What is Lifetime Income? What is Guaranteed Income? Do you need it in #retirement?

With the numbers of baby boomers having reached, nearly reaching, and will reach in the near future, the need for guaranteed lifetime income is growing into a necessity. Factors contributing to the need of guaranteed lifetime income are so vital and increasing in importance and role in retirement planning.

A couple of those major factors are human beings are living longer. If humans are living longer, then the need for adequate funds is of even greater significance. Another factor, the cost of living is increasing, our lives are becoming more expensive and lifestyles are more expensive to maintain. Quality of living will increase too. 

Statistics show, healthcare costs will be a major concern in retirement. Another factor, which we will visit later, what happens if you need Long Term Care? What if you need Long Term Care in a Long Term Care facility? 

Social security benefits (SSI) are consistently, a hot topic. The SSI system, as we know it, will probably not be around by the time our children are retiring. I am not into scare tactics, but what would you do, if SSI benefit was not around for your retirement? This could be a change in your retirement planning. You need more than one or two sources of income in retirement.

Your needs will probably change throughout your lifetime, and possibly into your retirement. Needing more than one source of retirement income, to help prepare for the length of your retirement, is smart planning. 

Your investments may not grow, as anticipated, prior to retirement and possibly into retirement. Statistics show that every 20 years, the stock market averages 6.25% growth, but there are down-cycles along the way. As you approach retirement, the funds in your 401(k) may not grow, as expected. You may experience a down-cycle, right before your retirement, without enough time for the 401(k) to recover. 

Again, you need more than one source of retirement funds. So, what is guaranteed lifetime income? A sum of funds, that have grown tax-deferred, that are guaranteed and upon retirement at a set age, paid out in a monthly payment to you throughout retirement. The days of pensions, and possibly SSI (as we know it), and even some 401(k)s have made retirement a stressful experience, rather than pleasure, leisure, and enjoyment. 

You need retirement planning in 2019 and moving forward!

To learn more, read the Motley Fool article below:

3 Reasons You Can't "Set and Forget" Your Retirement Plan (click here):

You Need A Will #NationalMakeAWillMonth

August is #NationalMakeAWillMonth and although every day and month" is some "day or month, but this month is an awesome reminder to us all. WE NEED WILLS! And, our dependents need for you to have a will.

Many do not have a will, and that is not good. Those that depend on you and what you intend to leave them, upon your passing, will more than likely suffer, as a result. Your heirs will probably have to sit in a court room, as probate court will decide where and to whom gets what!

Probate court, lawyers, and other fees will eat at the funds, that may be also in place. Hopefully life insurance is in place, that passes to the beneficiaries without the requirement of probate court. While most life insurance policies pass to beneficiaries tax-free, going through probate court and dealing with lawyers and governmental fees is also like a tax!

There are items in this article below, that could help you plan. Although, a large majority of Americans do not need estate plans, there are items within estate planning, that all Americans do need! Wills are one of those items.

7 #EstatePlanning Tasks That You Should Not Put Off!

Also, check out this article from Protective Life, a company that we utilize, commonly, in planning on a monthly basis. This is for preparing a will, as a parent:

Creating Your Will

Take advantage of this month's reminder, begin your preparation this week. Your dependents will thank you later, you will thank yourself later. 

Inside your auto policy, do you really know what Accident Forgiveness means?

Accident Forgiveness

For many, accident forgiveness can be a wonderful thing. Usually, a forgiving, one-time benefit with insurance companies, accident forgiveness can partly erase a bad memory. For the most part, the companies that offer accident forgiveness do a good job. But, for even those companies that do a good job, do they explain everything involved in the policy? 

The answer to an insurance company explaining a benefit, and all that is entailed, is almost certainly not. You probably have a higher chance of winning a cake at a Catholic fundraising picnic, or at least a better chance than I do!

In all seriousness, the chances of being explained everything in the accident forgiveness benefit, in your policy, are low. And, if you are given an explanation about accident forgiveness, what are the chances the explanation was correct? 

I would go as far as to predict, many sales managers at highly recognizable companies cannot explain to a consumer what all is entailed in an accident forgiveness benefit of your policy. Truth is, accident forgiveness is relatively new to insurance companies, and agents.

One thing you may not know about accident forgiveness, as it pertains to who qualifies on a policy...teenage drivers and even adults, who have not been on the policy for a specified amount of time (as much as one year), do not qualify to receive the benefit of accident forgiveness.

What is sad for auto policyowners, many discover this, after the fact of having the accident. Even sadder, it is these policyowners who believed in the company, the benefit, and probably the agent but it is also the time they need the benefit the most. Who wins? The insurance company!

Bottomline? Ask questions, and do not accept 1/2 of an answer, do not stop until you have the complete and factual answer from the agent and insurance company.

"I have life insurance with my employer..."

Often times, insurance agents and brokers hear, "I have coverage, or a policy, through my employer." And, I am quite sure that these people are telling the truth and 100% accurate. It is what they do not know, I am troubled about.

The first cause for concern is, does he or she have enough coverage? Industry research points to top policies at employers totaling around $50,000 and I can assure you, that is not enough. The average employer is far below the $50,000 and that is definitely not enough. Many will say, this is a way an insurance salesperson is trying to get you to buy a policy.

For some agents and brokers, this is another opportunity to 'push a policy' or 'make a sale!' But for professionals, employer-provided life insurance policies cause a great deal of confusion in the average person's thought process, when it comes to having adequate amounts of life insurance for necessary estate planning or planning in general.

Estimates in the insurance industry estimate between 7-10 times the person's salary. For us, it is hard to put a number into an equation without knowing the whole story. That is why an evaluation, consultation, and thorough review is completely necessary. Often times, 7-10 times the salary is sufficient, but each plan and person is different.

Everyone is unique, and their planning is just as unique! Many people do not realize the parameters and rules of the employer-provided policy change, after he or she leaves, either from retirement, to take another job, or termination. If we assume the average employer is no greater than $50,000, we could also assume that final expenses alone would exhaust most of the available death benefit, when it is needed most.

And, if $50,000 death benefit has been mostly exhausted when needed most, what does that leave for the family and dependents? The answer is, very little death benefit remains after the final expenses, and for those that say, "I have life insurance with my employer," it is a harsh reminder that obtaining another $100,000 in 2019, it super easy and can be inexpensive.

Oh by the way, I never recommend to leave your insurance planning in the hands of a corporation, that is focused on profits. In 2019, companies are cutting costs anyway imaginable. True, companies are offering more lucrative benefit packages to attract new talent, more qualified employees. But never underestimate an entity, that sole purpose to generate revenue, at the lowest cost.

Peace of mind is well worth pennies on the dollar! Pennies on the dollar is the equation between what a consumer pays for a policy, in return for death benefit from a policy. Hard to place a dollar figure on peace of mind.

You need peace of mind!

There should be a large premium on peace of mind. Personally, achieving peace of mind and happiness are large personal and financial goals, of mine too. What can help you obtain peace of mind, in your everyday life?

Proper estate planning, budgeting, retirement planning can help produce financial wellness and build a legacy for your family. Peace of mind generates from the accumulation of those factors and those factors consist of numerous variables that are the sum of daily and lifestyle financial habits and goals.

Clients should work with an experienced and professional team, that begin with the end in mind and will work towards the ultimate goal, peace of mind. Professionals should do what is best for the client, above all else.

We have established proper insurance planning, investments, tax preparation, all are necessary components in the decisions of the team of experienced professionals, you choose to partner with, in the future. Of course, these components based on decisions, must be good, wise, and fiscal decisions for those clients.

Do I have adequate insurance levels? Do I need a revocable or irrevocable trust? When do I take and what do I do with Required Minimum Distributions (RMDs), from my retirement account? What items do I need in an estate plan? Do I need an estate plan? If not, do I need proper planning?

These all are legitimate questions, all must be answered. The need for a team, to help create peace of mind, is extraordinary! Everyday you delay, you are gambling with your financial future and the future of those you love and depend on you. That is not a scare tactic, that is reality! Please do not delay, another day.

Perform a Personal Audit: 3 Spending Habits That Could Save You Money Towards #retirement! #FinancialLiteracyMonth

 

-Paying for subscriptions to streaming, gyms, etc:

Too often, as consumers, we subscribe, give authorization to our bank accounts and forget about them and probably don't utilize the service, entertainment, etc. We need to grab our bank account statement and do a "personal audit!" Find those $5.99, $11.99 & $13.99 subscription obligations, and terminate them. Find alternatives to those streaming choices, cable bills, and other subtractions to money we could use towards our retirement.

-Purchasing things just because they are on sale:

Trips to the mall or outlet malls, might not always be a great idea. We see the word, "Sale" and think, why not? After all, it is on sale! Forgoing sale items and things we really do not need, and putting that money towards our retirement is another way to assist our retirement goals and watch compounding interest work to our advantage. 

-UTILIZE AUTOMATION (positively) & forget about it:

This is major! Normally, we can set automation for savings with our employer or banking institution, adjust our budget, and forget about the deduction. We can use that automated amount of money to be deducted and placed into savings, to help our retirement goals. Automation works to our advantage, as well to our disadvantage. Set it today!

Beneficiary Designation & One Thing That Could Happen...

Let's use, for example, a real life situation. A single mother, successful executive, and good wage earner, passed. Unfortunately, her estate planning was not in great shape. The client was intelligent and loved her child tremendously. She did have adequate life insurance in place, that covered her debt, final expenses, and provided for the child generously. 

The ex-spouse was still living, and they did have a good relationship. Normally, the child would be under the surviving parent, provided something was to happen to the custodial parent. Often times during reviews, and following evaluations, advice was stressed and expressed to the client. A major item, left unaddressed, was the beneficiary designation (Read more about beneficiary designation from Life Happens: https://lifehappens.org/blog/who-can-i-name-as-a-beneficiary-on-my-life-insurance-policy/ ).

The client left the generous life insurance death benefit to the child, as most parents would want the proceeds to go to the child. Although a trust was not established, probably due to the client's age, thinking "I have time." A great strategy would have been to establish a trust, placing the insurance policy inside the trust, and being able to designate how, when, and where the proceeds of the life insurance would be distributed.

As a result, given the manner in which things were left, the child's full care shifted to the surviving father. Although the father was a good father, the issue was, since the child was well under 18 years of age, the death benefit of the insurance policy was left to legal guardian/parent of the child and free to decide how those funds could be spent.

Fortunately, the surviving parent was a good father and the situation was a good one. But, what if the surviving parent was not a good parent? Can you imagine $1,000,000 in the hands of someone who could not be trusted and with a child, who just lost his or her mother? 

Definitely not what the mother would have wanted, but at the same time, could have been avoided with choosing to adhere to evaluations, recommendations, and experience being involved with a team in estate planning. Without a doubt, the mother was an awesome mother, and the father, fortunately, was a good father. 

This story had a happy as it could be ending to the story, but how many times does the situation go the other way? Single parents, please do not leave your situation to chance or gamble with loved ones. Find an insurance agent, experienced in estate planning, that happens to have a team that consists of professionals to get the proper planning put into place.

You need #lifeinsurance and another reason why and The 3 E's!!

Legacy means a great deal, to a great deal of people. Unfortunately, too many times this is not the case with life insurance and estate planning. From our original post: https://advocateinsurers.blogspot.com/2019/08/you-need-lifeinsurance-and-heres-one.html

we talked about life insurance is not purchased for you and while you are living, it is purchased for final expenses and people who count on you, while you are alive!

Having an ego, being stubborn, and a close-minded approach to proper planning for your death, is unacceptable. Possessing a minimal amount of life insurance to cover final expenses, debt, and providing loved ones with money to adjust to your passing is beyond unacceptable, it is almost inhumane!

To see an adult possess such a disregard for planning, peace of mind, and legacy is mind-boggling. Your loved ones should be allowed to grieve when the 'if' happens, and it will happen, just depends on the when!

Personally, have sat in a meeting with a husband, who said, "I don't care what happens, when I die." The really unfortunate thing is, his wife of 21 years was sitting next to him. Recalling of another situation, which the husband decided to wait on purchasing a policy, and was later diagnosed with Stage 4 Cancer. The couple needed a death benefit that, after performing the needs-based analysis, it showed a $250,000 and the husband only had $22,000.

Many times, the naked eye can evaluate the situation and see debt and poor financial habits are a major reason of a lack of proper planning and necessary insurance. As an agent, and planner, all you can do is Evaluate, Educate, and Endorse (The 3 E's). At the end of the day, people are going to do what they want to do, regardless of who they hurt.

Begin with the end in mind. Get professional consultation, and properly plan. Building a legacy, leaves no room for other options. Thanks for reading!

You need #lifeinsurance and here's one example of why!

A fun loving sales representative, who made $100,000 a year, who lived modestly and nearly debt-free. Much of the disposable income went to bad habits, unfortunately, bad in nature. However, despite bad financial habits, this was a good person, a son, father, and brother.

After meeting with the sales rep, and a performed a thorough review and a needs-based analysis. The lack of life insurance was obvious, even to the untrained eye...there was none in place. It was a sad situation, but there was not a spouse to be concerned with and only one child, who was out of the dependency stage.

The analysis highlighted the only debt was a newly purchased mortgage, totaling over $100,000 and with 25+ years remaining. Although the mortgage was light in nature, compared to many, the fact was there was no insurance in place to cover the debt, in case the "if" happened sooner than later.

401K value was modest as well, but would help with the debt and the sole beneficiary, the lack of an insurance policy was significant! The two other items that were quite evident, the lack of final expense funds and funds to pass onto the beneficiary, the older teenager.

As a result of the consultation, the sales representative did purchase a $50,000 10-year term policy. Although, $50k did not cover the mortgage, expenses, and pass on money to the older teenager, the amount of the term policy death benefit and 401k would help. Some life insurance is better than no life insurance!

Around a year later, a call received from the sales representative, generated a request to terminate the policy. Before instructing the client to contact the insurance company directly, a plea to reconsider the policy termination was given, as it was doing what was best for the client. The client insisted and the decision was final, terminate the policy with the company.

About six months after that, a family contacted the office, asking if the client had life insurance. The family member quickly told me that it was discovered there was Cancer (stage 4) diagnosis and was -terminal. Because there was a certified Power of Attorney, we could discuss the situation.

The conversation was highly uncomfortable, difficult, emotional, and purely sad. Another piece that was unpleasant, the 401K had been surrendered. If the policy was still in-force, at least the family could possibly utilize the accelerated death benefit and have access to nearly 75% of the death benefit, helping the family afford treatments, bills, and buy some time to sell the home and avoid the discussed pending foreclosure.

It is definitely a sad situation, but one that is highly avoidable. Yes, some better financial habits would have helped. Yes, a cancer policy would have also helped greatly. The life insurance policy would have helped those responsible for the care and affairs. Please apply for life insurance today! You are never more insurable, than you are today.

10 Things You Should Know About #lifeinsurance from Life Happens

10 Things You Should Know About Life Insurance (click here):