The Social Security Administration has eliminated the “file and suspend” benefit (also called the social security do-over) that we previously write about in March 2009.  The do-over benefits had allowed retirees to make money by retiring early, starting benefits at the earliest age, age 62.  Then, upon reaching full retirement age (around age 66, depending on birth date),  withdrawing from the system by repaying the benefits received without interest.  Then they would re-file and receive the full social security benefit based on their current age (e.g. age 66). There was no reason for the Social Security Administration to ever allow this benefit amounting to an interest free loan and manipulation of the system.  The Social Security Administration finally figured this out.

Immediately, if a retiree applies to become a recipient of Social Security benefits, he has twelve months from the date of the first payment to withdraw the application and repay entitlements received.  This can be done one time, in other words,  to correct a mistake.

Very few people actually used this social security loophole ( I would guess that few knew about it or understood it or had the repayment funds to enjoy it). During 2009 only 1,015 of these ‘withdrawal applications’ were filed.  The number dropped in 2010 as by the end of June only 345 had applied to repay and withdraw.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

First, the alternative minimum tax, was patched so that middle income senior citizens are not caught paying an incremental tax bill. For 2010, the AMT exemption amounts will be $47,450 for unmarried individuals and $72,450 for married individuals filing jointly. For 2011, the amounts will be $48,450 and $74,450, respectively.

Next, the bill extends the benefit of senior citizens using IRA funds to make charitable donations.   Seniors age 70½ and older can continue to contribute up to $100,000 directly from their IRAs to charity. The IRA charitable withdrawal isn’t deductible, but it is not included in taxable income for the year.  This is a very significant advantage to most senior citizens whose tax on social security and health expense deduction depend on keeping their reported income down.

The withdrawal counts toward the IRA owner’s required minimum distribution — the amount retirees age 70½ or older are required to withdraw every year.

If you have already taken a distribution from your IRA in 2010, you cannot use the provision to give to charity. But if you haven’t taken your 2010 required minimum distribution, you have until Jan. 31, 2011 to make a contribution directly to charity and have it count toward your 2010 required minimum distribution.

Last, there is a break on estate taxes, an issue of concerns to senior citizens who may have significant estates.  Rather than the $1 million exemption and 55% rate that would have applied to estates for 2011, the new law reduces these factors to an estate tax rate of 35% and an estate tax exemption of $5 million ($10 million for couples with proper estate planning).

So even though senior citizens can lament the fact they won’t get an increase in 2011 social security benefits, they did pretty well with this Congress.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

Municipal bonds can be a great source of retirement income and this post will keep you from getting ripped off.  The interest is high and tax free but the way municipal bonds are sold lacks regulation and disclosure and you’re about to learn what your broker will never tell you.

Municipal  bonds are not for everyone and are best suited to those who can get maximum benefit from the tax free savings.  The maximum beneficiaries are those in the 25% or higher federal income tax bracket  ( for 2010, single people with taxable income of $34,000 or more and , marrieds with taxable income of $68,000 and more).  If your taxable income is less than these amounts municipal bonds investing MAY not be advantageous because you could make more by investing in taxable bonds and paying the tax. In other words, taxable bonds typically pay more interest so someone in a lower tax bracket will be better off getting the higher interest, paying the tax and still come out ahead.

BIG EXCEPTION:  Because municipal bond yields DO NOT have a constant relationship with others types of retirement income options,  one must analyze at the time of investment which type of bond would bring you put ahead.  The next paragraph illustrates.

Getting 5% from a tax free bond in the 25% federal tax bracket is an effective yield of 6.66%.  Where else can you get anything close to 6.66% rated AAA?  Currently (9/16/10), municipal bind interest rates are out of whack and tax free bonds pay WAY MORE than they should relative to treasury bonds or high grade corporate bonds.  That MAY be because the smart money expects the issuers of municipal bonds to default (i.e. go bankrupt) and not be able to pay off their bonds. Or, it may be due to very significant purchases by foreigners of US Treasury Securities which have pushed their yields down to uncharacteristically low levels.

You can buy bonds issued by your state or any state (or any municipality).  While many suggest buying bonds just from your state because the interest will also be free from your state income tax, it is better to have diversification.  I live in California and don’t want my entire bond portfolio concentrated here given the State’s chronic inability to balance its budget.  So I buy tax free bonds issued by others states and I will pay state income tax on this (about 6% of the income I receive) but no federal tax.

Unlike stocks, the prices of tax free bonds don’t get published in the newspaper.  There are just too many issues to list in the paper and that’s what makes municipal bind investing less than transparent.  Add to this that there is no government requirement that forces your broker to show how much commission you pay to buy a bond.  The broker simply adds their markup to the price so your transaction cost is hidden.  However, you can avoid getting ripped off.  The Municipal Sales Rule Making Board tracks prices paid for municipal bonds in recent purchases.  By consulting their web site you can check the actual recent price paid by investors and dealers. That way,  you’ll know if your broker is giving you a fair price (1% to 2% commission is fair to pay).  Or, you can use the prices that have transpired to give your broker a limit price.  Just visit http://emma.msrb.org/ and enter the cusip number (the identifying number) of the bond you desire to research.

If you are buying $25,000 of an issue, it’s not unreasonable for a full service broker to mark up the bond 2%.  However, the markup will usually be 1% or maybe .5% from a discount broker.  You can do a search for bonds trading on the market at http://www.rbcbondsearch.com and www.bondsonline.com.  You need to know enough to set your criteria when searching for bonds you might want to own: term, type of bond, rating, etc.  The web site will produce a list of bonds meeting your criteria and show you the cusip numbers so you can look up recent prices.  To learn more  about any issue, you take its cusip number (its identifying number) and look it up at the EMMA web site http://emma.msrb.org, which not only has prices but also the offering memorandum for the bond, describing all aspects of the issue and annul statements since issuance and recent trading/price history.

Now you have basic tools for becoming a sophisticated municipal bond buyer and not getting ripped off on price.  In a later post, I will review the dangers of municipal bond funds.

Financial advisors who can assist investors with retirement income investments, ProspectMatch

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

Supplemental Retirement Income

Would you rather depend on others for your retirement income needed or depend on yourself? Most retirees depend on others for retirement income–social security, the bank, their pension, etc.  Unfortunately, you cannot control any of these retirement income sources so if you get screwed, it should come as no surprise.  Let’s discuss controlling your income in retirement.

Own or invest in a business.  You can do this at any age.  In your town, there are dozens of opportunities to get needed retirement income from a  business.  You don’t need to work in it–you can just be an investor.  For example, what is your favorite restaurant?  Would that be a business you would like to own or own part of?  Then ask the owner if he is looking for investors–maybe he needs cash to send his kid to college or maybe he wants to open another location.  What about your clothes cleaners?  Are they busy?  is this a business you would like to own or own part of?  Think about everyone you buy something from and if you think its a quality business you would like to own, then ask the owner if he wants an investor.  Your retirement income needs may be satisfied right in your own town.  These local business–restaurants, clothes cleaners–they generate plenty of consistent cash for the owners.  Typically, 20%+ of the revenues can be taken as income and can be the source of your retirement income needs.

Or maybe you’ve said to yourself “I wish there were a …… in my town.”  Well why not start it?  If its a big company or a franchise then call them right now. Would you rather get supplemental retirement income from something you can control or observe that’s right in your town, or invest in stocks, or bonds with people you don’t even know, who may have questionable ethics and be the next target of the Justice Department or SEC?

“But I don;t know anything about…..,,” you say. Well FIND OUT!.  Go to the library, get on the Internet, talk to others in that business.  Retirement planning knowledge does not come out of thin air.  It comes from asking and investigating.  Be interested in looking stupid (you need to get over the American hangup of looking stupid) and asking basic questions so that you learn what you need to know to secure your needed retirement income.

Alternatively, maybe one of those local businesses want to grow and will hire you to make their business grow, assuming you have no money to invest. Take your favorite restaurant.  Have them print up coupons that you will give out to everyone you know (you can also put them on the windshield of every car parked in town).  For each coupon that gets redeemed, the restaurant owner agrees to pay you $10 to supplement your retirement income.  Sure, that payment to you may consume their profit on the meal they serve but if the new customer is impressed, he comes back again and again and the restaurant owner earns hundreds of dollars over the years from his new patron.  Same with the cleaners you go to, the fruit stand, etc.

Its time you get out and about and see all of the many sources for retirement income needed.  Put on your supplemental income glasses and see all of the opportunities around you and stop looking for the job that does not exist.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

Maintain a Steady Keel

If you are at the outset of your retirement and are counting on your savings for income, you may be a bit disconcerted about the economy and seek some retirement planning advice. A dipping stock market and housing market, rising crude prices, and the government’s refusal to make meaningful moves, make fears of another recession real and have you worried. What you do not want to do is panic – especially in your investment approach.

A Panic Move
There are some who will pull all their equity investments and put them into a money market fund or CDs. They do not want to lose any of their previous years’ gains or, at least, any more than they have to this point.  They plan to live off their money market interest and count the time until equities begin to rise – perhaps after declining. Unfortunately, neither they nor I know when the worst will occur. That’s acting like a speculator which is only for day traders and specialists.  This is not good retirement planning advice to be short term oriented.

At 65 years old, you have n additional life expectancy of twenty one years. That gives a lot of time for inflation to undermine the dollar’s value. Inflation will cut sharply into the value of your nest egg – and its yearly returns if you are completely invested in CDs and money market funds.  Better retirement planning advice is to have a long term view consistent with a 21 year life expectancy.

A Better Plan
After setting aside one year’s living expenses in a money market fund, split the balance of your nest egg equally between income and stock market investments. You require those income investments to generate some of your retirement income. Choose a good income generating mutual fund or buy some bonds (more about the differences of individual bonds and bond funds in a later post). Be sure to ladder your bonds (i.e. some for 2 year maturity, some 4 years, some 6 years and so on)  so that you can take advantage of rising interest rates over the next few years as the shorter term bonds mature. Laddering will likely smooth out your bond income from interest rate gyrations that may occur.

Do your preparation on your equity investments.  Look for stocks or mutual funds that have a history of increase in good times and hold their value in bad (Fortune magazine does an annual ranking of such funds). It is your equity investments that should offset inflation to maintain the overall value of your retirement funds. Be sure to allocate your equity investments so all your eggs are not in the same basket under any economic outcome (i.e. diversify among several industries).  Note that mutual funds and stocks are open to risks, including the potential for principal loss but the best retirement advice is to maintain a long term perspective and not react to anything you see or hear on TV or what the market did this week.

Now sit tight and be frugal. Make use of savings tips to stretch your money. Be sure to re-balance your long term investments annually (so that you have half in income/bond investments and half in equities/equity funds) and maintain your ‘12 month’ living expense fund refilled.  You’ll be around for at least 2 decades after retirement so take some good retirement advice and plan your portfolio for the same long time horizon.

For financial advisors seeking tips on how to help clients and maintain their business during an uncertain economy:

Annuity Leads
Lead Generation
ProspectMatch
Prospecting System

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

Your kids are likely far better investors than you.  The seek to learn investing on their own so as to avoid the dependence and fees of using a professional.

Young millionaires disparage the value of financial advisors per a recent study by Spectrem Group.  The study summarizes that millionaires under the age of 45 prefer self-directed investing and they believe the services of professional advisors to be over-priced.

The study polled three different age groups: age 41 to 45, 35 to 40, and under 35. The youngest group was most against using a financial advisor; 58% of respondents between ages 41 and 45 found the offerings of a financial advisor too expensive while an overwhelming 74% of those under age 35 felt advisors were over-priced.

Younger investors find the financial information they need on the Internet, according to Spectrem.  This means they are self-confident, self-taught and self-learners.  These are the traits needed for learning to invest well.

The thing that young millionaires have in common is that they are self-learners.  They know that they can easily learn investing from the Internet, magazines and books what any financial advisor can tell them.  Rather than pay someone to lose their money, these young success stories realize they can learn to invest on their own and have no one to blame for results.  And they can do so without paying fees.

They know that from the plethora investment choices, there are only two: stocks and bonds.  Every other product is just some combination or derivartive of stocks and bonds with a 70-page prospectus hiding fees so that the brokerage firms can take you to the cleaners.  If you do a little reading (yes, read the prospectus), you will learn how many fees are buried in the products maufactured by Wall Street and you will realize that all of these products are simply some version of stocks or bonds.  Learning about investing is simply reading.

It’s unfortunate, but of all financial advisors, brokers/wealth managers, whatever you want to call them (or they call themselves), maybe 10% to 15% can do anything of value for you.  The rest are just salesman of products they don’t even understand.  They have never read the prospectus for the junk they sell or understand if it’s even good for you.  If you want the best results, learn investing and take your investment education into your own hands.

Your kids have learned about investing and know that it’s probabaly best to do their own.  A good lesson.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 4,700 brokerage firms, about 167,000 branch offices and approximately 635,000 registered securities representatives.  Their job is to protect you, the investor, that you have a safe place to invest.  How well are they dong?

I did a Google search on “FINRA fines” and here’s what i found from the first two pages (there were 143,000 total results):

Finra Fines Deutsche Bank $7.5M In Subprime Case‎

FINRA Fines SunTrust $1.4M for Unsuitable Trades‎ -

FINRA Fines Terra Nova Financial $400000

Finra Fines Phoenix Derivatives, Others a Combined $4.3M – WSJ.com

FINRA fines Citigroup for supervisory violations  $1.5 million fine …

FINRA Fines Double In 2009 – Representing Investors – Blog Archive

FINRA Fines Morgan Stanley, Other Firms – On Wall Street

FINRA Fines H&R Block Financial Advisors for Inadequate …

FINRA Fines Citigroup $600000 for Failing to Supervise Trading …

FINRA Fines MetLife Securities, Affiliates – ABC News

The above is all fairly recent.  Do these fines against these firms indicate that FINRA is protecting you well OR that if protections were adequate, there would not be so many fines?  You will need to be the judge.

It is clear however, that these firms  (notice that many are large and well known to you) seem to be little interested in your benefit or profit and are complacent to break the rules.  And that’s the point of this post.  Don’t trust anyone in the investment or insurance industry without asking questions. It’s not that you should not trust, a necessary element for a healthy economy, but get all of your questions asked and issues explained to your satisfaction.  Don’t simply take anyone’s word for the facts.  Get the evidence before you invest or buy insurance.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

<!– /* Font Definitions */ @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:0; mso-generic-font-family:roman; mso-font-pitch:variable; mso-font-signature:-1610611985 1107304683 0 0 159 0;} @font-face {font-family:”Arial Unicode MS”; panose-1:2 11 6 4 2 2 2 2 2 4; mso-font-charset:128; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-134238209 -371195905 63 0 4129279 0;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1610611985 1073750139 0 0 159 0;} @font-face {font-family:”@Arial Unicode MS”; panose-1:2 11 6 4 2 2 2 2 2 4; mso-font-charset:128; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-134238209 -371195905 63 0 4129279 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:””; margin:0in; margin-bottom:.0001pt; mso-pagination:none; mso-hyphenate:none; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:”Arial Unicode MS”; mso-font-kerning:.5pt;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:”Times New Roman”; mso-bidi-theme-font:minor-bidi;} .MsoPapDefault {mso-style-type:export-only; margin-bottom:10.0pt; line-height:115%;} @page WordSection1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.WordSection1 {page:WordSection1;} –>

A rollover IRA is a retirement account that you can use to consolidate the funds you’ve set aside in various other retirement accounts. Bringing your funds together can give you access to a wider range of investment options and will make the management of your investments much easier. This way, if your retirement savings goals change, you can change the strategy for the management of your money quickly and easily. And make no mistake – your goals will change as your life changes.

A rollover IRA is also known as a target IRA by most financial professionals. What this means for you is that this is the IRA where your money is going to wind up – regardless of where it came from, it’s the target or destination of the IRA rollover. Be aware when you’re considering a rollover IRA that some types of IRAs can’t accept funds from other types of IRAs. Therefore, you’ll want to choose a rollover IRA that is of a type that can accept money from all of your old accounts (or, if not all, at least the majority of them).

If you haven’t already, this would be an ideal time to enlist the services of a financial professional. Many of the current IRA rollover rules can be very complex, and simple missteps in the IRA rollover process can lead to significant costs, in terms of unnecessary taxes, fees or penalties. This really isn’t an arena that you’ll want to walk into by yourself.

Once you’ve determined the type of rollover IRA to set up, the next thing to remember is that in almost every instance, you want to request an IRA direct rollover. As the name implies, this type of transfer occurs when money is moved directly from the administrator of one account to the administrator of the other. The money never comes into your hands. This is vital to protect the tax status of the money you’ve accumulated thus far. Once you take possession of your money, it can be classified as a withdrawal or a distribution. In that instant, you are subject to mandatory withholding – usually 20% of your account balance – as well as taxes and penalties.

To initiate an IRA direct rollover, contact the administrator of your target IRA and tell him or her to perform an IRA direct rollover; use those exact words. This will begin a legally defined process whereby the administrator of the target IRA will contact his or her counterpart at the old IRA and arrange for the transfer the money, typically using a check or a wire transfer. There will be some paperwork associated with this, but the administrator will be able to help with any questions you may have.

Following these simple rules, you’ll be able to use the rollover IRA process to both consolidate your funds and maximize your control over them. This way, as changes in your life necessitate changes in your retirement goals and strategies, you’ll have easier access to your retirement money to make those changes.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

Receive 12 monthly issues of the SeniorFinances Newsletter. Here is a small sample of articles that have appeared: Social Security Benefits How To Get A Bigger Check If You Can Save In Retirement Put It Where It’ll Count Eight Ways To Generate Supplemental Retirement Income Without Special Skills The Best Ways To Take Charge Of Your Retirement Income And Expenses A New Type Of Trust May Be Able To Solve Many Estate Planning Problems How To Get Income From An Old Life Insurance Policy Refinance Your Rental Property For More Retirement Income Annuities That Help You Qualify For Medicaid   The articles are written by financial professionals who don’t sell anything. You get unbiased information that helps you make better decisions or judge if your current financial advisor is giving you the complete story.   No cost to you and you can stop the subscription at any time.   To subscribe, click here.   Thank you,

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

There can be no question that saving for your own retirement is a financially sound and important thing for you to do, and one of the most common and popular methods of doing this is by investing in a 401K plan at your place of work. But what you may not know is that not all 401K plans are the same.

If you are like many people in the United States, the chances are that you have had several jobs over your working life and, as a result, still have a number of 401K plans with different former employers. Or perhaps you have recently retired, but are not yet ready to cash in your 401K plan(s). Whatever your individual circumstances may be, you should be aware that your 401K plans could actually be costing you money.

Under the current laws, not only are the companies administering your 401K allowed to charge maintenance and service fees, but they are also not required to inform you what those maintenance and services fees are. Some insurance companies and stock brokerage houses are charging as much as 4% or 5% per year off the top for the plans they administer, which can significantly decrease the annual yield and value of your plan. (There are also fees and charges associated with maintaining IRA accounts, and generally there will be management or transaction fees associated with most products.)

Specific fees that are considered to be “hidden” are:
 Trading costs, commissions between fund managers and brokerage firms
 Soft dollar “excess commissions” paid to brokerages pursuant to Securities
 Exchange Commission (“SEC”) rule 28(e)
 Sub-shareholder (participant) servicing fees – called “sub-transfer agent fees”
 (“Sub-TA”)
 Account distribution (sales) based 12(b)-1 fees
 Account servicing based 12(b)-1 fees
 Unitized variable annuity wrap fees
 Variable annuity mortality costs
 “On-the-fly” pass through fees
 Retail versions of institutional funds (i.e. funds that could be purchased at a lower price but are not, due to fiduciary ignorance)

Unfortunately, managers at many companies have signed on with 401k sponsors and simply do not understand the fees involved.  Since the fees are not paid by the company, bu rather by you and the other participants, they have small motivation to look hard at the fees.  In fact, a study by Spectrem Group showed that most plan sponsors don’t know what they pay. 

So unless you ask and thoroughly read the prospectus and make sure onerous fees are not being levied against your account, it’s best to do an IRA rollover and not leave your funds in a high priced qualified plan.

Listen to this post

Bookmark It

Read The Full Story Here

Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements