement age, be prepared to save aggressively to meet your goals.
  1. If you are already retired, then the allocation of your investment portfolio may be even more critical because you may no longer have the capacity to continue to save to reach your retirement goals.
  1. Be sure you understand how programs such as Social Security, Medicare, and employer-sponsored retirement plans can best be coordinated for maximum results.
  1. Consider products such as life insurance with long-term care riders, products that are designed to create guaranteed lifetime income in retirement, products that are designed to create income tax savings, and anything else that may be appropriate to help you reach financial peace of mind.
  1. Once your plan is in place, be sure to continue with annual conversations with your team of advisors.

As you can see, planning done well is complex and involves the integration of both programs, products and planning.

Do you remember the old Greyhound bus slogan, “Go Greyhound and Leave the Driving to Us”? 

It is suggested that the new slogan might be “Keep Texting and Leave the Driving to Us!”

Whether you find yourself familiar with the first slogan or relate more to the new slogan, we invite you to a conversation at Resonate.  Regardless of your age, our motto is to help you define and discover what Richness of Life means to you.  Then, it is our job to help create the pathway for you to experience this desired destination.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

 

Read More
19May
What the Worldwide Aging Population Means for Women: Part 2
Health Care Costs

In the first part of this three-part blog, we talked about why the U.S. demographics of an aging society present more of a challenge for women than for men.

Here are some additional thoughts for your consideration:

In part one, we suggested that the fact that women still tend to outlive men by 3 to 5 years definitely contributes to the financial challenges that women face in retirement.

Here is a chart that supports that information:

The second reason that women face an uneven challenge is because we still experience a disadvantage in the work place.  In addition to the fact that women are still more likely than men to leave the workforce intermittently, we also know that women are more likely to hold lower- wage and part-time jobs, both of which are detrimental to funding future retirement.

So what can women do about this?  That will be the focus of part three in this series.

If you’ve already read enough, please contact us now.  Otherwise, please be sure to read part three.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Read More
11May
What the Worldwide Aging Population Means for Women: Part 1
Health Care Costs

In his annual letter to shareholders, BlackRock’s Larry Fink shares these thoughts on April 10, 2017.

“The graying of the population in developed countries is without precedent in human history.

While most developing countries outside of China can look forward to a demographic tailwind for many years, developed countries are rapidly aging.”

 

 

(1)

“According to estimates by the United Nations between 2015 and 2030, the number of people in the world aged 60 years or over is projected to grow by 56%, from 901 million to 1.4 billion.  The number of people aged 80 years or over, the “oldest old” persons, is growing even faster. Projections indicate that in 2050 the oldest old will number 434 million, having more than tripled in number since 2015, when there were 125 million people over age 80.”

If you happen to be female, the situation is even worse.  For decades to come, women’s life expectancy on average will continue to be 3 to 5 years longer than that for men.  This results in higher healthcare expenses in addition to coping with inflation for a longer period of time. (2)

If you are age 50+ and in relatively good health, please do not wait any longer to contact us!

We will work with you to determine what you need in the way of income and assets to help assure a successful retirement.  Then, we will work with you to create a plan to fulfill that goal.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

 

Source:
(1) World Bank
(2) “Missed Opportunities” by Sue Watt, Morningstar April/May 2017
Read More
14Apr
What Makes Women Breadwinners Different?
Investing
Part Three of a Three-Part series

If you have not read the first blog in this three-part series, “An Overdue Apology to Women”, dated April 7, you might find it helpful because it is applicable to this blog as well.

The first piece focused on how women clients are often discounted in the relationship with the financial advisor.  It resulted in my apologizing on behalf of the industry to anyone who has experienced this type of discriminatory treatment.

The second part in this series centered on how single women are often victims of “product-pushers” as opposed to professional advisors who are also fiduciaries.  See previous blog titled: “Are You Ready for Disturbing Survey Results about Single Women and Financial Advisors?”

This third part in the Women’s Series shares some important information on women breadwinners.

Who qualifies as a woman breadwinner?  Anyone who earns at least one-half of the household income and is also involved in the financial decisions.

Often, these professional women hold positions in middle management through executive positions.

Read More
11Apr
Are You Ready for Disturbing Survey Results About Single Women and Financial Advisors?
Investing
Part Two of a Three-Part Series

If you have not read my previous blog, “An Overdue Apology to Women”, you might find it helpful because it is applicable to this blog as well.

The first piece focused on how women clients are often discounted in the relationship with the financial advisor.  It resulted in my apologizing on behalf of the industry to anyone who has experienced this type of discriminatory treatment.

While this blog continues on the same theme, the focus is now on the single woman as opposed to a member of a couple.

This includes the population of women who simply choose to remain single as well as those who may be divorced.

Read More