Planning for Your Future NOW

www.ehstoday.comAs another year gets off to a fast start, I have many clients and friends alike who have become nostalgic for the past and tend to reminisce about where the time has gone. Their once full houses are either devoid of children, brimming with new grandchildren, or still house a few adult children transitioning into their own independent lives. In all of these cases, I understand the tendency to look backward and reflect; but I also try to relate the importance of looking toward the future. I want the Baby Boomer generation to be sure to focus on their present financial habits in order to plan for the best retirement they can.

I’ve listed some helpful tips to get the conversation started, but for more information and insight don’t hesitate to set up a time to speak with me by calling 877-476-5051. For the moment, let these act as some guiding principles of retirement planning:

Decide what age you want to retire at. Many clients picture their first day of retirement as a time far down the road that is not worth the time and effort to even start thinking about now. Simply put, retirement can start early if you plan accordingly. Not only would you be able to travel or pursue lifelong dreams, you’d also be safeguarding yourself against unplanned health concerns or unforeseen job troubles down the line. Be aware, according to a report by The NTAR Leadership Center, over 50% of those job seekers aged 55 and up have spent 27 or more weeks looking for work; their younger counterparts in that same duration only total 40%.

Update your portfolio if need be. When it comes to your retirement, don’t just stick with the plan you made ages ago. The market is forever in flux, and it takes constant attention and care to make rsure you’re getting the most out of your portfolio. As time goes on, you need to reassess the risks within your portfolio since you increasingly have less potential recovery time. It’s imperative to find the right balance between aggressive and conservative risk taking, and you want your money to grow at a steady pace.

Despite being a potentially difficult task, get your estate planning in order. Often when clients consider planning their will, it causes an emotional challenge that they would rather just avoid. Remember that caring for your loved ones does not mean you are leaving them tomorrow, just that you are being a responsible planner. While the Fiscal Cliff deal left the estate tax exemption at $5 million, those underneath that threshold should still make the proper preparations. Your beneficiaries are important to you, so make sure to get the support of your family and friends to accomplish the estate planning.

These pieces of advice are simply to get you thinking about your future with as much fondness as you look toward your past. I assure you, breaking out those old photo albums will be much more pleasant when you have the peace of mind that you and your family are taken care of for years to come. Do you have a process to filter out all the myths, misconceptions and even incorrect information that you may have received to make sure any major financial decision is made in your best interest?

Make sure you have all the facts necessary to make the right decision with your financial future by calling us today! Speak with us now at 877-476-5051, email Warren at, or go to to learn more about Warren Elkin and his unique process to make sure your financial decisions are made in your best interest.

Have a great day,
Warren Elkin

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Financial Hide and Seek: Finding the Stealth Taxes that Congress Missed

Good afternoon!

The financial sector greeted 2013 with a collective sigh after spending a nail-biting few weeks unsure of how the potential Fiscal Cliff would affect us all in the new year.  I received many emails and phone calls during this tenuous time; most clients wanted reassurance that their investments were safe.  Keep in mind, the Fiscal Cliff sounds confusing because it is.  While the most obvious premises of the deal are more easily researched, there are stealth taxes that could be costing you money at this very moment.

As a Retirement Income Specialist, it’s my job to seek out these hidden taxes that could potentially hurt my clients.  I want to provide you with a brief synopsis of these stealth taxes, but to learn more you can set up an appointment to discuss current financial trends and how they affect your personal finances.  Set up an appointment by visiting us at

There are two provisions that were previously dormant from the 1990 tax increase that, as of this week, are re-enacted.  The Pease and PEP will now limit deductions and exemptions for taxpayers in a higher income bracket.  Those who make above $250,000 will potentially suffer the steepest tax increases under this new law.

Of that bracket, married couples with two kids could see a 4.4 percentage point rise in their marginal tax rate.  Americans with incomes topping $1 million could lose up to 80% of itemized deductions, which includes mortgage payments, healthcare, local and state taxes, and charities.

While missing from the main coverage of the Fiscal Cliff deal, Congress has allowed the Social Security Payroll Tax Cut to expire.  Over the past two years, wage earners have enjoyed a 2-percentage-point-cut in the payroll tax.  By allowing this to lapse, that percent now returns to 6.2%, earning the government about $115 billion a year in revenue.  This means the average taxpayer now loses approximately $740 a year.

There are also other stealth taxes that are not covered by the Fiscal Cliff deal.  Things like Phantom Income Taxation, Social Security Taxation, and IRA losses you can’t deduct.  Have you ever heard of Phantom Income Tax before?  Are you paying taxes on your Social Security?  Do you have losses in your IRA?  These are great indicators that you could benefit from a simple review process.

All of these stealth taxes have variances, depending on income bracket, etc.  Don’t start 2013 in the dark about tax policies.  Meet with Warren before going to see your CPA or completing your tax return to learn what questions to ask your CPA to cut your taxes now and avoid tax problems in your future.

Make sure you have all the facts necessary to make the right decision with your financial future by calling us today! Speak with us now at 877-476-5051, email Warren at, or go to to learn more about Warren Elkin and his unique process to make sure your financial decisions are made in your best interest.

Have a great day,
Warren Elkin

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Are All Annuities Created Equal?

During the holiday season, I was a part of many celebratory meals where family, friends and food were the main attraction.  One evening at a potluck, we were surveying a particularly full dessert table that boasted five different kinds of cookies.  While most of us paused in indecision, one guest remarked, “they’re all cookies, they’re all the same so there’s no bad choice to make!” But is that really the case?

It’s hard for me to ever turn off my analytical nature, even in the face of sugar and carbohydrates, so to me this observation was far from the truth.  My mind immediately leapt to the idea of annuities, and how many of my clients feel all annuities are created equally.

The truth is, they’re not.  Just like each of those cookies had a unique aesthetic, caloric content and taste, each annuity has a varying return for particular clients.  Admittedly I’m no help with decisions about sweets, but I do know that in finance many investments may look equally appealing to my clients. Annuities are one of the most misunderstood products in the industry today. Do you know how to separate all the myths, misconceptions, and opinions about annuities from facts that would help you make a sound financial decision?  Consider setting up an appointment with me before you make an important choice by calling 877-476-5051.

In particular, Fixed Index Annuities stand out among the platters of investments shown to investors.  That’s because they offer a minimum rate of return called an “income floor” that grows for purposes of income.  The result ranges from 4% as a minimum rate of return to as high as 8% per year compounding.

With a fixed index annuity, your income could be even higher if the market outperforms that 8% per year.  When you or your spouse finally decides to turn on the income, you will receive lifetime income; in addition, you can still maintain control and access to your money when you decide you need it.

The income from a Fixed Index Annuity also does not cease once you pass away (in most cases), so your spouse can keep building on the contract and better take care of your heirs in the future.  While there are still fees, they are considered very minimal in comparison to other plans.

Now that the holiday feasting is behind us, make sure you’re filling your wallet as much as you filled your belly!

There are some variances in the contracts for different Fixed Index Annuities, so make sure you have all the facts necessary to make the right decision with your financial future by calling us today! Speak with us now at 877-476-5051, email Warren at, or go to to learn more about Warren Elkin and his unique process to make sure your financial decisions are made in your best interest.

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Is Your Money Slipping Through the Cracks?

Around the holidays, money is one of the largest topics on anyone’s mind.  Whether you’re lamenting the sum total of your holiday gift expenses or outlining your budget for 2013, end of the year finances are an important subject.  I’m no stranger to these money concerns, as I’ve built a business on helping clients conquer their money fears and learn to get the most out of their investments.

As a Financial Advisor, I’m responsible for a lot of big-ticket financial worries.  People come into my office looking for long term investing solutions, but the long term is only part of retirement planning.  It’s important to look at the places in your life where money could be slipping through the cracks.  Money that could help boost your retirement. Here are a just a few things that might be slowing stealing your hard earned income:

  • Mutual funds can seem like a great investment to aid your retirement, but the fees associated with managing mutual funds can eat away a great deal of your returns. Investment advisory fees, 12b-1 distribution fees, and administrative costs can really add up. So check your expense ratios on Morningstar or use the FINRA Fund Analyzer. If they’re pushing 1.5% or 2%, it may be time to reevaluate your investment.
  • Planning for retirement can take so much thought and effort that people often overlook the biggest place they can save money every year: taxes. I’m not talking about the big income tax fight going on right now, but rather the “stealth taxes” that are sneaking by while the focus is directed elsewhere. Medicare payroll tax and the taxation of Social Security are bad enough, but the biggest hit will come from the new 3.8% Medicare tax on investment income. With all these changes happening, it’s time to take a good hard look at your taxes and investments to make sure you’re not losing out on thousands of dollars because of these silent money killers.
  • If you have cash in your money-market fund then you’re probably only earning a measly 0.01%.  This means for every $10,000 you have in savings, you’re only getting $100 in returns.  Savings accounts aren’t much better with the best rates not even reaching 1%. With inflation increasing at an average of 2.42% a year over the last decade, leaving money in these accounts is a recipe for money loss.

Staying aware of where your money is and how you’re spending it can shield you from these costs.  Don’t be complacent with your savings, and always make sure you’re staying on top of what is the best option instead of what is most convenient.  Let me help advise you in all of your investment decisions. The biggest gift I can give my clients is the financial knowledge necessary to be the most savvy consumer and investor in the marketplace.  Happy Holidays!

Make sure you have all the facts necessary to make the right decision with your financial future by calling us today! Speak with us now at 877-476-5051, email Warren at, or go to to learn more about Warren Elkin and his unique process to make sure your financial decisions are made in your best interest.

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5 Life Insurance Myths to Free Yourself of Now

Life insurance may not sound all that exciting, but when you do stop to think about life insurance and you, it’s not uncommon to assume that since the concept of life insurance is simple enough, so too are the products. It’s also fairly easy to rationalize the things you really don’t understand about life insurance, and before you know it, you’re harboring potentially damaging life insurance myths.

In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

The coverage you get at work is enough.

While this may, in fact, be the case if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes, for most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially, it must also pay off any debts, such as the mortgage or even the MasterCard, as well as settle up with Uncle Sam.

Only the working spouse needs life insurance.

This is a curious — and wildly inaccurate — belief, yet it somehow persists. Life insurance on the breadwinner is intended to fill in the gap left by the loss of a paycheck, but that discounts all the valuable work a stay-at-home partner contributes to the relationship. If you’re used to this arrangement, how would you pay for child care or the cleaning, or even manage the household without a little financial help in the event of such a loss? It can be easy to overlook the many contributions of the non-breadwinner, but to do so would be remiss.

The value of your life insurance coverage should equal two years’ salary.

Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If your lifestyle is more modest and you’re not financially responsible for anyone, on the other hand, then two years’ salary may even be excessive.

Single people without dependents don’t need to own life insurance.

While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents. And as one MSNBC article on the topic suggests, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

You don’t need professional services to buy life insurance.

While this is, in fact true, as any consumer can go online and shop for, and even buy, term and permanent life policies, electing to go it on your own can be detrimental to your financial future. A professional life insurance agent advisor can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of myriad different policies, if you’re honest about your financial and life circumstances, a professional can not only help you determine how much coverage you need, but also help decide whether a term or permanent policy is right for you. They can even customize a plan to meet your unique needs.

The most powerful benefit of life insurance is transferring wealth to your heirs, so if you have substantial tax deferred wealth like annuities and qualified plan dollars then life insurance can be a wonderful gift to transfer your wealth to your heirs in a tax efficient manner.

To learn how Warren can help you make sound financial decisions based on facts and not emotions, misconceptions, or opinions, please call 877-476-5051 or email Warren at today.

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How to Keep the Housing Crisis from Bursting Your Retirement Bubble

Everyone dreams of that perfect little retirement home in the relaxing tranquility of some quaint town on the shores of something beautiful.  Ahh, yes.  We can picture it now. The feel of a cold drink in our hand and the sun beaming down on our face.  The birds are singing and the waves are lapping at the shore.   Then suddenly, “Pop!” What was that, you say. That was the sound of that dream bubble bursting for the 1.5 million older and retired Americans that have lost their homes to foreclosure along with much of the financial security that came with them.

The reality is that, for many older Americans, their dream scenario has turned into a living nightmare.  Instead of visions of beach houses or lakeside homes, many retirees find themselves clinging for dear life to the homes they have inhabited for years.  The housing crisis knows no boundaries, and it has certainly proved that by inhabiting the lives of many retired and soon-to-be retired individuals.  Unfortunately, the tidal wave of foreclosures continues to splash through the 50+ age group.

The AARP released a report outlining the foreclosure climate in the lives of older Americans and the results were a little frightening.  Over 1.5 million of them have already lost their homes.  Currently, about 600,000 people in the 50+ age group are in foreclosure, while another 625,000 are over 3 months behind on their mortgage payments.  16% of all 50+ Americans currently owe more than their homes are worth.

These numbers are not what many Americans are accustomed to.  The proportion of seriously delinquent loans held by older Americans has risen over 450 percent over the last five years.  Many of these people have gone their whole lives with nearly perfect credit, but have now hit a solid wall of debt that doesn’t seem to be budging.  Things aren’t getting any easier with age.  Among Americans 75 and older, one in every 30 homeowners are in foreclosure.  Five years ago, that proportion was just one out of every 300.  The numbers are hurtling downward at an alarmingly fast rate, and they don’t seem to be slowing.

These statistics are more than just ink on paper.  They are seriously altering the lives of many retirees, forcing some to re-enter the workforce or drastically change the budgets they had planned out years earlier.   Their retirement dreams have disappeared and they are simply trying to stay afloat.

The report showed that younger Americans are struggling as well, but the number of older Americans entering the dreaded foreclosure zone is increasing at a much faster rate.  One of the main questions is simply, “Why?”  Why are so many older Americans falling into trouble?   What’s the problem?

The problem is that many of these people set their budgets and their retirement plans before the economy, well, you know.   Most of them are living on a fixed income and quickly find themselves plowing through their retirement savings.  The income from their investments has been drastically cut, but their house payments have not.  Picture this: the faucet of their main source of income has slowed to a drizzle, but the drain of payments remains wide open.  It doesn’t take a financial expert to realize that it’s only a matter of time before the pool of funds will be completely dried up.

That can be a pretty disheartening image, but the bursting of the housing bubble doesn’t have to burst your bubble of retirement dreams, you simply might have to alter your path to get there.  Planning for these difficulties ahead of time can drastically reduce the struggles you could face.  Many people approaching retirement can analyze their investments based on earnings and interest rates of the current market and forecast their plans more accurately.  It might not be as pretty, but it’s a more realistic picture of what things will look like.

The most important thing is to not be blinded by your dreams, but use them as your vision to create a plan that works for you and your future.  With some planning and a little creativity, you could find yourself livin’ the dream in no time!

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Five Things You Didn’t Know About Ford’s Pension Buyout

Much of the financial news this summer has revolved around Ford’s new pension plan, which sprung into action in August.  The plan offers lump sum buyouts to about 98,000 people, mostly Ford retirees or surviving spouses, as well as former employees vested in the plan or salaried workers in the union, from their current pension plans.  The plan is being rolled out among small portions of this group, about 15,000 people at a time, allowing them to opt out of their long term pensions for a more immediate sum.  As these offers arrive in the mailboxes of more and more people, there is a growing need for these people to understand the facts and figures behind this offer and their life altering decision. Knowledge is power, and this case is no different.

Here are 5 things people need to consider before making this crucial decision.

  1. Ford’s Motivation: They aren’t offering this lump sum out of the goodness of their hearts for the benefit of the retirees.  Ford Motor Company is sitting in a 50 billion dollar pile of pension liability and this new plan allows them clear out about a third of hat tand create some breathing room moving forward.  This isn’t to say that Ford is hanging its retirees out to dry, as many will benefit from accepting the sum, but the decision to accept isn’t as much of a no-brainer as it has been in years past.
  2. Calculated Sum: There is no set sum offered to everyone, and the numbers given to each individual are far from arbitrary.  The dollar amount offered to each retiree is based on a variety of factors in a set calculation.  These factors include things like age, years with the company, years retired from the company, interest rates and so on.  This is one of the things that makes the decision so difficult.  Your characteristics that comprise  your formula are very different than anyone else’s, which makes each situation unique.  Keep in mind, this plan was created to save Ford money, which means with those calculations they plan on the average lump sum being less than the average life-time worth of pension payments.
  3. Interest Rates: Years from now people will be looking back on their decisions, judging whether they went the right route.  One of the biggest determinants of this success is based on interest rates.  If you are certain you can do better than the rate of return used to calculate your lump sum amount, than you should take the money and run.  On the other hand, if you take the offer, and your investments have a lower rate of return, than you will have lost money on the deal.  Right now, we are sitting a low rate environment, which makes the pension itself worth more, but for the future, it’s something of a guessing game.
  4. Personal Health: One of the biggest factors effecting whether the lump sum is a good or bad choice is a person’s life expectancy.  This factor is also one of the hardest to determine.  If you die tomorrow, the lump sum would be the wise choice.  If you live to be 120, the pension payments is the way to go.  Chances are, your reality will be somewhere between the two.  By knowing your personal health situation, you can make a better decision in terms of calculating the value of each.  This is especially important for women.  Pension lump sum calculations are not allowed to take gender into account, so the longer life expectancy for women puts a point on the “pro” side of long-term pension payments.
  5. Investment Plans:  If you go the lump sum route, the hard work isn’t over once you get the check.  Actually, it’s just beginning.  If  you take the lump sum, only to go bury it in the backyard, you won’t being doing yourself any good.  Last I checked, Mother Earth didn’t offer much of an ROI.  Have plan of action in terms of what you plan to do after you receive the payment.  Get professional advice and make a wise decision based on your finances, your portfolio and the level or risk you wish to take on.

Ford retirees are facing a difficult decision, but knowing the factors that affect that choice and their success with it, can make it much more simple.  The most important asset in this scenario is time, and the ability to use that time to weigh all the options and all the repercussions, both positive and negative.  Time is money and knowledge is power, and if you take your time and  gain the right knowledge, you may just find yourself with both.

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Shattering the “Glass Ceiling” of Retirement

We have all heard of the “glass ceiling,” and in recent decades, society as a whole has worked toward shattering it.  Though many will argue that the ceiling is still intact, there is no question that women continue to approach it, and many have been able to break through.  Despite the focus on that effort, women are finding themselves with a new problem on their hands once they find their financial success: how to prolong that success into their retirement.

Studies upon studies upon studies have proven that women lag behind men in their retirement planning.  It’s easy to point fingers at various causes of this.  Some say that it’s because the male dominance in the financial industry causes women to shy away.   Others say that women lose their financial momentum when they take time away from their careers to raise a family.  Still others blame the mother’s instinct to put their family before themselves as the cause, pushing their own financial future toward the back burner.  The truth probably lies somewhere in a combination of them all.

While the causes for the lack of financial planning in women are still in the air, the effects are pretty obvious.  Women are living longer than men, but are saving less.  A recent report from the ING Retirement Research Institute found that women who are 50 to 69 have about 20% less in retirement savings than men in that age group.  This increase in life expectancy and lack of savings has left 9% of all women over the age of 65 living in poverty.  It’s a growing problem that needs to be addressed early and often if women are to shift the trend.  There are a few things that women can do now, in their working years, to prepare for their upcoming retirement.

Take advantage of your benefits-  All women, whether they are married, single, or divorced, need to take advantage of the benefits available to them through their employers.  Despite the fact that more and more women are becoming either the sole or leading breadwinner in the family, many of them are not focusing on the financial benefits that come with their careers.  It’s important that women are getting the full benefit of employer retirement programs, such as 401(k) matches, and invest all that they can.  In many households where both the man and women are working, the women’s income is often used for more discretionary purposes while the income from the men is used for their investments.  In the long run, women need to make sure that they are making the most of their money and their future.

Increase Survivor Benefits-  With the life expectancy of women continuing to rise past that of men, it’s important that women make note of the survivor benefits they will receive if their spouse is to pass away.  The most obvious of these situations is in defined-benefit pensions and Social Security payments.  In defined-benefit pensions, it can be tempting to take the single life offer that brings higher payments, but to help protect the future of the surviving spouse, the joint survivor benefit allows for partial payments to continue after the death of the retiree.  Also, applying for Social Security early will leave the surviving spouse with much lower payments later, so it’s important to delay application for Social Security benefits for as long as possible to ensure the largest payments later.

Learn About Your Finances Now, Not Later-  61% of men say they are most responsible for retirement and financial planning decisions in the household, while only 34% of women claim that responsibility.  It’s important for women to understand these decisions and learn the lessons of their financial planning now, so they can make more informed decisions later.  Because of increases in divorce, women remaining single, and life expectancy, the majority of females will, at some point, find themselves on their own, which means they need to be able to make critical decisions about their financial future for themselves.  Whether this means seeking out a financial professional for advice, or making smart decisions on their own, it’s critical that women learn the ins and outs of their financial portfolio now, or they will suffer the consequences later.

Women are continuing to make strides in terms of their professional and financial independence, and it’s important that as they reach those goals, they understand what to do when they get there.  By planning for their future, taking advantage of the opportunities around them, and taking the time to educate themselves, women can continue to make strides in their retirement as well.

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The Key to Solving Your Retirement Problems

“There are no guarantees in this life”. That’s what we have always been told, and many people have adopted that mantra into their retirement planning.

In recent years, it seems as if there are no guarantees in retirement investments and retirees are learning that lesson first hand. With pensions seemingly becoming a thing of the past, 401(k) fees rearing its ugly head, and the future of Social Security up in the air, the retirement landscape is becoming more and more questionable every day. With so many uncertainties, there seems to be one “safe” option surfacing more frequently: an annuity.

Annuities are a fundamentally different type of investment from many of the more traditional options. With rising insecurity about the ability to fund a happy and healthy retirement, people are turning to the security of annuities because annuities often solve the most pressing problems and fears that retirees face.

Afraid of Outliving Your Money?

It’s no question that people are beginning to live longer and healthier lives. This news should have people celebrating all the extra experiences they will have and additional memories they will be able to make, but instead they are worrying about how they will afford those extra golden years. The structure of an annuity eliminates worry and allows retirees to focus on how to spend their time instead of how to save their money. Annuity products can provide income to retirees for as long as they live, even if their account balance is zero. This is true even if they enter a nursing care facility; where often times the monthly payments from the annuity will double to help cover the costs of care. This means there is never a threat of outliving a life savings and that allows seniors to enjoy every minute of their retirement.

Afraid of the Market Crashing Again?

Market instability is a fear on the minds of nearly everyone approaching retirement, especially considering the recent beating that many portfolios endured. This is why more retirees are adopting the “fool me once, shame on you, fool me twice, shame on me,” mentality by protecting themselves from another market crash. How are they doing this? Annuities. Annuities are state regulated, so retirees can have security and confidence knowing their money is safe from anything the market will throw at them.

Afraid of Low Interest Rates Stalling Your Investments?

Interest rates have taken a downward tailspin in the past few years, and many retirees are unhappy with the new lower percentages. Annuities defy these depressing digits, giving retirees 6, 8, and even 10% return on their investments. Some people see those numbers and think that it’s not possible, or that pages of fine print are hidden behind those percentages, but more and more people are finding that 10% interest isn’t too good to be true. They can earn 10% interest on their annuity, and have that rate guaranteed for years to come. Gone are the days of having to settle with one or two percent interest on your hard earned money. Annuities offer a way to make your hard earned money work for you.

The anxieties surrounding funding a retirement lifestyle are an unnecessary evil for retirees. Annuities can give you the money, and the peace of mind, that you want so you can enjoy your retirement. The thought that there are no guarantees in retirement is a thing of the past and annuities seem to be the key to the future.

For more information on annuities, click here to receive a free informational booklet in the mail or call 1-877-476-5051 to learn how you can earn 10% interest toward your retirement future today!

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5 Things To Know About Your Parents Financial Future

Parents spend their entire lives planning for their children’s future but, as goes the circle of life, there comes a point when that responsibility starts to shift.  Many children take on the role of caretaker for their parents.  They do all the things that their parents once did for them: drive them to the store, make them their meals, and so on.  Well remember when you were a kid and your parents gave you an allowance, or only let you spend a certain amount of money at the store.  They were, in a small way, helping protect your finances.  Well, one of the most important aspects of becoming involved in your parents’ lives is understanding and managing their finances.  Of course your parents might not take well to you handling their allowances or expenditures, but it’s important that you get involved early and often in your parents financial planning.

More and more children are finding themselves either completely or partially financially responsible for their parents in their retirement.  In some cases, that situation is unavoidable, but there is a way to make sure your parents have financial stability as they age and make that transition from supported to supporter easier on you and them.  The main thing is to discuss the issue early.  It’s easier to plan for your parent’s financial future if you’re not planning out your own retirement at the same time.  Talk about it early, and talk about it often.

Some parents try to avoid discussing their personal finances with their kids, so it could be helpful to start the discussion by asking your parents for advice on your finances.  That gives you a window into the decisions they have made, and allows you to give them bits of advice you think they would find useful, without hurting any egos.  Once that window is open, there are a five different pieces of information you need to discuss about your parent’s financial situation and plans.

1.       Important documents-  All parents have their super clever secret hiding spots where they keep all their important files and documents.  If you are lucky enough that your parents remember where these super clever secret hiding spots are, than you are a step ahead of most of us. It’s important that you ask them where many of their important documents are located.  These are things like their will and living-will, life insurance policies, information on their financial accounts, financial power of attorney and more.   Knowing where these are kept is critical because a) you know your parents actually have the documents and b) you know where they are in the case of an emergency.

2.       Long-term care insurance-  It can seem like an uncomfortable subject, but the earlier you talk to your parents about their long term care, the less expensive it will be for both them and you.  Like any insurance, long-term care insurance is cheaper if you buy it when you’re younger and healthier.  Even with parents as young as 50-years-old, planning for the financial strain that long-term care can present is a conversation worth having.

3.       Social Security Planning-  Social Security is blanket that covers a lot of people in their retirement plans, but it’s important for your parents to determine when they should be tucked in.  The point at which a person should begin to collect Social Security benefits depends on a few details, details which you should ask your parents about.  It’s important that you ask how much they have saved in various contribution plans such as a 401(k) or IRA.  Also, find out how much they can expect to receive from a possible pension.  The funds available to them in these accounts can drastically affect the point at which they should apply for Social Security benefits.

4.       Investment Legitimacy-  We have all have that sweet old aunt who proudly told everyone how she received that letter in the mail informing her that she won the jackpot in some sweepstakes and will receive the prize money just as soon as she sends in her bank account information.  This is obviously a drastic example, but it’s important that you ask your parents about their investments that they have made and ensure that they aren’t involved in anything risky.  Older individuals are often targeted by scammers, so it’s an important conversation to have.  Even investments that are legitimate may involve too much risk to be worthwhile for them.

5.       Plan for their plans-  Trends have shifted to the point where the majority of young people expect to care for their elderly parents in the future.  In order to plan for this care it’s important to know their plans.  Ask them when they expect to retire, where they plan to live, and how much money they have saved.  These answers will allow you to better prepare your finances in way to give them the support they may need.

When it comes to your parents future there is a lot to discuss, and in order to get to all if it, you need to start the conversation early and revisit it often.  It may not be easy or fun, but your parents probably had a struggle or two with you back in the day trying to get you to comply with their conversations.  It’s the circle of life, and embracing your new role to clear up the essentials now can save your parents, and you, a lot of money later.

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