VOLUME 5, ISSUE 2 FALL 2016
PLAYING IT SAFE CAST YOUR BALLOT TO KEEP DEMOCRACY SAFE You can go to the polls in November and make your choice known. And you certainly could/should have gone to the polls for primary elections held during the spring in your state. We all need to vote, right? By Steve Dinnen
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SAFETY PINS SHOULD YOU RETIRE DUE TO AN ILLNESS? For many, choosing to retire simply isn’t a financial option, but their health demands that they take leave from work. Let’s look at some things seniors should think about when considering to retire due to an illness. By Leo LaGrotte Continue Page 9
SAFE RETIREMENT I BOUGHT MY FIRST FIXED INDEX ANNUITY
LIFE TIME INCOME By Raymond J. Ohlson, CLU, CRC
Most of us work all of our lives trying to accumulate a nest egg to take care of our families and ourselves during our “Golden Years.” It’s a tough job! We encounter lots of distractions along the way: money we need to buy our first homes, start businesses, put braces on our kids’ teeth, pay for college tuition – the list is endless and, for the most part, necessary. Most Americans take pride in creating a prosperous lifestyle for our families. We chase the American Dream attempting to create a more prosperous lifestyle for our children than we had when we were growing up. Then, we retire. Retirement should be a time to settle back and enjoy a new stage of life, but for many of us, leaving the daily grind of work will be one of the most difficult transitions we will ever make. Not going to work every day can be frightening, but realizing that you are going to live the rest of your life off your savings and Social Security
We felt we needed guaranteed income to cover our expenses during retirement, so we created a retirement expense budget. To fill the income gap we purchased FIAs with guaranteed lifetime withdrawal. By Dr. Jack Marrion
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PERSONAL FINANCE FAMILY HOME LOAN INTEREST MAY NOT BE DEDUCTIBLE It is not uncommon for the loan to be undocumented or documented with an unsecured note, and the unintended result that the homebuyer can’t claim a tax deduction for the interest paid to their helpful relative. By TMA, PC
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SAFE FOR LIFE GEORGE
When I succeeded in landing a 3.5lb pound small mouth bass on my first cast at Reelfoot, George was the first to give a rousing cheer of approval. I know most people in that part of the lake heard his exclamation. If that had been the only fish I caught ... By Norm Wilkens
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SAFETY PINS ... “Lifetime Income” - Continued can be even more intimidating! This period can be the most challenging and difficult of all. But it doesn’t have to be. Here’s a way for you to reduce or eliminate any fear of about your financial future and develop your own lifetime income plan! Fear of your financial future rests in your not knowing the answers to several important questions. We ask ourselves, for example: • “Where will the additional money come from over and above my Social Security benefit when I retire?” • Will that income last for the rest of my life?” • How can I be sure?” • How do I avoid making a mistake when planning for my retirement income?” These and several others are typical and valid questions most of us ask ourselves as we begin
to think about our retirement years. You are not alone!
the money we have preserved during our working years.
Prior to retirement, we earned money – we were in the “accumulation phase” of life. We worked, earned an income, and tried to keep as much of it as possible after paying our expenses. At some point, we began to think about how we could keep more of that earned income – the “preservation phase” of life. And finally, when we do retire, we have reached the “distribution phase” – that period of life when we must live on the money we have “accumulated” and “preserved.”
Today, retirement is quite different than it was for previous generations, and it will continue to change and become more difficult for future generations. Why? First of all, people are living much longer, so their money must last longer. They need a guarantee to keep them in the lifestyle to which they have become accustomed. Plus, we have to factor in inflation.
Our retirement income, therefore, becomes more important than ever! We are no longer “accumulating” new money. Instead, at retirement, we become recipients of income. We become beneficiaries of retirement income. One of our income streams is Social Security. But from where does the rest of our income appear? It will come, of course, from our nest egg –
Inflation at 4% (the past 20year average is 3.6%) can have a devastating effect on our spending dollars. It’s also important to understand that the health care inflation rate is more than double! These three factors alone require far more individual planning for retirement than just one generation ago. None of us can afford to make mistakes at retirement. It’s different than making a mistake at age 26, 36, 46, or even 56. At those ages, most of us can still recover –
SAFETY PINS ... “Lifetime Income” - Continued we can accumulate additional money. But, recovering from a financial miscue at age 66 or older is far more difficult today. Today’s pre-retirees and present retirees need to have a plan and not just a product. Retirees need solutions and assurances. They need the services of a trusted advisor who can provide those guarantees. Yes, you read that correctly – guarantees – regarding your retirement income! Every person – including me – at or nearing retirement should participate in a complete review with a trusted advisor – a Safe Money Places™ advisor. Each of us needs to determine a retirement income amount that we believe will be necessary to live in the style to which we’ve become accustomed. In the process of doing this planning with a trusted advisor, we need to be sure to adjust for rates of inflation and the potential increase in our life expectancy. Then, we should implement
this new plan and monitor its progress over the years – stay on top of the changes in the financial world and our own lives and the years roll by. All of this activity requires a dialogue – a conversation – with a financial professional. Each Safe Money Places™ advisor is dedicated to helping each client (that’s YOU!) determine the best places to put your money so that it is safe and so that you can take advantage of all of the legal tax advantages that could save you thousands of dollars in your retirement income. Safe Money Places™ advisors constantly study, participate in training (continuing education), and stay on top of the latest products from all of the companies out there. Accordingly, they can customize your retirement plan that will guarantee you an income for life! Call toll-free: 877-844-0900 today, to locate a Safe Money Places™ advisor in your area. There’s no cost or
obligation whatsoever, and you’ll sleep better every night knowing you’ve got your own professional advisor on your side! About the Author: Raymond J. Ohlson CLU, CRC, CEO & President of The Ohlson Group, Inc. and SMP International, LLC Mr. Ohlson entered the insurance business while completing his Bachelor of Science Degree at Ball State University. He quickly qualified for the Million Dollar Round Table (MDRT) of which he is a Life Member. He also received his Chartered Life Underwriter (CLU) designation from the American College in Bryn Mawr, Pennsylvania. Mr. Ohlson, a former life insurance company president, currently sits on college and hospital boards and is a published author. Raymond J. Ohlson can be reached at: Email: rohlson@ohlsongroup.com.
PLAYING IT SAFE
Cast your ballot to keep democracy safe By Steve Dinnen We strive to write about safe things in this column, so when the 2016 election came to mind, the word safe almost headed for the exit. I say almost, because there are safe ways you can participate in the process and not get dragged - badly, anyway - through the mud that’s being slung around so freely this election cycle. For starters, you can vote.
You can go to the polls in November and make your choice known. And you certainly could/should have gone to the polls for primary elections held during the Spring in your state. In my case, the effort started in January when I participated for the first time ever in the much-ballyhooed Iowa Caucus. Though born and raised in
Iowa, I left at a tender age and returned in the late 1990s and began working as a reporter at The Des Moines Register. That job precluded me from participating in politics. But I no longer work at the Register, so I am free to get involved in politics. On a mild evening in January, my wife, adult daughter, and I trekked to an elementary school near to our home that served as the caucus selection site for Democrats from several precincts. We and 300-plus other people sorted ourselves out by preference for a particular candidate. For Democrats it seemed pretty easy - Hillary Clinton, Bernie ( Page 4)
PLAYING IT SAFE ... “Cast your ballot to keep democracy safe” - Continued Sanders or Martin O’Malley. Republicans at that time had a vastly wider field of candidates. Yet, the Democratic caucus was way more raucous because of how candidates are picked. Republican caucus goers simply write in the name of their candidate, go home and let the party brass count up the votes. For Democrats, candidates had to reach what is called viability – 15 percent or more of whoever showed up at each caucus site, standing for their candidate. We got a brief speech for each candidate from a volunteer supporter who, honest, stood on a lunch table to make a push for their man or woman. Then party functionaries literally counted heads of those who mustered under signs for each candidate. (These caucuses are run by the parties, not the government, so they follow their own peculiar rules).
O’Malley didn’t reach viability, so his backers decided to throw in their lot with Hillary. A little messy, perhaps. But to my way of thinking it was democracy in action. It was the first-in-the-nation preference poll, if you will, to start the (crazy long) process of winnowing out winners and losers. And it was a completely safe, responsible way for me to participate; in some small way helping to decide who will lead this nation. In the fall, I’ve volunteered to work at the county election office. It will be a non-partisan effort on my part to help get people registered, advise them of polling stations, etc. and it has nothing to do with their political affiliation. We all need to vote, right? It seems to me that is a pretty safe way to help keep our democracy up and running.
About the Author: Steve Dinnen Steve is a freelance writer specializing in financial and travel news. He received his Bachelors Degree from Drake University and his Master of Journalism from Oklahoma University. Mr. Dinnen served as Sr. Business Reporter for the Des Moines Register, Business News Editor for the Indianapolis Star and served as Editor (freelance) for the Christian Science Monitor of its weekly personal finance column.
SAFE RETIREMENT Stock Market
Fixed Index Annuity
Minimum Guaranteed Contract Value
$XXX,XXX $XXX,XXX $XXX,XXX $XXX,XXX $XXX,XXXPURCHASE $XX,XXXX $XX,XXXX $XX,XXXX
Year 1
Year 2
Year 3
Year 4
Year 5
I BOUGHT MY FIRST FIXED INDEX ANNUITY By Dr. Jack Marrion, Founder of Index Compendium and Safe Money Places
Actually my wife and
I each bought one. The reasons we’d never purchased a fixed index annuity in the past were that we’re not particularly risk-averse and we had time to recover from any market downturn. The reason why we bought now was the recovery time-frame had shortened because retirement is looming. Although over the long-term the stock market has been a good bet, that isn’t always true when
you’re looking at five or six year time spans. I was concerned we would need to start withdrawing from our investments before we recovered from the next bear market.
then subtracted what the Social Security calculator says we’ll get in benefits and what was left was our guaranteed income gap.
To fill the gap we purchased FIAs with We felt we needed guaranteed lifetime guaranteed income to withdrawal benefits. I cover our expenses during wanted the most certainty, retirement, so we created a so the one I chose had retirement expense budget. the most predictable joint The budget is, of course, lifetime income – and the an estimate, but we tried to highest annual fee. My include everything, added main concern was money a bit more, and then added coning in each year, a bit on top for inflation. We especially if I die first, and ( Page 6)
SAFE RETIREMENT - “I bought my first fixed index annuity” - Continued guaranteed lifetime withdrawal benefits. I wanted the most certainty, so the one I chose had the most predictable joint lifetime income – and the highest annual fee. My main concern was money coning in each year, especially if I die first, and knowing the exact amount of that future check when I bought. My wife wanted a lower annuity lifetime benefit fee and the potential for more income, so the FIA she chose doesn’t have as strong a base income guarantee, but offers the potential for higher income than I’m getting if she earns more interest during
the deferral period. Her guaranteed base income is little lower than mine, but she could wind up getting a higher lifetime income than me when she begins to tale withdrawals. Might we get a higher income if we just left the money in the market? Sure, and that’s why a large portion of our assets continues to be in investments. If we want guaranteed income, why didn’t we just buy immediate annuities? With the FIAs we have access to the cash value. The odds are we’ll be taking out more than we
earn, so the account value will go down, but we have control over the account. If we needed to we could cash in the annuity and take whatever is left. And, like a life immediate annuity, even when our money is gone the FIA annuity company keeps paying for as long as we live. Do I believe we would have run out of money early if we hadn’t bought the annuities? No. I’ve done the math. The reality is we’ll probably both be dead before our accounts go to zero. Then why did we buy?
SAFE RETIREMENT - “I bought my first fixed index annuity” - Continued It comes down to peace of mind. I know the income my wife and I will get from the annuities and it doesn’t matter what the financial markets do. This is the one piece of our portfolio we don’t have to worry about (it’s also the part of the portfolio my widow won’t have to mess with). Finally, if our minds get foggier in the future this is again the one thing we don’t have to fuss with. The trigger that caused us
to take action and buy the annuities was doing the budget and seeing the guaranteed income shortfall (as a side note, my annuity income is more than enough to cover our real estate taxes and homeowners insurance, so I feel like it is our “always have a home” annuity). Planning for retirement gets very real when you’re looking at the hard dollars you will need in a rapidly nearing future.
About the Author: Dr. Jack Marrion Dr. Marrion’s research on senior decision making and the financial world have been featured in hundreds of publications including: Business Week, Kiplinger, Smart Money, and The Wall Street Journal. He is the author of six books and a frequent media guest.
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SAFETY PINS
RETIRE?
CRITICAL ILLNESS
AHEAD
Should You Retire Due to an Illness? Leo LaGrotte, Chief Executive Officer, Life Settlement Advisors
Illnesses and health
conditions are the reasons many seniors take early retirement. Whether they are physical, like MS, or mentally crippling conditions like depression or Alzheimer’s, illnesses
that manifest during old age can have a big impact on quality of life. For many, choosing to retire simply isn’t a financial option, but their health demands that they take leave from work. Let’s look at some things
seniors should think about when considering to retire due to an illness.
CONSIDER OPTIONS Whether suddenly impacted by an illness, or experiencing onset symptoms of an illness or medical condition over time, seniors forced out of the workforce by illness need options. Regardless of the situation, employers are legally required ( Page 9)
SAFETY PINS ... “Should You Retire Due to an Illness?” - Continued to make reasonable adjustments so that their employees with illnesses are accommodated. Further, FMLA provides those with certain illnesses the right to time off work without penalty. Many folks worry about whether or not they can practically stop working because of an illness. What’s important to remember is that there are many sources of retirement income that pad out a retiree’s retirement fund. It’s not all decided by the amount of retirement benefit you’ve built up in your retirement fund, but also considers Social Security Benefits as well as Medicaid and Medicare benefits as well. Still, there are a few other options to consider.
PART TIME OPTIONS part-time responsibilities.
It’s important to keep in Some choose to work a mind that your physical more flexible schedule—or and mental health are the even part-time—if possible. most important. Whether Retiring completely isn’t you’re able to comfortably always feasible, especially work through your illness if it’s because of a sudden, or not, it’s good practice unplanned illness. Many to set limits and keep folks develop a retirement yourself at a practical work plan without much room for deviations. In these cases, level. Sometimes parteven a few years can make time work is doable, but it’s not always practical. quite a difference in the Consider your illness, the retirement plan when it comes to building finances. symptoms you experience, your finances, and whether Part-time employments or not continued work will can give those with an illness the opportunity have a negative impact to continue working and on your overall health and earning their respective illness. retirement benefits while also allowing for necessary Of course, instead of basing your decision time off to recoup. If the solely on the financial illness allows, consider implications, consider all adopting a more flexible schedule or only taking aspects of your wellness.
SAFETY PINS ... “Should You Retire Due to an Illness?” - Continued VOLUNTARY REDUNDANCY In some cases, taking voluntary redundancy can be the right option for your quality of life. Voluntary redundancy is a financial incentive offered by an organization to current employees to voluntarily resign from their position. They are most common among times of company restructuring or downsizing; however, they may also be presented to seniors nearing retirement, especially those who are suffering with an illness and the work becomes difficult to perform. A clear advantage of taking redundancy is that it would come with redundancy pay, which might make the decision to retire early easier to make.
CONSIDER FINANCES Whether an illness is present or not, most
Back
working seniors are already thinking about retirement. In most cases, seniors must wait until they are at least 62 before they can start claiming their pension—but those retiring due to a medical illness or condition may be able to access it earlier. One downside to retiring and claiming your pension early is that it won’t have as much time to grow as it would if you worked longer. However, when health is at risk, most don’t have much of an option. Every pension has its own details and definitions, so it’s important that you work out exactly what your retirement funds will look like. Start this process by finding out what your pension provider’s rules are surrounding ill-health and taking your pension early. Find out how much the pension is worth and how much income your pension sum can buy. In many cases, ill-health allows the
pension holder to get an increased income—known as an enhanced income. After you’ve reviewed your financial situation, it’s a good practice to create a retirement budget in order to make sure that your retirement funds and income will be sufficient in covering all costs. Of course, in the case of illness even the support of a pension and partial income might not be enough to cover expenses. Many seniors might not be aware that they have options available for them to increase their retirement funds. One option is selling a life insurance policy through a life settlement.
About the Author: Leo LaGrotte ... I would be happy to answer any questions you may have about this or any other life settlement topic. I can be reached at 888-849-0887
Visit www.SafeMoneyPlaces.com for more information about The Safe Money Choices available to you in today’s marketplace ( Page 17 )
PERSONAL FINANCE Family Home Loan Interest May Not Be Deductible TMA Small Business Accounting, P.C.
Article Highlights: • Qualified residence interest is deductible interest that is paid or accrued during the tax year on acquisition indebtedness or home equity indebtedness with respect to any qualified residence of the taxpayer. • Acquisition indebtedness means that any indebtedness that is incurred in acquiring, constructing, or substantially improving any qualified
residence of the taxpayer is secured by such residence. • Interest on unsecured home debt is generally not deductible. It is not uncommon for individuals to loan money to relatives to help them buy a home. In those situations, it is also not uncommon for a loan to be undocumented or documented with an unsecured note, and the unintended result that the homebuyer can’t claim a tax deduction for the
interest paid to their helpful relative. The tax code describes qualified residence interest as interest paid or accrued during the tax year on acquisition indebtedness or home equity indebtedness with respect to any qualified residence of the taxpayer. It also provides that the term “acquisition indebtedness” means any indebtedness that is incurred in acquiring, constructing, or substantially improving any qualified residence of the taxpayer, and is secured by ( Page 12)
PERSONAL FINANCE ... “Family Home Loan Interest May Not Be Deductible� such residence. There are also limits on the amount of debt and number of qualified residences that a taxpayer may have for purposes of claiming a home mortgage interest tax deduction, but those details are not covered in
this article, which focuses on the requirement that the debt be secured. Secured debt means a debt that is on the security of any instrument (such as a mortgage, deed of trust, or land contract):
About TMA Small Business Accounting, P.C. The TMA Small Business Accounting, P.C. staff have been delivering professional services to small businesses in Central Indiana for over 20 years. Having worked with hundreds of small business clients, we have significant expertise with a wide variety of service businesses in Indiana. We have especially strong experience and expertise in working with businesses in the healthcare (medical, dental, etc.) and foodservice (restaurants, caterers, etc.) industries. Contact Info: (317) 571-8080 info@tmasba.com: tmasmallbusinessaccounting.com
SAFE FOR LIFE George
By Norm Wilkens
Every young man should
have a “George” in his life! In my case, George was George Pieper – a south side grocer in Indianapolis, Indiana. George was not a relative of mine, but a life-long friend of my Dad. Both men were raised on the south side of the city. My father went on to college, to Medical School and practiced medicine his entire adult life with time out for service in the Army Air Corps during World War II. George did not continue his schooling beyond high school, but ran a grocery store on Shelby Street where he was a skilled butcher throughout his lifetime.
The Pieper and Wilkens families were constant friends for over seventy years. George, his two sisters and assorted family members were as much a part of our family as any close relatives. Along with an assortment of other south side friends and business associates, Saturday evenings were reserved for get-togethers with the Pieper/Wilkens clans being the catalyst to bring the various members together. The parties would move from home to home and the hosts would provide food and libation for all attending. Once or twice a year, usually at Christmas and during the summer, the groups were enlarged with the
younger generations which included my sister and me. I always looked forward to these outings because it gave me an opportunity to enjoy the companionship of a group of wonderful folks. George was always somewhere in my life. He was a presence in my boyhood, and was certainly as much a part of my daily existence as any individual I had known. He bought my first Red Ryder Air Rifle for me. He must have done a lot of talking to convince my mother that I was of an age to properly handle the BB gun experience. My Mom was certainly not encouraging that boyhood ( Page 14)
SAFE FOR LIFE ... “George” - Continued step. George then proceeded to teach me how to aim and fire the rifle properly which lent some comfort to discussions of my owning such a weapon. Then, George felt it was time for me to take some responsibility for a pet that would pay dividends. He purchased a Dutch Doe Rabbit for me and helped my Dad build a cage and house for the mother rabbit and offspring. When the broods had grown to proper size, he instructed me on the handling and selling of the babies in the neighborhood. I didn’t want to know how the neighbors enjoyed them. I was too attached to each of them by name. When we moved from a rural home location to a city site, George once again helped build a housing structure for two more rabbits that I continued to care for through my high school days. In my family, George was known as the “Outdoors Man.” He was the hunter and fisherman supreme. My Dad was good at fishing, but not at hunting. He owned guns, but rarely took his shotgun or rifle out of their protective cases. George, on the other hand, was a great camper, fisherman and hunter. Some of the most memorable and enjoyable outings of my
young life involved George. Whether it was an overnight fishing trip to Tippecanoe River, or a shooting expedition for target practice, George would provide all the details and handling. He knew how to keep a young man’s interest at a high level. The most significant case in point, happened when I was a recent graduate of high school before entering college. I had a job at a Guarantee Auto Store during that summer, but I had been promised a three day fishing trip to Reelfoot Lake, Tennessee as a “rite of passage” to adulthood. My Dad along with George and other south side friends had been going to Reelfoot every spring for a week-long fishing trip. Their exploits were famous and the catches were phenomenal. George always provided the food for these excursions along with securing the guides and cabin. To say I was looking forward to the trip with George and my Dad hardly covers my enthusiasm. About ten days before we were to leave, George was involved in an auto accident. He was injured enough that the trip was in jeopardy. My Dad thought it would be a good idea if I would visit George in the
hospital. I bought some new lures I thought he would enjoy, and went to his bedside. He certainly didn’t appear as if he would make a recovery, but in a few days, he was able to leave the hospital and told my Dad he wanted to make sure he was a part of my first experience in Tennessee. George drove most of the night from Indy to Reelfoot. I remember it was important for me to drive a section of the trip to share that part of the experience. I didn’t sleep the entire trip and talked with George during his time at the wheel. My Dad did sleep, and he took the last leg of the trip. We arrived just in time to eat breakfast and secure guides for the lake experience. George did the cooking that morning, and every morning we were there. My most memorable part of the trip happened the first afternoon we were fishing. We had come in for lunch and a bit of rest before heading back out for the afternoon session. I had fished for Bream (Blue Gills) most of the morning and was looking forward to using some new casting equipment – rod and reel – I had purchased at Guarantee. My guide and I had just pulled away from the dock
Visit www.SafeMoneyPlaces.com for more information about The Safe Money Choices available to you in today’s marketplace ( Page 13 )
SAFE FOR LIFE ... “George” - Continued and he had not even started the motor. I decided since there were some lily pads at the edge of some open water, I wanted to test my accuracy and casting arm to see if I could put the plug where I wanted it. The bait had hardly touched the water, when the explosion hit my lure. All I could think was, “Please don’t let me mess this up!” George and my Dad were in their boats not more than a few feet away. They could see my action and I could hear their comments, though I was far too busy to add to the discussion. When I succeeded in landing a three and a half pound small mouth bass on my first cast at Reelfoot, George was the first to give a rousing cheer of approval. I know most people
in that part of the lake heard his exclamation. If that had been the only fish I caught that trip, it would have sufficed in that I knew George thought it was worthwhile. My Dad and George are both gone now. As a family, we attended George’s funeral. My Dad couldn’t sit in the funeral parlor, but stood in the doorway throughout the ceremony. He didn’t talk about George much after that. It was too personal and there were too many memories through the years. However, I know that both are still enjoying being together – sharing the boyhood dreams and adult experiences of a lifetime of friendship. I was happy to have been a small part of them.
About the Author: Norm Wilkens A nationally recognized speaker and writer, Norman Wilkens has traveled to forty-seven of the fifty states speaking on topics of marketing, advertising and public relations. His most noteworthy subjects include: Healthcare Marketing; Multigenerational travel and Baby Boomers - their contribution to society and economics. He is presently serving as Midwestern Contributor to California’s AAA WESTWAYS Magazine. Among Wilkens’ current activities are the Butler University Alumni Board of Directors; Butler’s Central Indiana Alumni Chapter Board; Chairman of the Board of Visitors for the new Communication College of Butler; Board of Directors of Ruth Lilly Educational Foundation; Salvation Army of Indiana Advisory Board and as an Elder at Second Presbyterian Church of Indiana. Email: NormWilkens@aol.com
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