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

cpayne@beehiveinsurance.com

“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."

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

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.

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

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.

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

cpayne@beehiveinsurance.com

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

cpayne@beehiveinsurance.com

Tips for Caregiver Tax Deductions

As more baby boomers take on caregiving responsibilities for their aging relatives, it is important to understand the tax ramifications—and benefits—of their financial support. Some caregiving expenses may be tax deductible. Below are some guidelines to help you better understand how these dedications work. Be sure to consult with your tax advisor when considering whether these tax benefits are appropriate for your situation.

How a relative qualifies to become a dependent on your tax return - Relatives are eligible to become a dependent on a caregiver's tax return if their total income is less than $3,950 a year, excluding nontaxable Social Security and disability payments, and if the caregiver provided more than 50% of the relative's support. If those criteria are met, caregivers can take a $3,900 tax exemption for each dependent. However, a word of caution is in order. Pensions, interest on bank accounts, dividends and withdrawals from retirement plans are counted as income. Note that most relatives do not have to live in your home to be considered your dependent.

When a caregiver can claim a tax benefit for a dependent's medical costs - If you claim a relative (a parent, spouse, step-parent, grandparent, sister, cousin, aunt or in-law, for example) as your dependent, you can claim medical deductions if you are providing more than 50% of their support and if your total medical costs represented more than 10% of your adjusted gross income. You must meet the threshold on both counts. If the taxpayer is age 65 or older, the threshold is reduced from 10% to 7.5%. Caregiver tax deductions are not necessarily limited to just relatives. Non-relatives could also qualify, but only if they are part of the caregiver's household for the entire tax year.

The kinds of dependent expenses that are deductible - The cost for food, housing, medical care, clothing, transportation and even bathroom modifications that are required for medical reasons can qualify for tax deductions. The IRS allows caregivers to deduct the costs not covered by a health care plan for a relative's hospitalization or for out-of-pocket costs for prescription drugs, dental care, copays, deductibles, ambulances, bandages, eyeglasses and certain long-term care services. Other items include acupuncture, adapters to TV sets and telephones for those who are hearing impaired, smoking cessation programs, weight-loss programs (if it is part of a treatment for a specific disease or condition) and wigs if hair loss is because of a medical condition or treatment. Keep all your records to prove these expenses in the event of a tax audit. If a caregiver works but pays for care for a relative who cannot be left alone, those costs may generate a tax credit.

Multiple siblings claiming a parent as a dependent on their tax form - If more than one sibling is sharing the cost of the parent's upkeep, only one can claim the parent as a dependent.

Caregivers can use their flexible spending accounts to pay for a relative's eligible medical expenses - A caregiver's tax-free flexible spending account (FSA) may be used to cover expenses for both dependent and non-dependent relatives — as long as you are responsible for more than 50% of their support. The FSA is a tax-advantaged account that allows an employee to set aside a portion of earnings to pay for qualified medical expenses. Caps for FSAs were typically set by employers over the years. A $2,500 federal cap is currently in place. The IRS, if permitted by your employer, now allows an annual carryover of unused funds of up to $500, but only for a period not to exceed 2 months.

Citations

1.      http://bit.ly/1Jbz6bW  - SeniorLiving.org

2.      http://onforb.es/1Sggr3w   – Forbes

3.      http://bit.ly/1aBAbJj  - AARP

4.      http://1.usa.gov/1HvFI3G   - IRS

5.      http://bit.ly/1fyWXLN   - Bankrate.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

cpayne@beehiveinsurance.com

Guidelines for Multi-Asset Exchange Traded Funds (ETFs)

Fine-tuning a near-retirement investment portfolio can be tricky. Yields—even amid a recent rally and expectations for an eventual Federal Reserve rate hike—remain at historically low levels, and growth stocks can be fickle. Multi-asset exchange-traded funds (ETFs) offer a structure that allows the fund manager to diversify among more asset classes, including high-yield areas such as master limited partnerships and real estate investment trusts (REITs). Multi-asset ETFs have grown from less than $500 million in 2010 to more than $6 billion today.  As with any investment, there are risks which you should discuss with your financial advisor beforehand.

What are multi-asset ETFs? - Multi-Asset ETFs build portfolios that contain multiple asset types. These types can include real estate, commodities, bonds, equities, and more. These ETFs have the freedom to go across different asset classes to achieve a higher yield.

How multi-asset ETFs work - By customizing portfolios to balance income and growth, multi-asset ETFs can offer investors allocations that are more appropriate as retirement looms.  Within multi-asset class ETFs, there has been further specialization. This is good for “do-it-yourself” investors because you can sift through ETFs that are labeled to suit your risk profile. So if, for example, you are a conservative investor, you can opt for a multi-asset conservative fund. You may want a higher risk multi-asset ETF if you want better returns and do not mind a bit of volatility. Multi-asset class ETFs can build a portfolio by putting together other ETFs, for example one tracking an equity index and another tracking a fixed interest index. However, some are more complex and can use leverage. There are also multi-asset class ETFs that track a basket of assets designed to cater to specific target retirement dates.

Where to find multi-asset ETFs - One excellent source of information on various multi-asset ETFs can be found at ETFdb.com.  The site includes information on historical performance, dividends, holdings, expense ratios, technical indicators, analysts reports, and more. You can click on an ETF ticker symbol or name to go to its detail page, for in-depth news, financial data and graphs. By default the list is ordered by descending total market capitalization.

The benefits of multi-asset ETFs - Multi-asset ETFs offer the opportunity for greater yield because of their ability to invest in multiple relatively high yield asset classes as master limited partnerships.  This type of diversification also helps reduce overall volatility.  Income investors can fall into the trap of being over-allocated to one asset class such as: dividend equities, high yield bonds, preferred stocks, closed-end funds, master limited partnerships, and mortgage REITs. While these investments can have excellent short term gains and sky-high dividends, they also have proven to be susceptible to periods of extreme price corrections.

The risks of multi-asset ETFs - To perform well, a multi-asset ETF must have the right balance of asset types.  These investments can pump up yields, but holdings such as master limited partnerships and mortgage REITs are riskier than typical yield instruments. They can be subject to significant price drops if rates go up.  In this case, higher yields do not just mean higher risk, but greater volatility. Also, holding lots of bonds means that a fund may underperform in a bull market. 

If you'd like an in depth protfolio evaluation please call me.

Citations

·         http://etfdb.com/type/multi-asset/all/ - EFTdb.com

·         http://www.cnbc.com/id/102746326  - CNBC

·         http://bloom.bg/1hoEpLe  - Bloomberg

·         http://bit.ly/1MC5NlH - BizNews.com

·         http://bit.ly/1cUXfKG - BrightScope.com

 Thanks,

 Cory Payne

Beehive Insurance Retirement Planning Services

302 West 5400 South #101

Murray, UT 84107

801-685-6875 Office Direct

801-685-2899 Fax

cpayne@beehiveinsurance.com