Cost of long term care January 2019

Hello again, welcome to 2019! This month's topic may seem unusual coming from the financial guy but bear with me. True, professional, financial advisors don't stop at investing. There are many factors that impact our financial lives. As we get older, there is a huge issue that can seriously impact us financially. I'm talking about paying for the costs of long-term care. I know, you're never going to a nursing home. I've heard that a million times over my 30-year career. I wish I could say that my clients were correct in their assertion. But, unfortunately, that's not the case for some.


Long-term Care (or LTC) is not just a nursing home. It can be a nursing home, assisted living facilities, and/or home health care. Some plans will even pay a family member to take care of you. This type of care is not covered by Medicare, Medicare Supplements, or Medicare Advantage Plans. Care can run as much as $80,000 dollars or more annually, depending on where you live and the type of care that you need.


The risk to your portfolio is bad enough that we advise our clients with even a modicum of assets, to protect those assets in some fashion. We can use Long-term Care insurance policies for that protection. We custom design a plan to fit the individual client needs, and then shop it with all companies to find the most appropriate coverage and at the lowest premium. Sometimes we can build the protection right into the financial plan, using investments that provide extra income for long-term care confinement.


Some of our clients opt to use a combination of insurance and savings to do what we call Medicaid planning. We basically custom design a plan to protect assets as we reposition them to prepare for Medicaid qualification.


So, in short, even if you think you will remain home with only family taking care of you, it’s a good idea to cover your bases in some way. Be prepared. We are here for you and are happy to assist you in exploring your options. Stay warm, stay safe.


Cheers!

Can you dream it – 2018

[et_pb_section bb_built="1"][et_pb_row _builder_version="3.0.101"][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Where do you see yourself in 20 years? No, I’m not kidding. Advancements in medicine have folks living much longer lives. Close your eyes (after you finish the paragraph). What is it that you (want to) see yourself doing in 5, 10, 15, and 20 years from now? Is it a trip to another country, a cruise, moving closer to family? Retiring? Fund a grandchild’s education? Be honest. Now, what will your assets and income allow you to do? Maybe all of it, maybe none of it. What we here at American Retirement Advisors try to do, is to incorporate as much of your dream as possible into your plan. We also understand that you don’t want to run out of income before you run out of time. The stock market today, depending on if your speaking with a bull or a bear, is either pumped up and will be forever, or it is going to crash. I say, it’s not that simple. The market is, by nature, cyclical. It ebbs and flows with market “tides” so to speak. We are stretching the common flow by a couple of years now. As you look at the ups and downs as a wavy line, we are at the crest now. A six year old can complete the pattern with a downward stroke of a crayon. Our clients, for the most part, can’t afford to lose any assets. They are in the income phase of life, not the growth (take more risk) phase. Invest for return and safety, not aggressively. This doesn’t mean that a percentage of your portfolio shouldn’t be in the market. It should for most people. But, it should be invested cautiously and with a portfolio manager who will watch it. Some folks like mutual funds because they come with built-in portfolio managers. The problem is that the fees are just too high. Even if you are using a no-load fund, there are internal fees. One of my issues with them is that the fund portfolio manager doesn’t know you. He or she is trying to make a name for him or herself. Portfolio managers with mutual funds become rock stars on the financial circuit. The problem is that they can have a great year then a terrible year. Our portfolio managers aren’t trying to gain fame. They are just trying to give our clients a reasonable return with as little risk as possible and as low a fee as possible. In other words, Mutual Fund managers have the bottom line in mind [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Financial Tip Nov 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Hi folks. It’s me again. I thought I would do this month’s financial tip on something a little different. An article that you wouldn’t expect from a financial advisor. When do you NOT need a financial advisor. No, really. Everyone doesn’t need us. Let’s take a look. 1. If you have Social Security as your sole source of income and no assets, you may not need a financial advisor. 2. If you have Social Security and a fixed income pension, you may not need a financial advisor. Unless you are at the point where you are making an election on how to take your pension. In that case, it may be helpful to consult. 3. You are retiring from making a living at financial planning; you may not need a financial advisor. Unless you have not kept up with the possibilities available with predictable returns while mitigating risk and ensuring portions of your portfolio. In that case, it may be helpful to consult. 4. You enjoy the vast swings of the stock market and aren’t concerned about losing your retirement. I’m not kidding. I have had clients tell me this. 5. You’re between 18 and 40 years old and systematically investing a couple thousand a month. For the long haul, you may not need a financial advisor. Now, when the portfolio starts to get large and you’re getting closer to retirement, it may be a good idea to seek professional help to make sure that you still have it when you need it. Remember that all advisors don’t necessarily understand the particular nuances to invest for certainty and income with low fees. Choose carefully. 6. All you need is tax help. OK, you need a CPA, not a financial advisor. Be leery of someone who holds him or herself out as both. You can’t be an expert at everything, and there is a possibility of a conflict of interest. That being said, a good financial advisor will always take tax concerns into account when custom designing a financial plan. [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Retirement Income plan review 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] I can almost feel the cooler air coming. I always look forward to the cool breezes of October. That’s the kind of change that I like. Some changes are a little scarier. But, if we are prepared or insulated from harm, we have nothing to worry about. Like Medicare’s Annual Enrollment Period (AEP). For the next couple of months, we will be in full swing, making sure that our clients are taken care of and have the most appropriate programs going into 2019. For our financial clients, we are always changing, fine-tuning, and adjusting portfolios to take advantage of opportunities. So, change is always occurring. We build Retirement Income Plans that, for the most part, are not affected by the risks commonly associated with investing. We plan with safety, yield, fees, and taxes in mind…in that order. Market watchers have been focusing on things such as emerging market weakness, politics, and earnings that some worry may have reached their peak. When it comes to the global economy, the world isn't in the same type of situation as the United States. While the U.S. is in a great position to negotiate tariffs, other nations aren't ready to handle interest rate increases. We have major countries that are still at zero percent interest rates. What happens when those countries that are not doing so great start to raise rates? That's what concerns me. The S&P 500 could trade as high as 3040, but if it gets past that mark, I think there may be a "bit" of a pullback on concerns over the midterm elections. That could bring the S&P 500 down to 2875. Ultimately, I see market gains in the range of 7.5 percent this year and another 5.25 to 5.5 percent next year. So, once again, we advise certainty and safety over unnecessary risk in retirement, while keeping fees as low as possible, with above-average returns. Change isn’t scary when you have a goal- appropriate plan. Cheers! [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

In Service Distribution 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Hi All! And I mean all! Today, I’m focusing my column on the spouses and children of our clients. We’re going to talk about Rule 72(t) as well as In-Service Distributions. Rule 72(t) is a ruling issued by the Internal Revenue Service (IRS) that permits penalty-free withdrawals from IRA accounts and other tax-advantaged retirement accounts like 401(k) and 403(b) plans prior to age 59-1/2. The IRS still subjects the withdrawals to the account holder's normal income tax rate. This rule permits account holders to benefit from their retirement savings before retirement age, through early withdrawal, without the otherwise-required 10-percent penalty. The plan payments must be equal installments. These payments must occur over the span of five years or until the owner reaches 59-1/2, whichever period is longer. There are a couple of calculation methods the IRS uses. The amortization method determines yearly payment amounts by amortizing the balance of an IRA owner’s account over single or joint life expectancy. This method develops the largest and most reasonable amount an individual can remove, and the amount is fixed annually. So, if additional income is needed, and you have assets locked up in a tax-qualified account, you have options. Now let’s discuss In-Service Distributions. This option is less well known. It allows you to roll over assets from your current employer's qualified retirement plan to an IRA while you are still working for that employer, assuming your plan permits it and you otherwise qualify for the in-service distribution. This law is relatively new, so not every employer plan allows for it. I have found that at this time, most do. In order to take an In-Service Distribution, you must be at least59-1/2 years old. If you decide to do one of these rollovers, you usually may continue to contribute to your company’s plan and still receive a company match, if any. All plan distributions can vary by specific plan parameters. So, you would need to check with your plan administrator. If no withholding if you’re doing it to roll the funds over to an IRA. This is done to achieve a more appropriate diversification. As we approach retirement, we may want to start divesting ourselves of the limited range of mutual funds within our corporate 401(k)s. Perhaps investing in a portfolio of well-thought-out, goal-driven and predictable, products. Maybe even a portfolio that is actively managed with you in mind. I hope this helps those of you youngsters over 59-1/2 and are still working. Here’s looking forward to some cooler weather! Stay safe out there! [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Are Mutual Funds a Good Buy 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Are Mutual Funds a Good Buy? Well, that’s a loaded question. 401(k)s are almost all filled with mutual funds. It’s the easiest way for an employer to assist you in diversifying your portfolio. There are also fees that can be passed on to the employees (you). Money Magazine has an annual list of the top mutual funds. Portfolio managers are getting celebrity status, till they fail. Most folks only see one other, costly, alternative; individual stocks. Yes, in order to mimic a mutual fund you would have to buy individual stocks and bonds (50 to over a hundred) and have the time and skill to actively manage the portfolio. Both can be costly, but mutual funds are definitely easier without having to manage the stocks and bonds inside of the funds. The issue is the fees. Mutual funds are not cheap. Even those highly touted no-load funds. Yes, even those have fees built in. You do have to go over the prospectus with a fine-tooth comb to find them but they can, and do, go up to 3% or more. Some advisors even have to charge a management fee for a portfolio of mutual funds. No kidding! They actually sell you a portfolio of funds that each charge a management fee of upwards of 3 percent and then the representative charges you another 1 to 3 percent on top of that to manage the portfolio of an already managed portfolio! ** Some think that if they buy several different mutual funds, they will have greater diversity in the portfolio. Maybe not; for example, two fidelity funds, Large Cap and Large Cap Growth Enhanced, actually contain 107 of the same holdings resulting in the Large Cap Growth Fund being held in the Large Cap Growth Enhanced Fund. If, in an attempt to diversify and manage risk, a mutual fund investor-owned both the Value and the Growth funds, that investor could actually be increasing risk! Another issue with Mutual funds is that if you would like to sell one, you won’t know what the net price will be until the market closes. Do you like unpredictable outcomes? Wouldn’t it be nice if advisors were fee conscious? What if portfolios were designed with safety, fees, and taxes in mind, as well as your dreams, goals, and aspirations at heart? So, what do we prefer for the actively managed portion, instead of mutual funds? We use a well thought-out and revisable portfolio of Exchange Traded Funds (not to be confused with mutual funds). These ETFs have no internal fees. They are static investments that trade like a stock while the market is open. We like ETFs that are relatively stable and throw off higher than average dividends. For the larger portfolios, we will extend the holdings to an individual stock, typically Blue Chip stable companies that, again, throw off higher than average dividends. We understand that most of our clients are in the income phase of life and for that reason, we recommend tools with predictable income See a theme? Safety, low fees, actively managed, and seeking higher than average yields. Together with guaranteed, no risk investments, we create, employ, and actively manage a winning combination. [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Talking about Annuities

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Talking about Annuities In this month’s issue, I would like to discuss and put to rest some misplaced judgments about a widely-used financial strategy. I’m talking about annuities. This is not a sales pitch for annuities. This is intended to educate folks about what an annuity is and is not and where it may fit into a well, thought-out portfolio. A client says to me; “You’re not going to put me in annuities, are you?” I ask the client what he doesn’t like about them. He has no answer. So, let’s discuss. There are three types of annuities; variable, fixed, and immediate. Only variable annuities do not ensure principal. In my 30 years as a financial advisor, I’ve found that most insurance agents and brokers (including banks) over-use this product. What I mean is that they want to “only” use annuities (typically variable annuities) as the sole vehicle to achieve all goals. Sometimes the reason is that’s all they are licensed to sell. In my opinion, that would be absolutely wrong and inappropriate. Folks should have a well-diversified portfolio that has the flexibility to adjust to your changing needs as well as market trends. We believe that fixed annuities may have a place in a portfolio as a component to achieve specific goals. I know that there are companies and pundits out there trying to steer you away from annuities with scare tactics. The problem is, that in some cases, they are correct. There are some annuities out there that we would never place our clients in. They talk about limited access to your deposits and high fees and the like. It’s like anything else. There is good and bad in every type of product. There is appropriate and inappropriate. We scan hundreds of options before selecting the ones that are viable options. That allows us to be a true fiduciary for our clients. We feel that most portfolios should consist of three components. 1) Your assets that are liquid are readily available. We call those Demand Accounts. 2) Principal insured accounts. Finally, 3) Managed risk. For this discussion, I’m going to just focus on Principal Insured accounts. This is the category where fixed annuities land. Fixed Annuities are: • 100% of principle is protected by insurance company reserves • Re-insured by State Guarantee Association and Re-insured by National Association of State Guarantee Associations • All credited interest is yours • Never loses principle • No fees (Unless optional riders are added) • Only financial product designed for lifetime income • Interest is compounded -Tax-deferred growth • Designed for long-term accumulation or growth • Allows for partial liquidity then full liquidity • Can earn a fixed rate of return • Can earn returns driven by a market index with NO market risk Fixed Annuities are not: • Going to tie up your assets forever. • Going to keep your remaining assets when you die. • Going to have high fees So, you see, they are not scary. They are actually kind of boring. They are a safe, insured, component of a portfolio with little or no fees. But, as I always say, don’t put all of your eggs in one basket, unless you truly love omelets. Till next time… [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Financial Tip June 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Happy June! Yay, no more school zones for a while. Watch out for more kids on the road though. So, this month I thought I would focus on one of the most important aspects of retirement; outliving your assets. I know, for most of us, this hits a nerve. We work our entire lives and hopefully try to put away money for retirement. But, is it enough? Just as important is not losing what we’ve saved to market downturns. If you’re in your 30s and the market crashes like it did in 02 and 07, well, okay. You have time to rebuild. If you’re 65 years young, we have a problem. Some people say it’s ok, the market always comes back. Well, yes. But, did you know that if we have a 50% decline in the market (your investments, 401(k), IRA, etc.) we would need a 100% rate of return to fully repair the damage? It’s simple math but people sometimes don’t make the connection. There’s also the big one that none of us want to think about, but as a planner, I don’t have that luxury. The loss of a spouse, including their pension and or social security income, can be devastating. We have strategies to help with all of these events, but we have to plan before they happen. If we have losses or just run flat when we’re earning an income, I don’t like it but I can still pay the bills and eat. If I’m taking money from my investments to live, that’s a problem. Like a lot of folks, you may want to downsize. If you’re lucky, you’ll have some equity in your home to cover the cost of the move. Maybe even some left over to invest and take income from. I’m talking to you, California. Healthcare surprises can pop up too. If you’re stuck in under-value bonds, you’re going to lose money selling to cover an unforeseen expense like big dental problems, that one expensive drug, or cancer treatments. There are other things out of our control like car repairs, major appliances, or God forbid, a new roof! If you turned 65 and were planning on retiring in 2007 to 2008 and lost almost half of your retirement nest egg, what would you do? Keep working? Maybe. What if you retired already? Now what? So, what we used to do is adjust the portfolio to bonds. As we got closer to retirement, we would, over time, shift assets from equities (stocks) to debt (bonds). This doesn’t work in today’s economy. Rates on bonds and CDs are too low. As rates go up, the bonds lose their value. Most brokers understand this. The problem is that most brokers don’t know what to do and are usually constrained by the firms that they work for. I often see portfolios of seniors that are heavily weighted in mutual funds, still adhering to the old way of allocating assets. The good news for the broker and firm is that they get big fees and usually sell the company-branded products. That’s conversely the bad news for the client. What if there was a company that was independent of a big wirehouse brokerage firm? What if this company’s primary mission was to assist folks over 65? They would have to be in a position to be experts on the specific issues that face seniors. They would certainly have to have a large portion of the portfolio in guaranteed and insured vehicles. They would have to keep fees as low as possible or even no fees, and have an emphasis on greater income-type offerings, right? The answer is yes. American Retirement Advisors was founded on these very principals. We will even go the extra mile and, with hundreds of companies at our disposal, we can try to save you money on coverage to cover the majority of the unforeseen expenses that come up over time. Call any time. Let us see just how much we can help you have a smooth, financially certain retirement. [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Financial Tip May 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Hey Marc! How will the tariff wars affect the stock market? Should I get out? What should I buy? All good questions, for a person in the growth phase of life. Our clients, for the most part, are in the “I can’t afford to lose money” phase of life. So, perhaps a different question is more appropriate. Hey Marc! How can I position my assets so that I won’t get hurt by market unpredictability? You see, when your portfolio is allocated properly, the craziness of society and White House events don’t cause you financial concern. In yesteryear, not that long ago, we would use a calculation of 100 minus your age, should be positioned in equities (stock) and the rest in bonds, and you should only withdraw 4% to not spend down your nest egg to zero before your eyes close for good. We don’t buy into that method. It just doesn’t work anymore. Bond rates are awful and as interest rates climb, bonds and bond funds that you buy today or bought within the last few years reduce in value. In order to get any kind of a decent interest rate, you seemingly have to tie up your money for an eternity. Mutual funds are loaded with fees; front end, back end, sideloaded (12B1 fees). Some brokers even sell portfolios that are made up of mutual funds that have loads built in (even if they are no load) and actually have the audacity to charge a management fee on top of the funds' management fees. Maybe a more appropriate idea is to build a portfolio that has a portion in investments that can participate in the potential of the stock market but fully insures the principal. Maybe even guarantee income and returns. Position some assets in stable companies whose share prices don’t bounce around much but pay higher than average dividends. After all, we are looking for retirement income. All of this, remembering to keep a healthy amount in a cash position for emergencies and day-to-day needs. And, as important as all of that, ZERO to no more than 1.2% management fees on managed portions of your portfolio. At American Retirement Advisors, we believe in a team approach. Your Retirement planning advisor meets with you first to discuss your wants, needs, and goals, as well as your family dynamics. We take a few minutes to take an inventory of what you have done so far. After the first meeting, the case goes to our Research Analyst who will review and organize all of the information. Then, one of our planners will allocate the portfolio for a starting position. The team will also review and rebalance as necessary, always keeping your goals, safety, fees, and return in mind. Compliance will then review, for appropriateness. The last step is you. It all gets presented to you. Take the custom-designed presentation book home to review. Come back in a week or so for more clarification. Like what you see, schedule the next appointment to implement the plan. We will then meet on a regular basis to take inventory of how the plan fits your life and adjust when needed. The entire planning process is a service that we provide our clients, free of charge. We just want you to be taken care of the way you should be. [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Financial Tip April 2018

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Is the person that you bought your auto insurance from always trying to sell you a life insurance policy, or already did? They have a life insurance quota to keep their job or agency! Did you need life insurance? How many companies did they show you? How do you know that you got the most appropriate policy for your needs from the company offering the most value? I’ve never held a Property & Casualty license. For good reason; you can’t be an expert at everything. Perhaps finding a planning firm with dedicated experts in a specific area may be a solution? Some insurance agencies are owned by an insurance company. Finding a firm that is responsible to you, the client, not the insurance company may be easier than you think. Many insurance agencies that sell Auto and Homeowners policies only offer the insurance company that is printed on the door. More importantly, after determining whether you actually need a life insurance policy, a thorough review of all existing policies is recommended to determine if the plan or plans that you have, still most appropriately suits your needs. Perhaps your needs have changed? Maybe the house is paid off? Once the review is complete, if it’s determined that a policy is advisable, shop at least 30 to 40 insurance companies to find out if there is something more cost-effective or appropriate for your needs. Are you still paying premiums? Sometimes you can transfer the value of one policy into another and stop paying premiums. A firm working in your best interest, perhaps in a fiduciary capacity, would consider your health, research multiple insurance companies (30 to 40) that have products that meet or exceeds your needs, and perhaps would find more than one company offering a match and then… let them fight over your business with better underwriting pricing. Yes, that’s right, the price for life insurance can be lower than advertised if you have someone in your corner!

So, If you have existing policies to review or just want to do a “do I really need life insurance” analysis, give the office a call to set up an appointment. We look forward to hearing from you.

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