Success Story of the Month

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By David S. Edge

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One phone call saved us lots of money!!!

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Gerry and JoAnn simply could not believe how many choices there are and were glad they had attended one of our many Medicare Workshops before deciding on their Medicare plan option.

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Months later, they were now getting ready to retire and were planning their exit strategies on how they were going to be debt-
free by paying off their house. They had decided to cash in one of their 401K accounts to accomplish their goal. They knew they would have to pay taxes on the withdrawal, but they really didn’t want a house payment anymore since they weren’t going to be working. Just before they transferred the money out of the account, they remembered something we told them; “don’t make any financial decisions without calling us first for a free review for possible financial implications”.

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They were excited about the possibility of being able to pay off their house, but what they did not realize was that they could
trigger unexpected expenses. By cashing in one of their 401K funds, their income would rise to over $170,000 on their joint tax return. They would then have to pay an increased amount for their Medicare Part B monthly premium. It increased from $134 each to $187.50 each. In a nutshell, they made and reported too much income and were now being penalized by Medicare. Additionally, they had to pay taxes on the cash they took out of the 401K!

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Cashing in your 401K to pay off your house isn’t always the best use of that money. What if you invested that money in a guaranteed principal account that pays you income while protecting your principal face amount of cash in the account? This way when you finish paying your house off with this income stream, you still have that principal amount of money to now generate income cash to pay your everyday living expenses! You also don’t have to pay Uncle Sam taxes on the withdrawn 401K money you cashed out, and you don’t run the risk of paying a higher Part B premium every month! It’s a win/win/win!

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After reviewing Gerry and JoAnn’s retirement funds and what they were currently invested in, we were able to make some improvements in their retirement cash flow! Now they could make their house payment without spending any of their principal money! When their house would be paid off in six more years, they would now have that income cash to spend!

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Everyone has their hopes and dreams of what they want their retirement years to become. Some want to be debt free, some want to travel, some want to remodel their home or downsize. Some folks just want to be financially worry-free.

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Whatever your retirement goals, come meet with
us to review what your possibilities are, and what they could be! Let’s meet and make a plan!!