Tuesday, November 10, 2015

Social Security Changes

Just like that, two strategies that have helped our clients take advantage of Social Security spousal benefits will be wiped out!

You probably haven't heard but the Bipartisan Budget Act of 2015 made dramatic changes to several well known Social Security claiming strategies.

Two key Social Security “loopholes” will terminate shortly: File and Suspend and Restricted Applications for Spousal Benefits are going away. 

The new rules for restricted applications will not immediately apply to all Americans.  Workers born before January 1, 1954 will be “grandfathered in” and still have the option to file a restricted application.

If you turn 62 on January 2, 2016 you could receive $60,000 less in spousal benefits than the person sitting next to you who turns 62 in 2015.

For the next 6 months, anyone over full retirement age will be able to file and suspend and have the spouse claim the spousal benefit, same as always, but after six months file and suspend will go away.

For those of us who help clients with retirement planning these significant changes literally save the government billions of dollars of Social Security payouts.  Is this what you sent your representatives back to Washington to do?

There are so many things wrong with the way Congress crammed the Social Security changes into the budget deal and passed it before anyone could notice.

The rapid changes will leave some people unaffected but most will be worse off, depending on the turn of the calendar.

If you need help with retirement income planning now would be the best time to examine in detail your Social Security options.

Please let me know if you’d like additional information.


Cory Payne
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, UT 84107

801-685-6875 Office
801-685-2899 Fax

cpayne@beehiveinsurance.com

Friday, October 30, 2015

Ways Your Brain Can Undermine Your Investing

It does not matter how rational we think we are. The chemicals in our brains often lead us to make irrational decisions. This affects all of our decisions, whether in our social life or our investment portfolio. Behavioral Finance is the booming field of study aiming to reconcile the discrepancy between rational valuation and irrational market pricing. Below are some of the common behavioral biases that can lead to bad investment decisions.

5.     Anchoring: Investors are bad at processing new information - Anchoring is related to overconfidence. For example, you make your initial investment decision based on the information available to you at the time. Later, you get news that materially affects any forecasts you initially made. But rather than conduct new analysis, you just revise your old analysis. Because you are anchored in the old thinking, your revised analysis will not fully reflect the new information.

Representativeness: Investors connect the wrong things to one another - A company might announce a string of great quarterly earnings. As a result, you assume the next earnings announcement will probably be great, too. This error falls under a broad behavioral-finance concept called representativeness: You incorrectly think one thing means something else. Another example of representativeness is assuming a good company is a good stock.

Loss aversion: Investors absolutely hate losing money - Loss aversion, or the reluctance to accept a loss, can be deadly. For example, one of your investments may be down 20% for good reason. The best decision may be to just book the loss and move on. But you can't help thinking the stock might come back. The latter thinking is dangerous because it often results in you increasing your position in the money-losing investment. This behavior is similar to the gambler who makes a series of larger bets in hopes of breaking even.

Regret minimization: Investors have trouble forgetting bad memories - How you trade in the future is often affected by the outcomes of your previous trades. For example, you may have sold a stock at a 20% gain, only to watch the stock continue to rise after your sale. And you think to yourself, "If only I had waited." Or perhaps one of your investments falls in value, and you dwell on the time when you could have sold it while in the money. These all lead to unpleasant feelings of regret. Regret minimization occurs when you avoid investing altogether or invest conservatively because you don't want to feel that regret.

Frame dependence: Investors like to go with the flow - Your ability to tolerate risk should be determined by your personal financial circumstances, your investment time horizon, and the size of an investment in the context of your portfolio.  Frame dependence is a concept that refers to the tendency to change risk tolerance based on the direction of the market. For example, your willingness to tolerate risk may fall when markets are falling. Alternatively, your risk tolerance may rise when markets are rising. This often causes the investor to buy high and sell low.

Citations
1.      http://bit.ly/1k390CG  - Investopedia
2.      http://lat.ms/1jhWjT5  - Los Angeles Times
3.      http://read.bi/1MM3uLG  - Business Insider   
4.      http://bit.ly/1H3dH4q  - InvestorsInsight.com
5.      http://onforb.es/1GASofJ - Forbes


Thanks,

D Cory Payne
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, Utah  84107
801-685-6875 Direct
801-554-7797 Mobile
801-685-2899 Fax


Thursday, October 22, 2015

How is Your Current Retirement Strategy Working?

For most retirees, the bulk of their retirement income is from Social Security.  The average check is about $1,250

Keeping your retirement plans current to market conditions doesn’t happen by chance.


How confident are you that your strategy is up-to-date? 


A Stunning 85% of affluent investors told a consulting firm Institute that they are so dissatisfied with their current advisor they would consider changing.  Forbes Magazine April 2010

Are you one of those people?

One of my main objectives is to keep clients continuously up-to-date on financial strategies in today’s uncertain market.

Many strategies may no longer be effective.

Would you like to have more detailed information?  Just ask.  Don’t be uninformed.

Having current information is more important than ever to ensure your retirement dreams.

Thanks,

D Cory Payne
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, Utah  84107
801-685-6875 Direct
801-554-7797 Mobile
801-685-2899 Fax


“Investment advice is offered by Horter Investment Management, LLC, a Registered Investment Adviser. Insurance and annuity products are sold separately through American Equity Life Insurance Company."

Tuesday, September 22, 2015

How Much Money will you Need in Retirement?
Have you underestimated?

What is enough?  If you’re considering retiring in the near future, you’ve probably heard or read that you need about 70% of your salary to live comfortably in retirement.  This estimate is frequently repeated, but that doesn’t mean it is true for everyone.  It may not be true for you. Consider the following factors:

Spending Habits: Do you spend only 70% of you salary now?  Probably not.  If you’re like most, you probably spend 90% or more.  Will your spending habits change drastically once you retire?  Most likely not.  In retirement every day seems like Saturday and spending often is increased. 

Portfolio: Many people retire with investment portfolios they haven’t review in years, with asset allocations that may no longer be appropriate.  New retirees sometimes carry too much risk in their portfolios, which can result in wild income swings from the roller coaster effects of the market. Other retirees are super conservative investors, their portfolios are so risk adverse that they cannot earn enough to keep up with even moderate inflation, and over time, they find they have less and less purchasing power.

Heredity: If you come from a family where people frequently live into their 80’s and 90’s you may live as long or longer.  Imagine retiring at 55 and living to age 95.  Do you have an income stream that will last 40 years?

Health: Most of us will face major health problems at some point in our lives.  Think for a moment, about the costs of prescription medicines, and recurring treatment for chronic ailments.  These costs can eat away our retirement income, even with a great health care plan.

Will you have enough?  In retirement, woefully inaccurate financial assumptions may cause you to lose the independence that you've worked so hard to preserve.  Consider meeting with a qualified financial professional who can help estimate your lifestyle needs for the short and long-term. 

Cory Payne
Beehive Insurance Retirement Planning 
302 West 5400 South #101
Murray, Utah 84107
cpayne@beehiveinsurance.com
801-6856-6868

Tuesday, September 1, 2015

Why Do People Use Annuities?

People purchase annuities for Income.

Below are some quotes about annuities from Kiplinger, Harvard Business Review, CNN, CBS News, TIME.com and Fox Business.

 
Kiplinger: The need for lifetime income is huge and growing as life expectancy's continue to increase and traditional sources of guaranteed income disappear.  An immediate annuity is based on a simple concept: You give an insurance company a lump sum and it promises to send you a monthly check for the rest of your life – no matter how long you live. “Lock In Your Retirement Income”

Harvard Business Review:  Our Approach to saving is all wrong: We need to think about monthly income, not net worth….  Risk should be defined from an income perspective, and the risk free assets should be deferred inflation indexed annuities. “The Crisis in Retirement Planning”

CNN: The reason it is hard to duplicate an annuity’s payments is that annuities have a unique feature that allows them to pay more income than you can generate by investing on your own, “mortality credits”.  If you want a more assured income than Social Security alone can provide, then putting a portion of your savings into an immediate (or deferred) annuity may make sense. “The safest way to make your retirement savings last”

CBS News:  One way to avoid running out of money before you die is to by an annuity form an insurance company, which then guarantee’s you a monthly payment no matter how long you live and no matter what happens in the economy. “How long will your retirement savings last?”

Time.com:Annuities sold through big insurance companies have soared in popularity as retirees have come to understand that guaranteed lifetime income makes them more financially confident – and happier too.  Securing at least a base level of lifetime income should be every retiree’s priority – at least if they want to live happily ever after. ”Lifetime Income Stream Key to Retirement Happiness”

Fox Business: By implementing a product allocation strategy combining annuities with a lifetime income rider and traditional portfolio strategies you vastly increase the chances of having sustainable income in retirement no matter if you live to be 85 or 105 years old. “The difference between investing and income planning”

Please contact me if you'd like additional information.


D Cory Payne
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, Utah  84107
801-685-6875 Direct
801-685-2899 Fax
cpayne@beehiveinsurance.com


Insurance and annuity products are not sold through Horter Investment Management, LLC.  Horter does not endorse any annuity or insurance products nor does it guarantee their performance.  Owners of these products are subject to the terms and conditions of the policies and contracts of the issuing companies.  All product guarantees depend on the insurance company’s financial strength and claims-paying ability.


Thursday, August 20, 2015

Super 401(k) Plan

Successful business owners and professionals seeking higher tax deductible contributions than the traditional 401(k) profit sharing maximum of $52,000 are looking at the Super 401(k) plan.

What is a Super 401(k) Plan?  A properly designed Super 401(k) plan can include a fully funded and fully deductible cash balance allocation, traditional or any other form of pension, a fully funded and fully deductible medical expense reimbursement account that may be redeemed free of income tax under IRC 105-6; a fully funded and fully deductible profit sharing plan and a fully funded and fully deductible 401k elective deferral.

How is this possible?  The Pension Protection Act of 2006 changed the landscape of qualified plan design.  It is unquestionably the best piece of retirement planning legislation in decades from a contributory, regulatory and fiduciary perspective.

Who could benefit?
·         Highly profitable companies
·         Successful family and closely-held businesses
·         CPA, law firms, medical groups and professional firms
·         Older owners who need to squeeze 20 years of retirement into 5 to 10 years
·         Owners/partners looking for a way to fund buy-sell or stock redemption agreements on a tax deductible basis
·         Wealthy owners and professionals with charitable giving intentions stymied by the limitations on tax deductibility

Yearend is coming and what you pay in taxes never comes back.  Direct more money to your own retirement.
 
Please contact me for additional information. 

Thanks,

D Cory Payne
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, Utah  84107
801-685-6875 Direct
801-685-2899 Fax

Tuesday, August 4, 2015

Estate Planning Tips for the Blended Family
These days, many families include children, stepchildren, former spouses and in-laws. According to the Pew Research Center, the number of remarriages has been steadily rising over the past few decades. In 2013, 40% of marriages included at least one spouse who had previously been married. In 20% of remarriages, both spouses had had a previous marriage. Such situations require careful estate planning with clear goals. The biggest issue in blended families is, ‘where does my money go when I die?’ Below are some things for those in a blended family to consider when setting up their estate plan. Be sure to consult with your financial advisor before making any changes to your estate plan. 

Be careful about beneficiary designations - One of the biggest mistakes people make when determining who will inherit their assets is in the beneficiary designations on retirement accounts and insurance policies. The best-laid estate plan can be destroyed by an incorrect beneficiary designation. Regardless of what a will or trust says, the asset goes directly to the primary beneficiary or beneficiaries. For example, if your will states that a particular asset, such as an IRA, is to go to your current spouse, but you have named your child as primary beneficiary, the IRA will go to your child. Another error occurs when a spouse names the current spouse as primary beneficiary and the children as equal contingent beneficiaries, believing that everyone will get something. In truth, the primary beneficiary receives all the assets in this situation and will be free to act as he or she wishes. One way to avoid a potential problem is to name each beneficiary as primary and designate the percentage of the asset each will receive.

Plan trusts carefully - Remarried couples often use a trust to spell out the distribution of assets. The trust—either revocable or irrevocable, depending on their situation and amount of assets—does not preclude the will, however. A will is still needed to ensure that assets not titled in the name of the trust are transferred according to the decedent’s wishes. Another challenge with trusts occurs if a spouse sets up income for the surviving spouse with the remainder going to the children and then dies prematurely. In this scenario, the children could have a long wait before receiving their inheritance, particularly if the surviving spouse is not much older than the children. One way to avoid this situation is to implement a strategy that leaves an immediate inheritance to the children, perhaps naming them as primary beneficiaries on an insurance policy so they receive some money upon the first spouse’s passing.

Use a prenuptial agreement - The mechanics of designing an estate plan are bound to run more smoothly if a couple makes decisions about their assets and puts them on paper before tying the knot. A prenuptial agreement will start a couple on the right road to an understanding, though it does not replace a written estate plan. Because the prenuptial agreement is a contract, be sure the terms of the will and/or living will are in line with the intentions spelled out in the prenuptial agreement. Otherwise, you could set up a potential court battle for your heirs. If the intent going into the marriage is to keep assets separate so that each spouse can pass an inheritance to their own children, then be sure to maintain that separation. Once you start blending assets in accounts, then the other spouse has a claim. If one spouse decides to claim “elective share” (a percentage of the estate), the claim is only against marital assets. Non-marital assets and separate property are considered separate and not subject to the elective share. The amount of elective share is determined by state law, but typically is between one-third and half of the estate.

Communicate the plan - Drafting an estate plan by no means ensures a smoothly blended family. That is why it is critical to maintain meaningful and ongoing communication among all concerned parties. Many families set up family meetings to inform everyone what is expected of them. Regardless of the chosen method of communication, a well-thought-out estate plan will have a better chance of a seamless transition. If there are no surprises, things have a much better chance of going smoothly.

Citations
1.      http://bit.ly/1VfdNPI   - Nolo.com
2.      http://bit.ly/1e7zpfi - Bankrate.com
3.      http://onforb.es/1CILGmj   – Forbes
4.      http://bit.ly/1TJm4d3  - Investor Solutions
5.      http://bit.ly/1J7O07q   - EstateAssist.com
6.      http://bit.ly/1MABRqk   - WikiHow.com

 Please contact me with any questions.

Thanks,

D Cory Payne
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, Utah  84107
801-685-6875 Direct
801-554-7797 Mobile
801-685-2899 Fax