1) Do not gamble with your retirement savings

The stock market is not a sure thing. If the events of the last few days have not proven that to you, then I don’t know what will. If the value of the stock market goes down 50%, it needs to go up 100% just to get back to the point it was. It took 2 years to recover from the crash in 2008, 2 years just to get back to where people were before. If you are in your 20’s you may have time on your side, but I personally know others who were close to retirement in 2008, but had to continue working simply because they gambled that the market would continue its upward trend. They lost the bet. If you have some discretionary income that you want to use to prove to yourself that you can do better than those astronomically highly paid traders on Wall Street, then knock yourself out. However when it comes to your main retirement vehicle, look for something that protects you from the down-side of the market, but still lets you participate in the upside.

2) Use tax advantageous retirement strategies

Qualified plans are great in the sense that they allow you to fund them using pre-tax dollars, thereby allowing you to reduce your tax liability today. However, the IRS is really not being as generaous as you might think, for when it comes time to take distributions from your qualified savings plan you will pay tax on whatever amount you withdraw at whatever the prevailing tax rates are, depending upon which tax bracket you are in. Ah yes, I hear the proponents of qualified plans now….’you will be in a lower tax bracket in your retirement’. Really? Taxes are at a historically low rate at the moment and unless something has changed, the last time I looked our national debt was the highest it has ever been. You really believe that taxes are going to stay where they are? Think about that for a while and tell me if you still think that most investors will be in a lower tax bracket during their retirement years. Look for a plan that will help you generate sufficient tax-free income during your senior years. You work hard for your money – make sure you get to keep as much of it as possible.

That’s enough for now. Hopefully if nothing else this will get you thinking. If you want to know more, as always feel free to contact me directly and I can help see what makes sense in your personaly situation.

To end with , I thought in the spirit of craziness it would be fun to share the events that lead to a Darwin award. For those of you that don’t know what a Darwin award is, this is an award that is given to recognize those that improve the human species……by accidentally removing themselves from the human gene pool. These awards are all the result of actual events. I just hope that those honored had life insurance…Enjoy!

Sunderland, England paramedics found a prone man suffering injuries including a scorched colon, caused by a Black Cat Thunderbolt rocket. The 22-year-old had, unbelievably, inserted this rocket in his back side, laid down on his front side, and lit the fuse in an attempt to make the rocket fly up into the air. But it was pointing the other way! The regional Firework Association chairman spoke for us all when he said, “This sort of thing is beyond belief.”

Here is something to ponder: would you trust those same elected officials that are failing to balance the budget and reduce the federal deficit with your hard-earned retirement dollars? Are you willing to give a large percentage of your nest-egg to the government once you start taking out distributions from your qualified plans? Well, if you own a 401k, an IRA or other qualified savings plan, that is exactly what you are going to do. You might think that you are in good shape with your retirement funds, but remember, whatever amount you have in your plan, subtract 25-50% of those funds as that is the amount that Uncle Sam will take for himself. You think 50% is too high? Maybe today, but given the debt situation, given that social security is under-funded, given that Medicare and Medicaid will probably not coninue to exist in their current form in another 10-20 years, and given that taxes are at a historical low, there really is only one way for tax rates to go in the future. Remember, your 401k plan is a deferred tax plan………and the rate that you will be taxed on your savings will be determined by whatever the prevailing tax rate is at the time you start your distributions. Given that those who are beginning to save today are doing so at historically low rates, there can be little question that tax rates will be higher by the time distributions are either required or mandated.

Ok, so now you have subtracted 25-50% from your saved funds number, will the remaining funds allow you to maintain your exisiting life-syle for the next 30-35 years? Will these funds allow you to pay for nursing care at a quality facility in the event you or your spouse becomes seriously incapacitated due to health concerns? Will you still be able to continue to live in your house once your spouse passes after accumulating health insurance bills?

So I am not here to bash 401k or other similar qualified plans. When they were first introduced, taxes were high, so the idea that you would be in a lower tax bracket at retirement was a sound one. Also, they were the perfect vehicle to save some additional funds that would help to supplement the defined benefit plans that most corporations had at that time. Also, any financial vehicle that helps us save is a good thing given the US propensity to spend and live either pay check to paycheck or in many cases beyond our means.

The purpose of this blog is to help educate. The reality is that 5 out of 100 people will be truly prepared for retirement, whatever your definition of retirement is. The other 95% will have to reduce their lifesyle, some significantly from their pre-retirment days. This trend will continue unless we allow ourselves to become better educated about the options available to us all. The follow the herd mentalilty is easy…….it must be right because everyone is doing it. However, what if there was an alternative way to secure a safe and financially healthy retirement? What if that way allowed for you to take tax-free distributions from your savings for the rest of your life? What if your retirement savings could help secure any long-term care needs that you may have in your twilight years? Beter yet, what if when you died you could also pass along a substantial legacy to your children or charity of choice?

There is another way that offers all of the above. It’s not sexy, it’s not what the ‘herd’ are doing. It’s not what most advisors will tell you about. But it works. Life insurance, in particular indexed universal life insurance policies, when properly structured, allow you to achieve all your financial goals, shielding you from the dramatic crashes of the stock-market along the way (think 2008). Interested? Curious? Contact me today to learn how to move away from the herd and make your financial future secure.

stayalivebenefits.com has partnered with Next Stage Financial to help our clients navigate their financial future. For a short video on this topic and to make an appointment to discuss how this strategy might fit into your financial path, go to www.retainmygains.com or fill out the contact form on this website.

Have an enjoyable, relaxing and above all safe holiday weekend. I was reminded today how quickly things can change when I ran into the bathroom to discover my 3 year old son painting wart remover (acid) on my 2 year old daughter’s leg. Luckily after a quick wash and a call to Poison Contol everything appears to be fine, but it goes to show how quickly life can throw curveballs at us. Enjoy the holiday and come talk to us about how to better prepare for life’s hurdles.

Watch the video at www.retainmygains.com and schedule your in person or web-based consultation to review your options. Take back control of your financial future.