Sunday, September 30, 2018

Tips on Enhancing Your Retirement by Getting Rid of Possible Dangers

Geoffrey J. Thompson is a serial entrepreneur and investor announces In the financial world, it’s a typical occurrence for the press to report that buying safeties that are long-lasting, along with using up even more danger, are one guaranteed means to obtain revenue.

Naturally, for specific retirees who are always on the lookout for brand-new means to potentially gain more income for their future, especially in a low-income atmosphere such as this, this is greater than excellent news. But why even bother with this to begin with?

Stabilizing your dangers with one consistent cash flow

Obviously, as you near retirement, good sense dictates that riskier assets in your portfolio need to be lowered and replaced with safer bonds. However, these much safer bonds generally create reduced returns, and considering that a longer life expectancy imbues more loan, is this a danger worth taking into consideration?


Seeking ways to create even more revenue always comes with dangers. (Picture by DepositPhotos).

In a Forbes release, Qualified Financial Planner and Blankenship Financial Preparation representative Jim Blankenship said, “Living much past your 80s is ending up being fairly usual, and the expectations are that this durability fad will certainly continue. You’ll stretch those income streams out further than you anticipated.”.

Given this statement, where should one spend after that?

Well, for beginners, it is necessary to recognize that trying to find methods to generate more earnings continually comes with threats.

Inning accordance with Kiplinger, there are typically four threats included when trying to get earnings. These risks are duration danger, where you enhance your income by purchasing later-maturing bonds; market risk, where your safety and securities might drop due to its company; reinvestment danger, where you need to reinvest when safety begins to grow; and timing danger, which is purchasing high, however, marketing low.

Suppose there’s a method to remove all these possible threats by concentrating on a brand-new one?

Enter income annuity, which, inning accordance with Investopedia, allows you transform a part of your retirement funds right into a stream of lifetime settlements that ensure consistent earnings utilizing a single amount of money called a “premium.”.

Freeing yourself up to discovering even more threats.

Exactly how does this job after that? And just what is the threat that features it?

Earnings annuities have just what is called a survival danger, which paradoxically, is precisely what produces the revenue.

And in an uncertain market that poses all kind of risky situations, gaining a constant capital provides you the advantage of taking much more dangers with your portfolio.

Read more:

In reality, nobody has a concrete suggestion of where this will all finish, yet making use of earnings annuities to stabilize all those risks is one means of protecting your financial success once you finally start on your retired life.

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Friday, September 21, 2018

5 Things You Must Know About Retirement

No matter where we are in our careers, thoughts often turn to retirement.

From the young person just starting out in the employment journey to the seasoned veteran who is counting the days until finally being able to retire in peace, the concept of retirement is filled with challenges, misconceptions, and even some surprises.

Retirement may not be all about relaxation and freedom; the reality is that retirement can be a lot of work on its own.

In this article, we’ll talk about some of the aspects of retirement that may surprise you. The goal is to prepare you for a retirement that is both enjoyable and free from financial stress.  

Difficulty in Spending Retirement Savings

As responsible adults, many of us have spent our entire careers setting aside money for retirement. If done correctly – with a diversified retirement savings portfolio – chances are that the savings have grown over the years, thanks to the power of compounding interest and favorable market conditions. It may come as a surprise, then, that many retirees discover how difficult it can be to spend down that nest egg.

Throughout the process of retirement planning, we have been programmed to save, save, save. Now that retirement is here, the concept of spending that hard-earned savings seem alien and more than a little discomforting.

Retirement planners and financial professionals alike must oftentimes encourage their clients to spend down the retirement savings; in effect, giving their clients permission to spend their own money.

Government Retirement Benefits Aren’t Enough

It is an unfortunate fact in the United States that most of us do not save enough for retirement. One of the factors that influence this is the misguided belief that government-sponsored retirement benefits like Social Security, Medicare, and pension plans will provide all the funding we need after we retire. The sobering truth is that these benefits are simply not enough. Let’s look at some of the particulars behind these government retirement benefits:

  • The average Social Security benefit is just over $1400 per month. Multiply that by 12 and we arrive at a figure around $17,000 in annual retirement income.
  • The maximum retirement benefit under the Social Security program is based on the age in which one files for the benefit. Assuming you reach the age of 66, or the “full retirement age”, the maximum benefit is $2639 per month.
  • Average benefits over a lifetime in the Medicare program come out to about $180,000. That may sound like a lot, but these benefits are paid over a number of years – sometimes 20 or more.

When we look at these numbers, it is clear that our expenses in retirement are hardly covered by government retirement benefits. The solution to this shortfall is to start saving right now with retirement plans of your own. Relying solely on government benefits is a recipe for failure. A retirement planning professional can help you get started with a portfolio that will provide the funding you need to retire comfortably. This can include a variety of investment strategies and accounts, from annuities to Individual Retirement Accounts (IRAs), life insurance, stock and bond investments, and more.

Retirement Savings Must Continue to Grow

It may sound counterintuitive, but after saving all that money for retirement, it is still incredibly important that those assets must continue to grow in value. What does this mean? In simple terms, it means that saving enough to retire should not be the final goal; rather, developing a plan to make your retirement assets last the rest of your life should be the real goal.

The key to this is allowing the bulk of retirement savings to remain in place, where they will continue to grow in value due to interest rates, and only make the withdrawals needed to pay for expenses. In other words, taking a lump sum of all your retirement savings can negatively affect the overall value, and may subject you to significant tax implications.

Minimizing risks in investments is one way to preserve the value of retirement assets. Taking advantage of tax-deferred or tax-free investment/savings opportunities is another. A retirement planning professional can help you develop strategies that allow you to invest wisely, gain asset value, and protect that value for the years after you retire.

Retirement Can Be Lonely

Many people discover that after they retire, they’re no longer as active as they once were. Going to work every day offers some measure of social interaction with others; once that is taken away, many retirees find out that their days may be spent in isolation. This can have profound effects, causing people to feel a loss of purpose.

To counteract this lost purpose and the feelings of loneliness, retirement experts suggest developing hobbies outside the home. Retirees have many options when it comes to engaging with others, from social clubs to hobbyist groups, outdoor clubs, and activities. Volunteering is another great way to regain lost purpose and to make connections with others. Retirees often delve deeply into volunteer programs, such as giving time and effort to services for the underprivileged.

By remaining active and taking part in volunteer opportunities and outside-the-home interactions, retirees can continue to lead productive, engaged lives.

Retirement May Mean Help from Others

As we age, we are often no longer able to do the tasks that help us lead our daily lives. Depending on health, simple tasks such as cooking, bathing, and dressing can become difficult. It’s a fact that retirees need a support system, regardless of their health status, and this is especially true for those with debilitating illnesses.

Planning for a support system in the future is part of the overall retirement process. Long-term care insurance is one way of preparing for the future, as is investigating the possibility of retirement homes and long-term care facilities.

In a perfect world, our family members pitch in to help with daily tasks, but it is crucial to remember that our families typically have commitments of their own and may not be able to assist in the manner we need. Setting up a contingency plan for the future is a smart move, and can help ensure a comfortable retirement.

Related: Can Life Insurance Protect Your Legacy?

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Tuesday, September 18, 2018

Tuesday, September 4, 2018

What is Earning Power?  Can it Help Me Save for Retirement?

What is Earning Power?  Can it Help Me Save for Retirement?:

If you haven’t heard of the term ‘earning power’ you must begin taking advantage of this now. 

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How Business Loan Insurance Plans Work (Part 2 of 2)

In the first part of our two-part series on business loan insurance solutions, we introduced the concept of these life insurance plans and how they can provide advantages to businesses of many types. We contrasted unincorporated versus corporate business interests, went over the financial hardships that may be experienced in a business owner’s untimely death, and talked about the many benefits such a plan provides.

In this article, we will delve into the mechanics of a business loan insurance plan and how they work to protect both business and personal assets. Finally, we will provide both a summary and a checklist to give business owners the information they need to make sound financial decisions. As with any business insurance plan, it is important to seek out the expertise of a qualified insurer to find the plan options that meet the specific needs of each individual business interest.

How Do Business Loan Insurance Plans Work?

Business loan insurance policies are economical and efficient methods for protecting critical business (and personal) assets. If a business owner were to die unexpectedly, any outstanding business debt would still need to be repaid, either through remaining business assets or by tapping into personal financial assets.

Let’s take a look at the mechanics of this insurance plan to understand how it works for a given business:

First, like many businesses, the business itself or its owner obtains a business loan or makes arrangements for an open line of credit. Lenders and creditors will require sole proprietor/sole partner businesses to personally guarantee repayment of the debt. Larger companies, such as multi-owner/multi-partner operations or corporations, may still have to provide assurances that the loan debt will be repaid.

To guarantee the funds needed to repay the loan debt in the case of an owner’s unexpected death, the business or business owner purchases a life insurance policy in an amount roughly equal to the outstanding loan. The business or owner pays the premiums on the policy, which are typically non-tax-deductible. For the purposes of this policy, the business is named as the beneficiary or the owner names a specific personal beneficiary, depending on the structure of the company and which entity actually owns the insurance policy. To summarize:

  • The insured is the business owner
  • The owner of the policy is the business itself or the business’ owner
  • The beneficiary is the business or a specified personal beneficiary who is empowered to make financial decisions on behalf of the company.

In many cases, creditors/lenders may require the assignment of collateral benefits of the policy, as their financial interests are at stake.

At the business owner’s death, benefits of the insurance plan kick in. Proceeds from the policy are paid income-tax-free, and are used primarily to pay the outstanding loan debt and any interest that has accrued on the debt. If the policy was assigned to the creditor(s) as mentioned above (collateral benefits), then the proceed payments go directly from the insurer to the creditor(s). If the business is named as the beneficiary, or the owner assigns a personal beneficiary, proceed payments will be made to them for repayment of the loan debt.

Any policy proceeds in excess of the amount needed to satisfy the outstanding debt can be used by the beneficiary to cover any financial needs that may have arisen at the owner’s death. These excess proceeds can often be used to pay for surviving family member expenses or sometimes to indemnify the business against the loss of the owner and his or her experience and skill.

Potential Value of Business Loan Insurance Proceeds

Value of the Tax-Free Insurance Proceeds

There are many advantages to business loan insurance plans. Many companies can benefit from obtaining such an insurance policy to protect their interests and assets from creditors in the event of an unforeseen owner death. There are other benefits, particularly in the value these policies (and their proceeds) represent.

The value of insurance proceeds received tax-free upon the death of the owner can be quite significant, especially when compared to t pre-tax profits or their equivalents. An example to illustrate this value can be useful: imagine a company existing in the 25% tax bracket. With a business loan insurance policy in place, $100,000 of tax-free proceeds from that policy are equivalent to $133,333 in pre-tax profits.

To make this value even clearer, consider that depending on a company’s profit margin, the sales required to reach $133,333 in pre-tax profits can be substantial. A company with a 10% profit margin would have to have $1,333,333 in sales; a company with a 20% profit margin would expect $666,667 in sales, and a company with a 30% profit margin would need $444,444 in sales to reach that $133,333 pre-tax profits number. So, with a $100,000 business loan insurance policy in place, the proceeds from this policy resulting from the death of the business owner could replace $666,667 of sales or receipts that would have to be used to satisfy any outstanding loan debt. This is assuming a 20% profit margin for the example company.

A Checklist and Action Plan for Businesses

Smart businesses protect their assets, no matter the circumstances. Small business owners that carry business debt must also protect their personal assets, as many lenders require personal guarantees of business loan repayment. Business loan protection insurance can provide that critical asset protection. There are three steps business owners should take now, including:

  • Selecting the appropriate life insurance policy and policy ownership arrangements to suit the unique needs of the company.
  • Establishing insurability of the owner(s) and/or partner(s)
  • Arranging for the business to make appropriate premium payments to the insurer.

In the short term, there are additional steps to take to ensure that this valuable and important insurance is ready to protect business assets. These short-term steps include:

Draft and execute a resolution to authorize the purchase of business loan protection insurance if appropriate for the needs of the company and its ownership.

Execute any collateral benefit assignments, particularly if required by lenders/creditors.

Review the issued insurance policy to make sure it meets all needs. Make adjustments with the insurer as necessary.

Finally, companies change from year to year, and their needs will also change. It is a good idea to establish an annual review of all insurance policies, including business loan protection insurance, to ensure they remain current to the specific needs and circumstances of the business and its owners. It is also a good idea for businesses to evaluate their business continuation planning needs, such as establishing a buy-sell plan in case of death or permanent disability of the owner or other key employees.


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Geoff Thompson - Synergistic Life CEO - Profiles in Leadership

Geoff Thompson - Synergistic Life CEO - Profiles in Leadership:

Thank you, @sharingleadership for the wonderful blog feature 

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