If you don’t want to be “broker”, fire your Broker! Sound a little rash? Think about it. Did you lose a big chunk of your retirement savings back in 2000-2003? Most lost 40-60%. Did you lose again in 2008? Many lost 20-40% or more! Now ask yourself this question, “Did you ever get back to even?” The answer is no doubt NO! So what makes you think it won’t happen again? Somehow magically your broker will get it right next time? OF COURSE NOT!

So ask yourself, “What happens if the market goes down at a time when you need the money to live on?” Of course the answer is simple, you now have a new LOWER lifestyle. How would it make you feel to have to take a “pay cut” when your retired? AND THERE’S NOTHING YOU CAN DO ABOUT IT! At least not after it happens.

There is however something you can do about BEFORE it happens! You can move to “safe” money. More on that in a minute. Most retirees I’ve met fail to realize that as you get older your retirement plan has to change. Accumulation isn’t as important as preservation; protecting your nest eggs from breaking! Now you need INCOME THAT’S GUARANTEED TO LAST THE REMAINDER OF YOUR LIFE EVEN IF YOUR ACCOUNT RUNS OUT OF MONEY. With that in mind can your brokerage account, stocks, bonds, mutual funds, reits, CD’s money market any of them provide that? NO, NO AND AGAIN NO!! So why are you stubbornly holding on to something that CAN’T give you what you want and need? Only YOU can answer that but it’s a question that needs to be answered.

It’s called “CHANGE”! We hate change. We avoid it like the plague. We don’t like to have to adjust – to move from our comfort zone – to have to LEARN something new! Instead we put our heads in the sand and hope it all goes away.

We say things like, “The market will come back”, “I’ll lock in my losses if I move my money now”, “It’s worked up till now”, “I trust my broker; I’ve worked with him for years” – you fill in the blank – what’s your favorite PROCRASTINATION phrase? How ’bout “I’LL THINK ABOUT IT!” You keeping talking and YOU keep losing! We’re so good at putting things off till disaster hits. In fact, over the years I’ve been doing this, I’ve only met one guy who made a timely decision and even then it was pure luck!

He had come to one of my Senior Estate and Retirement workshops to hopefully get some retirement advice that would work. At one point, I was talking about stock market risk when he raised his hand. He asked if he could share something with the group and I told him to go ahead. He said that the previous fall (fall of “08) right before the collapse he had an uneasy feeling about the investment advice he’d gotten from his broker. He had pretty much decided to move his money to cash to avoid the risk but was going to leave it another month or two to try to “squeeze” out a little more earnings.

He woke up one morning and felt uneasy as he looked at his investment accounts; an urgency. He hadn’t gotten back “even” yet but decided to go ahead and move out of the market. THE MARKET FELL THE NEXT DAY! He dodged the bullet! But was it on his brokers investment advice? NO. (Have you ever know a broker who said move your money out of the market so as not to risk the loss? NEVER! THAT’S HOW THEY MAKE THEIR MONEY!) No he just had a feeling. He told us he would have lost over half his retirement savings and probably would have had to go back to work. At age 70 or so that would not have been a lifestyle change most of us would not want to face. He realized his retirement plan needed to be tweaked.

Listen, please listen, your ability to have a secure financial future is at stake. I’ve been heralding for months another major downturn in the market and I’m not the only one. Here’s what Greg Roy with Wealth Insider Alliance had to say in a recent post (and he’s just one of many) -

“Our leaders bought some time and slowed the rate of economic deterioration. That’s all. They didn’t solve any problems (other than the problem that Wall Street’s billion dollar bonuses took a dip – but that problem has been solved and Wall Street bonuses are again back at bubble levels.) But now we are in a very, very precarious state. Everything economic is starting to dip again. We’ve got no Plan B to fall back on. It’s going to get nasty. Financial Armageddon is unfolding right before our very eyes. This is real, folks. Another MAJOR downturn is barreling down on us.

If you do nothing, you’ll watch your retirement accounts get destroyed … again.

If you do nothing, you’ll watch your investments shrink to next to nothing … again.

If you do nothing, you’ll see your “safe” “rock-solid” investments … “Sure-thing” trading strategies …and decades of your life-savings – get WIPED OUT … again.”

My friends, it’s time to DO SOMETHING!  STOP PROCRASTINATING!  There aren’t that many options open to you and they’re not that difficult to understand, if you’ll just take the time to DO IT!

for a detailed look at your options take a look at the PDF in the “Freebies” section above entitled “Three Investment Ships” Here’s an overview:

* Ship #1 – Leave it at risk in Investment accounts – Brokerage, stocks, variable annuities, bonds etc
* Ship #2 – Move it to cash – CD’s, Money Market, Fixed Annuities, some bonds (low interest)
* Ship #3 – Move to a Fixed INDEXED Annutiy – a hybrid of the other two ships.

Ship #3 provides these benefits:

* SAFETY: THE ONLY WAY YOUR ACCOUNT CAN GO DOWN IS IF YOU REACH IN AND PULL THE MONEY OUT!! YOU are in control. NEVER LOSE ANOTHER DIME!

* INCOME FOR LIFE: Once you trigger the GUARANTEED income stream you’ll receive your payment every month till you die EVEN IF THE ACCOUNT BALANCE IS ZERO! It’s like setting up your own pension.

* LIQUIDITY: Even though you have income for life you still have access, use and control of the money in case of emergencies. You DON’T tie up your money!

* INDEX EARNINGS: Interest earnings are tied to an index like the S&P, Dow, Nasdaq etc. but are NOT subject to any downside risk – NO LOSS IS GUARANTEED! So you can get market like returns. Interest “locks” in every year in most cases so it can’t be taken away once you earn it.

* MINIMUM GUARANTEES: Along with a typical 1-2% minimum guarantee on the annuity, there’s a larger guarantee on the income account value that varies from 4-10%. At 7.2% you would double your asset every 10 years for income GUARANTEED! (Does your broker give you a minimum guarantee?)

* BONUSES: Some companies offer premium bonuses from 5-20% in initial premiums. This help make up for some losses, help with any transfer fees etc. It earns interest with the rest of you money from day one.

* DEATH BENEFIT: Death benefit to heirs is 100% of the balance of the accumulation value or in some cases the income account value.

* 100% liquid for Long Term Care & Terminal Illness (in most cases)

Each company and product has different pros & cons, features and benefits but with hundreds of these products available, your sure to find something to meet your needs. Let me tell you this, there’s a lot of BAD press about Annuities in general. DON’T LISTEN TO THE HYPE – CHECK IT OUR FOR YOURSELF. You’ll come to learn what my clients have learned – that they’re the perfect solution to the retirement income problems facing you. My clients now have SLEEP INSURANCE and HAVE NEVER LOST ANOTHER DIME!

To see how these products might fit in your retirement plan I’ve got a new calculator that will analyze your current plan and show you how long the money will last and how much, if any, you would need to move into an FIA to solve the retirement income issue. Take advantage of my COMPLIMENTARY CONSULTATION. It won’t cost you dime to get informed!

Safe savings
Roger

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… Rank: wait… Traffic: wait… Price: wait… I: wait… Top: wait… C: wait…

I’m not the only one that’s been urging folks to move to “safe” savings options and current events are putting an exclamation point on the advice! I woke up today to the news that unemployment is stalled at 9.5.  This on top of GDP at all time low & Social Security in the red a year earlier than predicted, I have a feeling today is not going to be a good day for the market.  If you still have retirement savings in the market listen up.  Here are the headlines:

* Unemployment hangs at 9.5% (of course the real number is somewhere between 16-22%)

* GDP (consumer spending)  dropped again to 2.5% (when consumer spending gets this low, markets typically collapse. Last time this happened – in Jan – the market fell)

* 131,000 jobs lost in July

* Social Security is in the red 1 year earlier than predicted.  (More being paid out due to those unemployed taking early retirement.)

* Economic advisor stepping down (more changes in the administration may lead to instability)

There are two questions that you need to ask and settle your course of action:

*With stocks 42 percent off their 2007 highs, is this the time to be buying or doing nothing? Or-

*With stocks 66 percent above the 2009 lows is now the opportunity to sell before another major collapse in the market hits?

Valid questions … But here is what’s even more important: Many are expecting too much from what the stock market index offers and have illusions of its past returns. Investors often fail to understand that … IT’S ALL ABOUT RISK

The mantra of the inexperienced is ”Buy low Sell high” – virtually impossible to do! Especially when you consider that the long-term annual average return for the S&P 500 (including dividends) is only  9 percent.  After you pay the fees, what’s left?!  NOT WHAT YOU WANTED!  And your asked to take on ALL the risk for that!

I didn’t mention this above but here’s another indicator we’re headed for disaster. Claus Vogt recently wrote in Money & Market, “The most amazing thing was that the cash level of mutual funds fell to a new record low in March and April 2010. Lower than in 2000 and lower than the summer of 2007, and we all know how those two events played out! So when you see mutual fund cash levels come down, it’s usually a sign of a topping market.

The scary thing is: What will the fund managers do if investors decide to get money out of their mutual funds? They’ll be forced to sell stocks, no matter what the market is doing.”

He went on to say, “The weekly leading indicator from the Economic Cycle Research Institute (ECRI) has plunged from its cyclical high. It entered the negative threshold at the end of May and has since declined to -10.5 percent.If you look back in history, you’ll see that when this indicator came down to a level this low, we were either already in a recession or a recession began shortly thereafter.”

I wrote about some of these trends several weeks ago in my article “The Stock Market Crash of 2010 part I-II”  If you didn’t pay attention then, you may want to now.  If I were talking to my mother I’d be telling her to GET OUT OF THE MARKET NOW!  Watch for a market drop TODAY!

Don’t be like these guys: putting your head in the sand and hoping it all works out and gets better won’t save your nest egg. Don’t wait to see what the market will do; by then it will be too late! STOP LISTENING TO BROKERS WHO SAY, “Don’t move your money now you’ll just lock in your loses!”  It’s NOT true and your alternative is leave it there, take more losses, & what…hope you live (and possibly work) long enough to recover enough to get some income?  DON’T LET THEM TALK YOU INTO VARIABLE ANNUITIES EITHER!

Here are you choices as I see them:

1) Leave your money in the market and watch it evaporate if the predicted double dip occurs.  (Have you noticed the only ones saying things are getting better and the economy is growing is the Feds?!  As Groucho Marx said, “Who you going to believe, them or your own eyes?” )

2) You could pull your money out and put it under the mattress!  (That WOULD BE “locking in your losses” plus the house might burn down!)

3) Put it in CD’s/money market and not make anything and what you do earn turn around and pay taxes on it.

4)  Or you can finally get serious about protecting your hard earned savings and put it in a Fixed Indexed Annuity & NEVER LOSE ANOTHER DIME!

Here are some of the benefits of these NEW hybrid annuities:

* PRINCIPAL IS 100% GUARANTEED (unlike brokerage accounts, stocks, bonds, mutual funds variable annuities. It’s backed by the strength of issuing insurance company – you want A rated investment grade or better – and it’s also backed by the Guarantee Association ($350,000 in NC for each account) and regulated by the states.)

* Interest is tied to an index so you can get a portion of the upside of the market with NO downside risk (over the last 10 years the S&P delivered  a negative 4% while annuities averaged around 4% depending on crediting stratey)

* Income stream can be set up GUARANTEED FOR THE REST OF YOUR LIFE

* Won’t “tie up” your money (like your broker/banker tells you) – liquidity ranges from 10% of value to 100% depending on product – you decide.

* NO FEES (unlike what your broker/banker tells you) – in most cases there are no fees unless you add riders

*  Add an income rider and get a GUARANTEED 4%-10% growth for income depending on company and produc

* If you die the Balance goes to your heirs (unlike what your broker / banker would have you believe)

* Interest earnings are tax deferred (unlike brokerage earnings – paying taxes on money your trying to grow for income is like having one foot on the brake and one foot on the accelerator and trying to get somewhere!)

Doesn’t it make sense to have at least a portion of your portfolio is a product like this to insure your income? You insure your house, your car, your life….why not your retirement savings?!

If you want to learn more about the lies being told about these products and get the facts, read my ebook “Annuities exposed” in the “Freebies” section.  Also ck out by article “Are Fixed Indexed Annuities Being Portrayed Unfairly”.  To learn how my clients like these products read the “Client Stories”  in the upper tab.  Let me leave you with this -

OVER THE YEARS I’VE BEEN WORKING WITH SENIORS AND PRE-RETIREES, NOT ONE OF MY CLIENTS HAS EVER LOST A DIME!!!

Safe savings – Roger

PS:  Whether this applies to you or not, who do you know that could benefit from this information?  Please forward it to them! FREE consultation & retirement plan analysis

Long Term Care Insurance used to be a staple in any retirement plan but of late has declined in popularity. Of course there are reasons for this:

* The cost can be prohibitive

* Most don’t understand the need for it

* Health can be a factor as it has to go through underwritting

The Feds have recognized the need for people to be encouraged to buy Long Term Care Policies and has made a provision to help cover the cost.  Pension Protection Act of 2006 allows TAX-FREE Distributions from an Annuity to purchase Long-Term-Care Policy.  Of course you may say, “But I bought my annuity to provide an income in retirement.”  In that case by all means use it.  But the fact is that only about 2% of annuity owners ever turn their annuity into income.  Any yet almost 66% of retirees WILL need long-term-care benefits at some point in their life.

Personally, as a professional, I put LTC high on my recommendations of retirement products you MUST have. Why the emphasis?  Because the impact to you family’s income, if you have to go into a nursing home, is devastating.  The average cost of room today is around $70,000 / yr.  So think about it – you have $210,000 saved for retirement income and you have to go into a home.  With no coverage you pay out of pocket.  SO HOW LONG WILL YOUR SAVING LAST?  ONLY 3 YEARS in this example.  What happens to you spouse’s income? I think you get the picture.

I understand your concern about the cost of LTC Insurance but what’s the cost of NOT having it.  Actually on average you could pay into a LTC policy for 30 years before you’d approach what it would cost you for one year paying for nursing care. If you really don’t like paying for things you may not use, there are Return of Premium riders you can put on most policies so that if you die without using the benefits of the policy, all your premiums go to your heirs.

So if you don’t have Long-Term-Care coverage and you have money stuck in an annuity, and you have no intention of using that money this is one way to get the coverage you need perhaps with no money out of pocket.

THE FACTS

* Effective January 1, 2010, the Pension Protection Act of 2006 states you will be allowed tax-free distributions from an annuity as long as you use the annuity proceeds to purchase a long-term-care policy

* Withdrawals taken under annuity LTC enhancement Riders do NOT qualify to be tax-free under this provision. The withdrawal from these enhancements, in most cases, has to go to pay for the nursing home or hospice facility, not a polic

* Keep in mind that even though the distribution may be tax-free, clients could still be assessed a withdrawal charge from the insurance company if the withdrawal is in excess of their annuity’s free amount.

Many annuity companies offer LTC income enhancement riders that provide a way of increasing your annuity income by some factor; some as high as double. While these enhancements are not tax-free, they are still an extremely attractive feature of these Lifetime Income Riders. It adds an extra layer of protection to long-term-care insurance by providing an extra amount of guaranteed lifetime income for your client when one annuitant meets qualifying confinement criteria.1

THE CONCLUSION

* This provision shows that regulators understand the growing & fundamental need for LTC coverage and are willing to provide tax incentives so you can add this valuable benefit to your retirement plan.

* Will help make long-term care insurance more attractive and annuities available to more retirees in the future.

If you’d like to see in more detail how this might impact your future income, I have retirement income calculators that will give you the detail you need and it’s available at no charge to you. Just click here for more information about this FREE analysis.

Safe savings,
Roger

1 Each company has different rules regarding these doublers so take your time and read carefully the provisions of each.

So you’re getting near retirement or perhaps already there and now realize that you can’t touch the money from your 401k, IRA or other qualified plan without paying taxes on dollar ONE!  Yes, you dutifully funded this most of your working life and got to defer the taxes.  Good for you?!  You see you not only deferred the tax but the tax calculation so now you pay tax on ALL the money you put in, ALL the money your employer put in AND ALL the gains made on the account.  So there’s only one other pressing question to answer, “Do you think taxes are going up or down in the future?”

We’ll we know that for many taxes will be going up in 2011. Although it may not feel like it, we’ve enjoyed some fairly low taxes over the last few years; in fact the lowest in our history. Did you know that, since the inception of income taxes, the average rate has been 65%. THAT’S THE AVERAGE! Here are 3 things we know:

* that the feds need money to cover their “drunken sailor” spending (no offense to drunken sailors)
* because of this fact, taxes will be going up (starting next year) Unless of course they “sober up” & extend Bushes tax cuts. Groucho Marx said it fairly succinctly, “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”
* the income tax went to 65% during the Great Depression and we’re in similar conditions.
* (BONUS) it’s reasonable to assume our taxes are going up a lot more than we realize; directly & indirectly. Or as Groucho said, “Are you going to believe them or your own eyes?”

So given the current state of affairs, it may be time to rollover your 401K? There are several options but we’ll look at just one in this article: 401k rollover to a Roth IRA.  Here are the benefits of a Roth Conversion:

* Pay the tax now while it’s still relatively low. (Since tax has never been paid on this money, you have to pay the tax on dollar one of whatever amount you want to convert.)
* But, If done this year (2010), you have three (3) years to pay the tax; no tax this year, 50% in 2011, 50% due by April 15, 2013.
* Once converted it grows TAX FREE...
* Take it out as retirement income TAX FREE…
* And goes to your heirs TAX FREE… (seeing a pattern here?)
* No RMD’s (Required Minimum Distributions) Unlike IRA’s you also avoid having to take the money out at age 70 1/2.

Here’s the downside: YOU HAVE TO PAY THE TAX! But you can control this by the amount you decided to convert (you don’t have to convert it all) and you have virtually 3 years to pay it so you can stretch it out. It’s best to have other non-qualified savings to pay the tax. (non-qualified funds are things like CD’s, Brokerage accounts, Mutual Funds that are not IRA’s, 401k’s, 403b’s etc.) Here are the reasons to use non-qualified funds to pay the tax:

* If you pay the tax out of the qualified plan you’ll drastically reduce your after tax retirement savings.
* By Paying the tax out of NON-qualified funds you’re paying it with money that will be taxed anyway. Remember that the gains from CD’s, Brokerage accounts, Mutual funds etc are taxed each year whether you use the money or roll it back into the account. This reduces your overall rate of return. By using it to pay the tax, you keep the largest amount in a TAX FREE account that will enjoy triple compounding; make interest on the money, interest on the interest and interest on the money you would have sent away as a tax (opportunity cost).

So you may still be wondering if a Roth Conversion is right for you. Here some considerations that will help you decide:

* If you have to pay the tax out of your qualified savings and you are going to NEED THIS MONEY TO LIVE ON, then it may not be a good idea to convert.
* If you don’t need this money and it’s all going to the heirs then it may be a goo idea.
* If you’re younger, under age 65, a conversion might work if you have time to grow back the amount you have pay in tax.

To view my complete seminar presentation on Roth conversions, just click on the link in the upper right hand corner of this page on the Roth Coversion button.

I’ll cover another option to strategically role out of your qualified tax trap in my next post.

Safe savings
Roger

PS: If you have further questions, don’t hesitate to leave a comment/question or click here for a free consultation.

All my clients have one thing in common they want their retirement money safe but they don’t want to “tie” it up – they want to enjoy it!  So here’s a way to “have your cake and eat it too”.

Many of you are looking for a safe environment to put your money to avoid the volatility of the market but one in which you will still be able to get to the money when you want it and make a decent rate of return. You could move it to cash or money market inside the brokerage account but you get no rate of return to speak of. Plus there is no guarantee that the brokerage firm is safe – YOUR MONEY IS NOT GUARANTEED! CD’s are safe but you can only access the funds without penalties at the end of the term and then you only have a 5-7 day window or so.  (some exceptions) Plus you might as well put it under your mattress right now because you get virtually NO return for your investment. With both these options you still have to pay taxes on any gains further diminishing your returns. (Don’t forget that taxes start going up next year!)

Another option is Fixed Annuities.  These insurance products provide safety (principal is guaranteed) and more liquidity (typically 10%) and a little higher interest rates than CD’s (2-5%).  They also offer tax deferral with give you the advantage of TRIPLE COMPOUNDING! Unfortunately the perception is that Annuities TIE up your money.  That’s NOT reality but it’s what your broker and banker emphasize to keep you from moving your money so let’s deal with it.

Let’s say you have $300,000.   After the first year, you’d be able to take out $30,000 per year with no fees.  So the only questions you have to ask is, “Is that enough?”  The contract is typically longer on these products but there’s probably more liquidity than you think.  But let’s say it’s not enough – you need more liquidity.

To get the liquidity you want with safety and better rates of return, put part of the money in a Fixed Indexed Annuity giving you 10% free access and part in a Fixed Indexed Annuity with a RETURN OF PREMIUM RIDER. The return of premium rider allows you to liquidate the account at ANY time with NO FEES OR SURRENDER CHARGES.  Typically you’ll lose some or all of any interest earned but you can’t lose your principal.

Here’s how it might work for you.  Let’s say you have $300,000 and you’d like to have access to closer to $50,000 at any given time.  If you put it all in an FIA you’d only have $30,000.  So put $280,000 an FIA with 10% access and $20,000 in an FIA with a Return of Premium Rider.  Now you have 10% of $280K plus the full $20K = $48,000; MISSION ACCOMPLISHED.

One reason to use two different FIA’s is you’ll typically get higher rates of return without the rider so you can maximize your earnings potential.  You can also add income riders that will allow you to trigger a guaranteed income for life and still have access, use and control of the money while it continues to grow. (These riders also return 4-8% guaranteed for income)

Now, if an opportunity arises for you to buy a boat, new house, take advantage of a real estate opportunity or just move some money back in the market, when it stabilizes, you have access to the cash you need without penalties.

If you’d like to see how this might work for you, please, take advantage of my free offer to analyze your retirement plan.  It won’t take but a little of your time to make a lifetime of positive impact.  Also, please leave a comment.  I’d love to hear your thoughts.

Safe savings,
Roger Ely