Rest In Peace Friend

What me worry?

Good grief!  There is so much doom and gloom in the world today.  Isn't it time to look on the bright side?

Have you written your "bucket list" yet? ( You know, the things you want to do or see before you kick the bucket).  Why not?

It can be a lot of fun to think about this, and besides it will definitely take your mind off things that worry or concern you like the economy, the job market, or real estate values, etc., etc., etc.

Instead, take time every single day to "reprogram" your mind with more positive thoughts.  We get fed so much garbage on a daily basis - you know the saying - garbage in, garbage out!  How about good stuff in -good stuff out?

Do you know it actually takes less facial muscles working to smile than it does to frown?

Your list doesn't have to be exotic or expensive.  How about writing your memoirs, cataloguing your recipes, starting a botanical garden?  ever thought about painting?  Take a class. Missed your chance to be a movie star?  Enroll in an acting workshop.  Start a charity, become a mentor.  Learn to salsa!

Life is so short.  Let's try living it with all the vim and vigor and passion we can muster and throw all the "junk" away.  If you're a procrastinator or excuse maker, go visit a cemetery.  You'll realize you need to get busy.  Tomorrow may never come.

Don't be afraid of living your life.  It's much better than the alternative-even if it's not all perfect.

-Lady Fi

Kathy

Five Forces Affecting Your Retirement

Imagine sitting down on the day of your retirement to plan your financial future.  You know what your annual expenses have been and you want to maintain your current standard of living.  So, you consult a recent mortality table and find that if you've made it to your 65th birthday, you can expect to live to 85 years old.  You perform a little calculation and find that, together with your Social Security monthly payments, you have just enough savings to maintain your current standard of living and spend all of your savings and future expected earnings by the time you die at the age of 85.  But, what if you live longer?   Will you be reduced to eking out an existence on Social Security alone?  Where will the additional money come from?  What if future investment returns are not what you anticipated at the start of your retirement?  These questions are increasingly urgent in America today, as forces are combining to make planning for outliving your resources more important than it has been in the past.  Old rules of thumb for spending your assets in retirement, called decumulation, need to be reconsidered.

Retirees must take strategic action in the deployment of their accumulated savings and funds as they begin retirement.  Five forces are converging upon Americans in what some have called the Perfect Storm - others the Tsunami Wave - that is about to engulf us from all sides.  The best we can do is to organize our own finances in such a way that we can provide for ourselves, because there isn't anything we can do to stop these converging forces.  These five forces are:

1. The decreasing levels and importance of Social Security benefits: Relative to the benefits provided to our parents, people currently in their working years will receive a much lower return on their Social Security contributions.
2. The demise of defined benefit (DB) pensions: Over the past 15 years, there has been only one new pension program of any size initiated in the U.S.  The number of pension plans in the U.S. peaked at 175,000 in 1983, and has since declined to less than 25,000.
3. The aging of the Baby Boom generation: Beginning last year, the first members of the largest generation in American history turned 60, leaving their jobs and entering the retirement force.
4. The emergence of post-boomers: Generations X (born between 1965-1979) and Generation Y (born between 1980-2001) will be burdened not only with the responsibility of providing for their own future retirement and health needs, but also with supporting the Social Security and Medicare costs of the boomers.
5. The increasing longevity of the American population: Since Social Security began monthly payments in 1940, the number of months we can expect to receive benefits for those of us who reach age 65 has increased by roughly 50% for men and women.  Coupled with the fact that when Social Security was instituted, the average person did not live to age 65. 

These are the facts folks, and it should be very concerning for anyone about to retire.  An analysis of your holdings can provide you with the tools you need.

Call our office at (732) 364-5462 for your complimentary consulation.

Tom

Should You Pay Off Your Mortgage?

Contrary to popular opinion, as I usually am, I'm not always a big fan of paying off a mortgage.  Truly, it is one of the few tax deductions you have left once your kids have grown up and left the nest.  When you reach your 70's you also have the additional income to declare from IRA distributions, and very little in the way of deductions.

Is it wise to tie up significant liquidity in a house that you have no access to until you either sell your home or take a home equity loan and PAY interest on your own money.  How is that smart?

Why not have a manageable mortgage that fits your retirement income budget and enjoy your money living your life.  If the money invested conservatively, you have access to it immediately if you need it and you can always choose to pay off the mortgage if it's really bugging you.

Also, it is important to consider that if either partner should need long term health care someday, the house could be included in the spend down to qualify for Medicaid if one spouse has already passed.

If you're not retired yet, what if you needed the extra liquidity to get you through a job loss or a major medical expense.  Sure, it's nice not to have a mortgage payment to make, but that fact is not going to put food on the table or gas in the car.  Making extra payments to get rid of your mortgage is like burying money in the backyard.  It won't reduce the interest rate you are paying and the bank just gets to have more of your money now. I'd rather they have it later.

Don't go hogwild and saddle yourself with ridiculous mortgage payments - that's gotten a lot of people in trouble already as we well know.  But a modest mortgage at today's interest rates, may be something to consider.

-Lady Fi

Kathy

NO-FAIL DIET!!

Don't worry about trimming your waistline by cutting down on food consumption.  U.S. food prices have been steadily rising in the past year, and it's only the beginning.  Soon you won't be able to afford to overeat - maybe that's a good thing.  Americans as a whole are far too overweight anyway.  Going out to dinner at many restaurants means you probably have enough food left on your plate for two more meals at home - or we should anyway.

Ladies, if you are chocaholics, bad news.  Hershey recently announced a 10% increase for most of its' sweet treats.  What is a girl to do?  We absolutely need that stuff.  "Real" chocolate actually increases serotonin levels which keep us sane and happy.  Oooops, here I was supposed to talk about a no-fail diet, and I'm talking about chocolate.  Well, everything in moderation, right?

Higher wheat costs will begin to affect cereal and bakery products to the tune of a 3.5 to 4.5% increase.  Tropicana has been hit by a series of prolonged frosts to its' orange juice crop and so citrus prices went up 11.5%.  The costs of manufacturing lumber products, like paper towels and toilet paper have been hit as well by an 80% jump in lumber futures.  According to the USDA, the wholesale cost of tomatoes more than tripled last year compared to the previous year.  What, French Fries with no ketchup?  Guess we'll be giving up those as well!

And needless to say the cost of gasoline to transport all of the food commodities that we need to consume is not helping matters either.

A common practice by many food and staples companies is to trick the consumer into believing that prices are not increasing by "short sizing."  For instance, boxes of cereal have about 2.5 less ounces in them.  The half gallon carton of OJ is now 59 ounces - 5 full ounces less!  And, oh my, Haagen Dasz ice cream pints are 14 ounces instead of 16 - for shame- they kept the lid on the carton the same size so you don't notice and tapered the carton down in the middle.  A 5.5% increase in the prices is expected as well.

So get ready to eat less for the same or more money.  A no-fail diet plan for sure.

-Lady Fi


Kathy

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Estate Planning

One underutilized tool in the wealth transfer process is the survivorship life insurance plan.  Often referred to as second-to-die insurance, survivorship life provides clients with an economical solution for covering costs associated with asset transfer and settlement fees at the time of death.  These costs can include those associated with transferring property to heirs, state inheritance taxes on estates, probate, administrative fees, unpaid taxes, funeral costs, unreimbursed medical expenses and more.

Unlike traditional life insurance, the death benefit featured in a survivorship policy isn't paid out until the second insured dies.  Since the premium is based on joint life expectancy of the insureds, survivorship life insurance is usually less expensive per thousand dollar of death benefits than traditional single-insured insurance.  Additionally, since the death benefit isn't paid until after the second death, the insurance company is less concerned is one of the two individuals is not in ideal health.  Many carriers will issue this type of policy even if one person is uninsurable.  Of course, each carrier has their own definition of "uninsurable" and for clients of older ages, the carrier may require that the insurable person's health be no worse than the standard or a low table rating.

Obviously tax planning is an integral part of the overall process, but the value that a properly designed estate plan brings to clients is not measured in tax benefits alone.  Estate creation and preservation is often the most important overriding concern of clients.  A survivorship life insurance policy can accomplish both goals.

In many business situations, one child of the owner is active in the business while one or more of the owner's other children are not.  In these instances, the business is often left to the child who is involved in the day-to-day operations.  But what about the other children?  Should a business owner expect the involved child to provide them with income from the business?  A life insurance policy naming the other children as beneficiaries is a useful tool in equalizing the inheritance.

Even though federal estate tax is not an issue for the majority, 21 states and Washington, D.C. currently have their own estate or inheritance taxes in place for 2011.  The exempt amounts allowed by these states vary from $0 to $5 million with $1 million being the average.  With many states experiencing financial distress, it seems logical that more states may seize the opportunity to generate revenue by decoupling from the federal estate tax and adopting a state estate tax.

Survivorship policies generally insure married couples.  However they can be designed to insure business partners protecting families against their premature death, or to provide an efficient wealth transfer vehicle from parent to child.  The more you know!!


Tom

Prepaid Funeral Expense Trusts - Protecting Assets from Medicaid Spenddown

Do you want to work your entire life, only to see your retirement funds devastated by healthcare costs? There is no question that the cost of healthcare is going up, along with the cost of everything else.  With thousands of Baby Boomers aging into retirement every day for the next 20 years, the social support structure in place to supplement medical care will feel an even greater strain than it already does.  It is more important than ever to plan for your potential future healthcare costs, and, most importantly, safeguard your hard-earned assets against Medicaid spend down.

1. What is Medicaid?- Medicaid is a state and federally funded health insurance program intended for those people with low income and a dire need for medical care.  The program provides funds for hospital and doctor visits, prescriptions, nursing home care as well as other care that may not be covered by Medicare or Medicare supplement policies.  The cost of Medicaid is paid directly to health care providers
2. Who Qualifies for Medicaid?- Eligibility requirements vary slightly for the groups that qualify: this includes those ages 65 or older, Families in Poverty, Pregnant Women and the Disabled.  Each state has its' own limit on how much income and assets a person can have. For adults in NJ income limits are between 133% and 185% of the Federal Poverty Level.  If you are taking SSI Income: the limit is $2,000 for an individual, $3,000 for couples.  If your assets are more than allowed, you will be required to either spend them down or move some assets into types of assets that are considered exempt.                                                                                                                                           Countable assets, or those vulnerable to Medicaid spend down, are, not limited to, property other than your principal residence, stocks, bonds, CDs, annuities, and cash surrender of life insurance with a face value of $1,500 or more.                                                                                                       Excludable resources, or those assets safe from Medicaid spend down, include, but are not limited to, your principal residence, life insurance cash value up to  $1,500, burial spaces, burial funds not exceeding $1,500*, one automobile (market value under $4,500) and one wedding and engagement ring.                                                                                                                                    *Important* Moving or transferring assets incorrectly can result in a penalty period or total ineligibility for Medicaid.  States can look back at transfers of up to 60 months (5 years) before you apply for coverage. Always speak to a qualified advisor before spending down or transferring assets to qualify for Medicaid.*

One Simple Way To Protect Your Assets - Prepay Your Funeral Expenses

If prepared properly, prepaying your funeral can be a lawful way to reduce your assets and help you become eligible for health care assistance at the time you need it.  This is accomplished by purchasing a life insurance policy that has been designed to cover final expenses.  Ownership of the policy is then irrevocably assigned to a trust that will pay out at time of passing, or possibly directly to a funeral service provider of your choosing.

Taking this step both alleviates the burden of final expenses on your heirs at the time of your passing, and ensures that there will be sufficient funds to provide the kind of services you would like for yourself, in remembrance.

There are many benefits to structuring your final expense plan this way.  By irrevocably assigning the policy to the trust, the added benefits include:

1. Eligibility - the Trust will exclude the policy as an asset to qualify for Medicaid and Supplemental Social Security Income (SSI).
2. Easily paid to heirs - the policy is paid to the Trust, which pays for your final expenses; any excess funds go to your estate.
3. Protects funds - funds for final expenses are not vulnerable to creditors or collections, such as nursing homes, doctors, hospitals, etc.
4. Peace of mind - death proceeds avoid probate costs and delays when used for final expenses.
5. Growth - the benefit will INCREASE over time with simple growth.
6. Savings- these benefits are received income tax-free, ref. IRS Code Sec 101(a).

If you would like to find out more information about Funeral Expense Trusts and Funeral Estate Trusts to protect your hard-earned money in the future, call Family Focus Financial Today! 


Why not knock out three birds with one stone and take care of your Final Expenses, protect some of your assets, and make your time of passing a time to grieve and remember your life, without a financial burden on your loved ones.  What are you waiting for?


Ashley 

An Article to Share - "The Case for Income Annuities"

An article I would like to share with you taken from the Wall Street Journal...
Click here for original article link.

By JEFF D. OPDYKE

Strategies outlined in a new study could sharply lengthen the amount of time a nest egg survives in retirement.

The study, soon to be released by the University of Pennsylvania's Wharton Financial Institutions Center, finds that so-called income annuities can assure retirees of an income stream for life at a cost as much as 40% less than a traditional stock, bond and cash mix. The study was co-sponsored by New York Life Insurance Co., which sells annuities.

Income annuities are insurance contracts designed to pay back not only a return on investment, but also a portion of the original principal with each payment. The payout occurs over your life expectancy, but if you live longer, you continue to receive payments. Those who die earlier than their life expectancy effectively subsidize those who live longer.

What it means is that retirees who need a nest egg of, say, $1 million, can live the same lifestyle with as little as $600,000 in an income annuity. Looked at another way, $1 million in an annuity will currently generate about $86,000 a year in income for a healthy 65-year-old male, while the same amount invested in a traditional securities portfolio would currently generate between $40,000 and $50,000 annually, depending on the annual withdrawal rate.

That news could offer hope for the millions of workers about to retire with inadequate retirement savings.

"At 65 years old, you're going to need money, on average, until you're 85," says David F. Babbel, an insurance and risk-management professor at the Wharton School who co-wrote the paper with Craig B. Merrill, an insurance and finance professor at Brigham Young University. "But the problem is that 'on average' means half of the people will need continuing income between the ages of 86 and maybe past 100. That's where [retirement-income planning] breaks down."

To ensure that you have a stream of income that lasts for as long as you breathe generally requires an inordinately large beginning value -- and even then, there is no guarantee your account won't run dry, depending upon your ultimate spending needs in retirement.

An income annuity is the only asset class the two professors found that most effectively addresses the risk of outliving your nest egg, because it generates a permanent stream of income, unlike a typical nest egg of stocks, bonds and cash. Meanwhile, the study notes, investors who place retirement wealth in mutual funds "are subjected to greater risk, typically higher expenses, and returns that are unlikely to keep pace with annuity returns, when investment risk is taken into account."

Yet the study also found that consumers have been tepid buyers of income annuities to this point. Many worry about costs, illiquidity in a financial emergency and the bad reputation the industry as a whole is often saddled with because of well-chronicled and dubious sales tactics with some variable annuities.

Prof. Babbel says the insurance industry is addressing these issues by building new contracts that are inexpensive, allow access to cash and don't have the problems associated with other types of annuities. The best strategy, Prof. Babbel says, is to invest enough in an annuity early in retirement to cover basic fixed costs. That allows you to invest the remainder of your portfolio more aggressively.

As seen in the Wall Street Journal.

-Tom

IRAs Can Be the WORST Asset to Inherit

When I speak of IRA's, I am referring to any type of retirement account that has not been taxed.  This is referred to as "qualified money."

What confuses most people is that we have at least five kinds of taxes.  Most of you may only think of income taxes when we are discussing these accounts, and the rules are: by December of the year in which you turn 70 1/2, the IRS requires that you take a mandatory distribution based on a life expectancy factor each year from now on for the rest of your life.  Many grumble about this because if you have accumulated a significant amount (even if you have multiple "qualified" accounts), your required mandatory distribution can be significant, and may even push you into a higher tax bracket.  Hah, that was not the theory behind saving in these accounts in the first place.  The idea was, in retirement you should be in a lower tax bracket so the distribution would not affect you as much.  Many people find that with the combination of pensions, social security checks, investment income, and interest income coupled with the fact that you may no longer have deductions like mortgage interest, or dependents - your tax bracket has not gone down at all.  Some even may see an increase.

Well, this is only one area of concern that most of you are well aware of.  What is usually not stressed enough is the fact that many of these IRA accounts will not be spent down to zero, many even continue to grow even with required minimum distributions.  What is left when you die is a totally taxable account in your name that will now also be subject to Federal Estate Taxes & New Jersey Inheritance Tax (may be different for your state.  So you see, you have triple taxation.

Right now the Federal exemptions are $5 million for an individual and $10 million for a couple for the next two years only. No one thinks the exemptions will remain that high come 2013.  So If you don't plan on dying now, you don't have to ignore this.  NJ taxes can be 11-16%.  Often times your heirs escape the Federal but get creamed by the state.

There are several strategies that can be implemented to offset this rape of your retirement accounts.  It is imperative to do the proper planning to allow for the efficient transfer of these assets to your heirs.  "Stretching," also known as "Multi-generational IRAs" may soften the blow of the income tax problem, but this strategy does not eliminate or reduce the estate tax, both federal and state, problem.

Reach out to us if you'd like to have an independent analysis of your IRA and find out what may be an appropriate strategy to pass on this money in your individual circumstances.

Please don't pay more tax because you failed to plan for the inevitable.  You worked hard for that money!


"Lady Fi"

Kathy

The End of QE2: Major Policy Shift Ahead

The shift, and it is imminent, will not change the larger trend, but it has the potential to be quite disruptive over the short term.  The fundamentals that have caused so much pain and economic woe over the last ten years or so remain intact.  If anything, they've gotten worse.  We've gotten currency debasement, not just in the U.S., but especially in the U.S. Dollar, which is not just any currency, but the world's reserve currency.

We've got a truly mind-boggling expansion of the reach of government into all aspects of society and the economy, with all that implies in terms of regulation, taxation, controls over investments and finance, impact on personal liberty, and so forth.  By recognizing this destructive trend for what it is, investors can position themselves to avoid the worst, and to profit.  Think safety and tax - deferral here.

There is growing evidence that in the next month or two, we will head into a very dangerous period.  The Fed has been extremely supportive of the U.S. government's insane spending, polluting its own balance sheet by buying up toxic loans by the hundreds of billions and by pumping enormous quantities of cash into the money supply.

You don't have to look very hard to understand why we have seen some small recovery in the economy, much of which has been driven by the financial sector that has been the recipient of so much - it was bought and paid for by the government working hand in glove with the Fed.

But there is about to be a fundamental change in this arrangement.  It appears that the Fed has decided that it's time to take a step back from its' monetization - or quantitative easing (QE) as they now term it - in the hopes that the market will step in to fill the large gap it will leave.  They can't know how that's going to work out, but if they don't stop pumping money into the economy, they never will know if the quantitative easing has worked.

The problems that made the economy stumble in 2008 have not been solved.  As I said before, most have gotten worse.  Have the impossible levels of sovereign debt and trillions in unresolved bad mortgages embedded in the balance sheets of Fannie, Freddie, the banks and even the Fed been resolved?  Hardly.  Is there any real sign coming out of Washington that the deficits will be substantively tackled?  You don't have to be as active as a skeptic as I to understand that the deepest spending cuts being discussed don't even scratch the surface of the $1.5 to $2 trillion deficit.  As for the $60 trillion or so in deb and unfunded obligations, forget about it.

The U.S. government and the governments of most large nation-states are fundamentally bankrupt.  In time, they will have to default on their obligations. While there will be some overt defaults, I expect most of them to follow the path of least resistance, which is to try to inflate (inflation) the problem away.  Now is the time to think safety, guarantee of principal, guaranteed income for life, and tax deferral.  Call us, we can help!

Tom

Don't Assume You Are Too Old For Life Insurance

Many of the effective strategies that can be used today to transfer your wealth, reduce tax burdens and to arbitrage as asset into becoming a larger net asset to your heirs may involve the use of life insurance.  Thankfully, the IRS has not attacked this financial vehicle yet if it is used properly.

When you think of life insurance, what may come to mind is protecting your family to be able to cover a mortgage or provide a college education if you should die too young.  However, even though you may no longer worry about these things when you reach your 50's, 60's or 70's, there are many other applications of life insurance.

It is detrimental to assume you are not healthy enough, are too old, or that it would just be too costly.  Insurance companies have realized that people are living longer, even without perfect health, and they have adjusted their mortality tables and premiums accordingly.  You may find that it is not as expensive as you thought.  In addition, a thorough audit of any existing policies as well as your investments, may uncover hidden equity that you did not realize you had.  This can sometimes be used without inflicting and additional financial burden on your budget.

Acceptance also varies greatly among different carriers.  For example, some may be more lenient towards diabetics, while others may be better suited for cancer survivors.  Each company determines what their risk pool of insureds needs to be for them to be profitable.  And you want the company to be able to pay the claim, right?  So a profit margin is important, just like any other business.  I think it is important to mention here that all  insurance companies are required by law (in every state they do business in) to keep a certain amount of surplus and cash reserves.  They are also highly regulated as to what they are even allowed to invest in to be sure they will be able to fulfill their promises.

You may want to allow us to do an independent audit of your current situation to see if there is a viable solution that you may be overlooking. As always, we are at your service.

"Lady Fi"

Kathy

Updating Beneficiaries is Critical

There are several things you may not realize about the importance of updating your beneficiaries.  Just because you may have a will or a trust, and you have listed beneficiaries and percentages, this may not happen with all of your assets.

For example, an IRA may list your oldest son as the contingent beneficiary.  Your will may state that your three sons and one daughter are to share equally in the disposition of all of your assets.  You incorrectly assume the IRA will be included in the pot and be divided accordingly to your wishes.  It will not! The IRA beneficiary designation will take precedence and the other children will be left out of this part of their inheritance.  You may say that your oldest knows that he is supposed to share equally, and even if that actually comes to pass (but remember, there is nothing legally binding him to do so), he is still 100% liable for the taxes on the IRA distribution.  There is no way for him to share that with his siblings.

This happens all too often.  We see life insurance policies whose beneficiaries are deceased.  We see CDs that have a POD (Pay on Death) designation - and they get paid only to the person/persons named, leaving others out - it doesn't matter what your will says.  Annuities work the same way.  They are legal contracts and will supersede a will to inherit the money, thereby inadvertently disinheriting your current spouse or children?  Could get really ugly.

So please.  Regularly check and update all life insurance, IRAs, 401ks, any retirement plans, all annuities, bank accounts, and even brokerage and mutual fund accounts.  You may have "TOD"- transfer on death instructions on your accounts.  It would be a shame to have your assets go to an unintended party, accidentally eliminate a loved one, or have the asset tied up in probate.  All of these potential problems can be avoided very easily.

If you are unsure if you have structured your intended beneficiaries correctly, let us help you.  It could save a lot of money, and more importantly, a lot of unnecessary heartache.

"Lady Fi"

Kathy

Why Are Gas Prices Soaring?

If you're like most people, you probably cannot understand why gas prices are so ridiculous, and continually escalating.  A natural gut reaction is to assume the oil companies are just being too darn greedy.  Perhaps you buy into the media sensationalism and blame the crisis in Libya for affecting oil supplies.

Well, the bottom line is, both assumptions would probably be wrong.  You see, oil is just too juicy of a commodity.  It has nothing to do with supply and demand (yet).  It has everything to do with the financial market for the oil.  In other words, investors and speculators who in essence bet on the performance of the oil exchange-traded funds, or even the swing of particular oil stocks who are actually ratcheting up the price of gas. Make it look scarce, prices go up.  Oops, it's not scarce, prices go down.  Lots of money to be made on either play if you know what you are doing and get the timing down right.

The average Joe, he is just a dumb cluck who doesn't know he is getting played.  I'll admit, the world does have a major problem ahead with our super-dependence on oil, but that does not affect the roller-coaster of current prices looming out of control.  Like many hardworking or out of work families don't have enough to worry about just putting food on the table or keeping their home right now!

The "players" need to get a social conscience and think a little about their fellow man.  Not everyone knows how to or wants to play the game.  Some of us just want to be able to earn an honest living the old-fashioned way.  Work for it.
-Lady Fi

Kathy

Bucket Strategies Provide a Pot of "Safe Money"

Using bucket strategies for Retirement Income planning has become more popular in recent years and the reason is pretty simple: Dividing a portfolio into separate pools or buckets each with varying investment objectives, works.

The basic concept is to separate the investment money from the dollars that need to stay liquid.  With the global financial crisis driving home the value of a predictable income stream, techniques to provide investors with a pot of "Safe Money" that generates secure income as well as a pot or pots of money set aside for growth should be a part of every retirement plan.

There is a debate among academics and throughout the financial planning community over the optimal number of buckets to be used in the strategy.  But regardless of whether the portfolio is simply split in two or divided in half a dozen or more separate pools, the one constant is the presence of a bucket dedicated to between two and five years of safe liquid income.

As with all bucket strategies, the idea is to keep the longer-term pool in a position to be able to fund the near-term cash bucket which provides the retiree with a steady pay check.

We know that as a retiree, they can't afford to sell investments in a down market, but if you have three years worth of income put aside in January 2008 you would have been ok.


To find out more about this strategy call our office at (732) 364-5462 and ask for Kathy or Tom.


Tom

What Is Really Important to You?

Let's all agree on one thing. Life is short. Too short.

Although you may worry about having the right investments, having enough income to last you through retirement, and staying healthy as long as possible, these concerns may be secondary to what is really important to you, which of course will be different for all of us.

If you were able to accomplish all of these things, how would you feel? Successful, secure, free?

I recently read a great book written by a colleague, Bill Bachrach, titled "Value-Based Financial Planning" in which he encourages you to find out whats really important to you and "build" on that.  "What [does] having enough money mean to you?" Is it freedom, then what's important to you about freedom? Keep building on your answers until you've gone through about 7 steps. Identifying what it is that you are really seeking will allow you to develop a plan to get there and be able to live a great life.

If you'd like us to help you identify what matters wost to you we would be honored.  Besides, it's fun and enlightening.  My husband and I recently went through this exercise and some of the answers surprised us.  We now have a much clearer vision of what we want our lives to be, both individually, and as a couple.  Try it, it will give you peace.  I promise!

-Lady Fi


Kathy

DREAM A LITTLE DREAM

Times may be scary and the road ahead frightening, but don't let anything take away your dreams.

Sometimes you get so bogged down with fear and negativity that is fed to you on a daily basis, you begin to feel like your dreams are just that - dreams.

Don't give up!  When you are so entrenched in your daily life, it is often hard to see the forest through the trees.  What you may see as impossible, another may see as probable.  Take a step back and gain a fresh perspective.

You have no idea how thrilled I am when I tell someone that they can afford that second home in two years, or that they can open that coffee shop after retirement that they've been thinking about for a while.

Retirement is about beginning a whole new chapter.  Have you thought about how you would like it to read?  Many of you may just think about the end of your working days, not the beginning of your new story.

With a carefully crafted distribution plan for your retirement savings you may be closer to realizing that dream that you think.

We're really good at this, so give us a call if you need help.

Lady Fi

-Kathy

Are Bonds Really That Safe?

Many investors put their money into bonds for the safety and predictability of income.  Now, more than ever, it is a good time to visit the risks that are associated with bonds but rarely discussed.

A major concern with any type of bond is the default risk.  This is the likelihood that the issuer, usually a local government or a major corporation, will fail to live up to its obligation.  Along with the default risk, is the market is concerned that the issuer may default, the bond's price is likely to suffer as the market adjusts for a potential default.

Municipal bonds are issued by local governments to generate revenue that is used to finance local and state governmental spending.  Even though these bonds offer a low rate of return, investors have traditionally chosen them for safety that they offer, along with the tax exempt status.  The problem that we are facing today is that states are not the only ones facing a budget crisis - many cities and counties are on the verge of bankruptcy.  This has the potential to sink the entire municipal bond market if defaults do indeed begin to occur.

A problem that refuses to go away is the housing crisis.  Municipalities rely heavily on property taxes for revenue.  Assessments continue to fall, which reduces the property taxes and reduces the amount of revenue for municipalities.  Industry observers have noted that many big cities are at risk of going bankrupt in 2011.

In addition to the default risk, bonds also carry significant inflation risk.  Should inflation pick up steam again and head higher, the interest payments as well as the principal will be less valuable.  In addition, bond prices traditionally fall when interest rates rise, and interest rates tend to move higher when inflation rates move higher.

Another risk to take into consideration with bonds is something labeled "call risk." Call risk only pertains to bonds that have a callable feature.  In this situation, it is the issuer's discretion to purchase the bond back from the bondholder.  This is typically done when interest rates are substantially lower than when the bond was originally issued.  The issuer retires the bond with the higher interest rate, and reissues a bond with the lower interest rate, thereby reducing the cost of debt.  While this is a good scenario for the issuer, it can wreak havoc on planning out an income stream for the investor.

For alternative strategies to provide income while maximizing risk, call us at Family Focus Financial Group at (732) 364-5462.

Tom

You Can't Trust Wall Street's Numbers

Ever hear of Vanguard?  Of course you have. It is a very well-known respected mutual fund company founded by Jack Bogle, now 81 years young!  In his latest book, Mr. Bogle warns about the "perils of numeracy."  Even though investors have earned about 9% a year in the stock market in the last century, much of that from dividend income and earnings growth, there's more to that story than meets the eye.

Trading costs, sales charges and investment fees as well as TAXES, eat a large portion of the return.  In fact, Mr. Bogle says that the number is as much as 75%, before taxes!

Well known as a guru in the investment world, Mr. Bogle says, "Numbers don't necessarily repeat themselves, and the person who presents the number to you may have a vested interest,"  In his ninth book, "Don't Count on It! Reflections on Investment Illusions, Capitalism, Mutual Funds, Indexing, Entrepreneurship, Idealism and Heroes," which is a collection of his writings over the last decade.

An interview with Mark Jewell of the Associated Press asks Bogle, "What worries you most about the markets?" He responds, "I've never seen a more difficult time to invest, with the specter of these enormous deficits hanging over us, and with the global economy teetering a great deal more than people think it is.  China poses special risks, with a huge construction boom that can't go on forever.

When asked "What's your current outlook on the stock market?" He answers, "The market is at a relatively fair value now but may be a bit overvalued for the long term. But I will no more predict what will happen in 2011 than fly to the moon. Anybody who goes into the market to make money specifically in 2011 should either be spanked or have their head examined.  It's just too short of a period to predict, and it's a crapshoot."

"Jack" Bogle at least tell it like it is. I really respect the guy.


-Lady Fi.

Kathy

Protecting Yourself in a Skittish Market

Turning the TV channel from Fox News to CNN to MSNBC, the images are familiar. Crowds of people demonstrate in the streets. Molotov cocktails fly through the air and explode in a grisly mix of fire and glass.  Another dictator may fall, or protesters may be arrested.  The slumber of a previously submissive population has been awakened by a younger generation fueled by social media.

Beyond Egypt and the Middle East, our own economy still struggles to gain footing.  Many analysts believe that, as a result of a weak and unbalanced financial system, the bull market that we are seeing right now could experience significant volatility.

The VIX is an index of consumer perceptions of risk in the market place.  The VIX index is published in any Financial Newspaper, i.e. Wall Street Journal.  It is a bellwether measure of volatility in the marketplace today.  In 2010, the VIX peaked in May and June, and has gradually leveled off since then.  This index, however, can change quickly.

In 2010 the S&P 500 saw an increase 15.06%.  All in all a pretty good return, particularly in light of previous years when the S&P was negative.  In looking at 2010 in detail, however, some facts are important to realize:

1. On 106 of 252 days that the market was open, the S&P 500 actually went down.
2. If you had taken a daily average, the return on the S&P 500 would be 2.2%.

In fact, over the past 30 years the S&P 500 has averaged 11%.  The issue of course is when you decide to put your money into the index.  Over the 30 years if you take out the twenty best days the return drops to 6%.  If you take out the best 50 days the return drops to 2%.

In May of 2010, the market experienced the "Flash Crash;" an event started by a computer program that eventually led to a 600 point drop in the Dow Jones.  In the aftermath the television program 60 Minutes ran a story about how computers are now handling trades on stocks sometimes at split-second interval.  The question for today's investor concerned about retirement is what to do when world events impact the direction of markets.  While this has been an age-old dilemma, increased volatility in the markets reflects what is happening in society.

While diversification is a good strategy, what happens is the entire market is negatively affected by world events.  There is no real way to avoid systemic risk. Systemic risk is market risk.  If the market goes down, people lose money, take it one step further if the market goes down so does your retirement account go down.  At this stage in your life can you really afford this scenario.

What if there was a product for investors that protects them in this time of increased volatility? If a market has a decline over a period of time, investors will see 0% credited to their accounts as opposed to actually losing money.  In compensation for this security against loss the upside is limited.  Would you accept a more limited upside in return for a guarantee of protection on the downside?
A study was done that actually asked these questions and 80% of people surveyed stated that they would rather have a 4% return with a guarantee against not ever losing their investment, versus a product that offered 8% return with the possibility of loss.  If asked, and you fall into the 80% category, give our office a call and we will gladly provide you with the information needed to make an intelligent decision otherwise enjoy the ride, it's your retirement.

Tom

Family Focus Retirement Group LLC Jackson NJ Financial Plans

PEACE BE WITH YOU

This is a common phrase used in many religions today to wish someone well, to send them love and goodness.

It is also a mindset.  With all the mania in the financial world today, I think what everyone really wants is very simple.  Peace of mind.


There is so much information out there to disseminate.  Surely, we do not have a lack of it, we have information overload. When a client tells me they want to do more research on my recommendations, I know I have failed.  I have not effectively conveyed my message, which is " you can place your trust in me."  I have attentively listened to you express your desires and needs for a happy retirement, and based on my professional experience and intuitive nature, I have delivered one or more solution that I sincerely feel will deliver the outcome you need.  There are sometimes several scenarios one can put in place to solve a particular issue or concern.  The bottom line, is which one of those will give you what you are really looking for - peace of mind.  Do you really want to know or try to learn the intricacies of how an investment or insurance product works?  Don't you really just want to know what it will do for you?

Certainly, full disclosure is important and mandatory, but honestly, most people glaze over after a few minutes of explaining the mechanics of most investments.  What you want is trust.  You want to be able to fully trust the person who is making the recommendations.  Without trust, you will never have peace of mind.  All the research in the world won't give you peace of mind.  All the procrastinating in the world won't give you peace of mind.  No, my friend, you must dig deep and see if there is trust.

I know this is so hard to do in our world now with all the scandalous behaviors of unethical and dishonest individuals who have abused someone's trust.  It is, however, attainable.  Trust is a two-way street.  You have to let your guard down some and also be honest with the person from whom you are seeking advice.  You don't go to the doctor and not reveal your symptoms.  You could get a totally inaccurate diagnosis, and that would not make the pain go away and could cause you harm.

For peace to come into your mind you need to empty it of all the noise, all preconceived notions, all the negativity and hyperactivity.  Keep an open mind, free of fear.  Trust will come, or it won't.  You will know.  Trust yourself.

Kathy

Play Defense

Did you know the U.S. Government does not have an approved 2011 budget for its DEPARTMENT OF DEFENSE? We're nearly 6 months into the year and Congress has not authorized any money to fight wars-at least not the one with Libya.  Still, the U.S. is shooting missiles, dropping bombs, and there's no budget.  Weird.

Last year, Congress had the money to pass "Don't ask, don't tell" legislation.  Oddly, Congress could not pass a law to pay our troops and fund operations.  Very strange.

With all this craziness, gold and silver are looking even more attractive, as well as mineral developers.  Oil and energy related shares also look like a defensive play.

The federal budget is way out of control.  Spending is over the top, and our debt is escalating daily.  No one knows how this will all turn out, but the U.S. dollar is destined for inflation.  Lose your purchasing power, lose your way of life.

Gold may once again become the new standard.

Happy Birthday, Health Reform

Well one year ago this week, President Barack Obama signed the Patient Protection and Affordable Care Act into law.

And, in the last 12 months-despite promises to the contrary-we still haven't found out everything that's in it.  Since the Secretary still has not filled in all the blanks- as if this legislation were some sort of Federal Mad Lib.

We've seen at least half a dozen lawsuits, with as many rulings as plaintiffs, and no clear resolution in sight. And, after all of that, I'm not sure we've seen that many patients "protected" and we've certainly not seen any more "affordable" care.

We've also seen Congressional Democrats endure a midterm beating the likes of which we haven't seen since Clinton decided to pass his own (Welfare) reform.  What we have also seen is a public still split over the law; clearly opposed to the individual mandate clause, but without it, the entire thing falls apart, making even less sense than it already does.

Meanwhile, we have a President who believed so much in this legislation last year he insisted on shoving it through Congress, and now we've seen more waivers - and wavering - than an office fantasy football league.

Last week I had the privilege of attending a Chamber of Commerce dinner where the guest speaker was the Vice President of a local hospital.  In his speech he mentioned that he has yet to meet any Congressman who has read the 2,500 page report that outlines the details. It still amazes me that this is a fact. He also stated in his speech that he had no idea how this health care reform was going to work.

If you believed in this so much, at least stand by it, and I can respect your ideas and resolve.  Otherwise, you're just another slick politician more beholden to polls than principals.  And not unlike the host of federal regulations that hangs over our heads, we already have more than enough of those.

Tom

How to Trim the Fat From Your Budget

We see some tough times on the horizon. With longer life expectancies, higher inflation and not enough income – the time is NOW to buckle down and watch your spending.

You don’t have to live like a hermit or make drastic changes to your lifestyle, but here are a few suggestions to help you think about how you spend.

• Don’t go shopping without a list.  Stick to the items you need so you don’t impulse by.
• Cut down on eating out.  It may be fun to take turns creating a new recipe. Or take turns hosting on Saturday nights with friends – you can play games or cards for an inexpensive form of entertainment.
• Use debit cards instead of credit cards.  You’ll only spend what’s actually in your bank account and won’t run up your charge accounts with high interest charges.
• Consolidate your errands so you use less gas and less of your free time.
• Think about writing out your bills instead of automatic debits. It makes you more aware of what things cost.
• Go shopping in your own “store.”  Your closet and drawers probably have clothes you forgot you have or have not worn in a while. Change it up with a scarf or vest or by layering.  Guys too!
• Go out for appetizers instead of dinner!  You’ll get a lot more variety and won’t overeat.
• Have one glass of wine or one drink when you go out, and the rest at home! You can probably purchase a bottle for what you pay for 2 drinks in a restaurant.  And besides, you shouldn’t drink and drive anyway!
• Be kind to your environment – use aluminum water bottles and refill them.  Also, less exposure to plastics, which can break down and may be harmful to your health.
• Use washable containers instead of baggies, aluminum foil and disposable containers.

Small changes in your spending habits can really add up over time and may give you that little bit of extra cash when you really need it.

Kind of like cutting calories during the week so you can indulge a little on the weekends!

-Kathy

Lady Fi

Taking Income in Retirement

As great as it feels to take income from an appreciating account, it feels terrible to take income from the same account when the value is declining.  From a mathematical perspective, taking income from an account with a declining value might be harmful in terms of retirement planning. The reason is simple - whatever the percentage of investment loss, it takes a larger percentage of gain to make up the loss as the discussion below outlines.

Let's look at an example.

If I have an investment worth $1,000,000 and lose 20% in a given year, I have a year-end account balance of $800,000.

Now, let's assume the following year my investment makes a 20% gain.  I now have an account balance of $960,000. A 20% loss followed by a 20% gain still results in an investment loss!!

It takes an investment gain of 25% to recoup the losses experienced from a 20% investment decline.
The relationship existing between losses and subsequent gains is absolute - meaning it always exists, regardless of the percentage. The greater the investment loss, the larger the subsequent gain needs to be in order to recoup all investment losses.  It's this simple mathematical fact that makes not losing money in investments so important for so many retirees.

That's why it's important to invest at least a percentage of your assets conservatively, in a vehicle where account values are as stable as possible.  A large investment loss makes it more difficult to receive a level, consistent income stream.  And, for those individuals in retirement or nearing retirement, receiving consistent income is an essential component of living a traditional retirement.

Avoiding losses in retirement may be every bit as important as making gains, some would argue more important. One of Warren Buffett's best known quotes is "Rule number one: Never lose money. Rule #2: Never forget rule number one."

-Tom

Get Ready for the Ride

We are still in a secular bear market! (Secular means a long period of time).  The last secular bear market lasted 17 years – If we count back starting in 2001 – and history proves itself, that means we have about 7 more years of a bumpy ride.  Don’t be fooled by the last 2 years.  Most bear markets have periods of retracement. But as the recent volatility suggests, these periods eventually wash out.  I see storm clouds ahead.  The bounce in a secular bear market lasted about 26 months during past downward cycles and that puts us around mid May of 2011.

Funny how some people are just gluttons for punishment. If you get creamed in 2002 and/or 2008, why are you still in the ring?  It doesn’t hurt to step out for a while.  If I’m right, you still have your gains and have avoided another blood bath, If I’m wrong, well you still have your gains!

Steve Blumenthal, CEO of Capital Management Group, an Investment Advisory firm, sees a pullback of about 34%.  I like the people he hangs out with – brilliant minds like John Mauldin and Dr. Christopher Geczy.  I’m in their camp .  Here it comes, buckle up.  This is going to be another wild ride.  If you choose to stay on – keep your eyes wide open!  No surprises here.

Get the heck off and just watch.  Somewhat of a thrill, but without the high blood pressure.

The Choice is Yours.

-Kathy

This is NOT the time to Buy and Hold - Spring Cleaning

Who’s the first Irishman you see in springtime? 

Patio Furniture. 

Yeah – corny, right? 

Goodbye winter of 2011- hello Spring.

Spring is always a good time to take stock of what we need, and what we don’t.

We can hope for a traditional strong spring real estate market, but I don’t think we’ll see one. Still too much unemployment and only 50,000 “Gen X-ers” to buy 83 million Boomer houses, among other things... 

Perhaps it is a good time for getting rid of those collectibles you’re just not into anymore. I hear E-bay is booming. There are also probably a lot of families going through some tough times who could use “like-new” clothing, shoes, boots and next year’s winter coats. Little league and soccer is revving up-got any equipment crowding your garage and closets?

Spring is also a great time to do a checkup on your financial situation. Organize your records, discard unnecessary paperwork and old statements.

Do you have the stomach for another rocky ride with your investments? I think we’ll see a pullback very soon. Don’t wait too long before you talk to your trusted advisor for their take on things.

Spring is a wonderful time to remember those we love and make sure they will be taken care of if you’re not here. Update those wills you had done 20 years ago. The language may be insufficient to carry out your wishes today! Perhaps you need more than a will-such as a trust. Speak to an experienced estate planning attorney about what’s best for your personal situation. Be sure to have Durable Powers of Attorney and Medical Directives in place-no one plans on getting sick or hurt. This simple act will make it so much easier for your loved ones to step in and act on your behalf. Do it now!

So spring shape-up time my friends. Time to get the “house” in order.

Carpe Diem!

Kathy

Worker's Retirement Confidence Falls To Record Low

Yesterday I was doing some informational research when I came across this article from Benefit Selling. It blew me away so I decided to share it with you:

Worker's Retirement Confidence Falls To Record Low by Amanda McGregory

Twenty-seven percent of employees say they are “not at all confident” about having enough money to live comfortably in retirement, according to the 2011 Retirement Confidence Survey, released by the Employee Benefit Research Institute and co-sponsored by the Principal Financial Group.

This figure is the highest in the survey’s 21 years.

Additionally, 13 percent of workers say they are “very confident,” which ties 2009 for the lowest rate measured by the survey.

“The survey finds that many systemic conditions are forcing Americans to redefine retirement, such as high unemployment rates, government fiscal crises, rising health care costs, lower investment returns, a surging older population putting pressure on Social Security and Medicare and longer life expectancies,” says Jack VanDerhei, EBRI research director and co-author of the report.

“Americans are beginning to recognize the level of savings needed for a comfortable retirement. Now it’s critically important to take steps to improve the chances they’ll have enough,” says Greg Burrows, senior vice president, retirement and investor services at The Principal. “Research shows even simple actions, like calculating how much is needed for retirement, increases savings. Creating a plan and working with a financial advisor can also help get savers on realistic paths to a secure retirement.”

Approximately one-third of workers and retirees report dipping into their savings in 2010 to pay for basic expenses; however, those with retirement savings accounts are much less likely to withdraw from their savings.

Forty-two percent of respondents say they guessed to determine their needed retirement savings while 70 percent say they are a little or greatly behind schedule in planning and saving for retirement.

More than half of workers report having less than $25,000 in total savings and investments, excluding their homes.

Twenty percent of respondents say they now intend to retire at an older age than originally planned, but 45 percent say they retired earlier than expected, primarily because of a health problem or disability.

 What steps are you taking? Our analysis can put you on the right track and establish a working plan. Calling our office at 732-364-5462 would be a good first step.

Is greeting customers at Wal-Mart or Costco really an option you want to consider for your retirement?

-Tom

The Life Cycle of Your Money

You spend many years trying to save for retirement. During your 20's and 30's you are just starting out. Perhaps you married, paid down some school loans, while saving for that illusive down payment on your first home. If kids come along, a lot of your earnings went to raising them. A lot! During these years, your money is in the accumulation phase.

Just when you can finally start to buckle down, after college tuitions, weddings, and helping the kids get started, you realize you don't have a lot of time left to save more for your "planned" retirement date. Now you are getting near the distribution phase.

This is the time you need to consider being more conservative with your investment choices. Please realize, conservative does not necessarily mean guaranteed. It can be totally devastating to the longevity of your money if you take a hit from the market during the first few years of distributions. When you are drawing down during these periods it can become very difficult and sometimes impossible to recoup losses.

A strategy that may help is to build a foundation based on a guaranteed supplemental income stream (after Social Security and your pension, if you're on of the lucky ones that still gets one!). Once you have an income plan in place, then you can diversify according to your own risk tolerance. A word to the wise: being too conservative can be almost as dangerous as being too risky. You could very well outlive your money, earning today's meager returns once you factor in inflation and future tax increases.

I suggest having an analysis done on your current and future income needs. Be sure to cover the "what if"s like needing extra money for health care, or losing your spouse/partner. Then go and live your life!

For an independent audit and income analysis, give us a call. We want you to live the best life possible.

-Kathy

Family Focus Financial Group (732)364-5462 kathy@ffrgonline.com

There is a general sense of uneasiness, skepticism, and mistrust permeating the air..

Many still vividly remember the stock market collapse of 2008 and early 2009. The news stories of Bernie Madoff and other financial swindlers are still relatively fresh in our minds. Quantitative easing, i.e. the massive printing of money by the Federal Reserve has people worried about the future direction of the US economy and the possibility of massive inflation. While the "official" unemployment number is falling even those who are less engaged with current economic news know that as far as official Government reporting is concerned, the proverbial books are being cooked.

How many watch the financial talking heads on TV? Do you watch Cramer? Kudlow? Cavuto? The squawk box gang. How many of you have ever heard two seemingly bright people on these shows talk about the same financial topic and give advice that is the polar opposite advice that another seemingly intelligent person gives? The reason for this is that each of these pundits has a different opinion as to what might occur due to a specific set of economic circumstances. Then based on that opinion these experts have a suggested course of action in order to profit from or be safe from these possible outcomes.

A better course of action, I suggest, would be to identify personal financial goals and pinpoint possible obstacles to achieving these goals and from those two lists develop a plan to achieve those goals. There is a lot of confusion and uncertainty among the masses, people are scared financially speaking, unsure what their personal goals are and how to identify the possible obstacles that might get in the way since there are so many. Can we help? I think so.

What are you really looking for - could the answer be Security?


-Tom Boles

Choose the Right Pension Payout - It's Forever!

The day you've been looking forward to is almost here- retirement. 
You've put your time in and now you've had enough!

Before you leave your employer, some very important decisions need to be made; how do you structure your income payout from your pension. What is the best option for you?

It will be different for everyone. Here are some questions to ask yourself:

1. How stable is your company or municipality. It is no secret that many public pensions could be in jeopardy due to overspending, mismanagement of funds, loss of revenue (foreclosures hurt-if you're not paying your mortgage, you're likely not paying your property taxes).
2. Are you willing to permanently part with a portion of your pension to provide a spousal benefit? Boomers are expected to live 25-35 years into retirement. That's a lot of lost wages if you take the reduced payout option.
3. On the flip-side 25-35 years is a long time to go with no pension if you choose a life only option and die too soon, leaving your spouse under-protected.
4. Should you consider a pension maximization program which basically allows you to take a higher payout with no spousal benefit, then supplement with a life insurance policy on the pensioner if he or she dies first. This can give you many years of maximum income to spend, especially if you are both relatively healthy. However, the numbers may not make sense if you are rated or a smoker.
5. Are you healthy? Consider each partner's health and the lifestyle you envision for your retirement?
6. Are you planning to work part-time or perhaps start a business?
7. What other income sources do you have? Could your investments sustain you if you experience a market loss, especially early on?

It is wise to meet with your trusted advisor who should be able to do an analysis and run all the numbers and scenarios. Only then can you make an educated decision on what feels best for you and your spouse.

If you need help, we're here to listen.

Kathy

Family Focus Financial Group (732) 364-5462

The Media Can Hurt You

We're all so thirsty for information, especially when it comes to what to do with our finances. There are plenty of opinions out there. What scares me the most is the media. It seems when you read it in print, some written by whom the public views as credible, or hear it on television, you want to believe. Many do believe. It was on TV, so it must be true; or "so and so," who is a celebrity, says you should do this...

Don't get me wrong. I am happy that you are being made aware. It causes you to think. However, more often than not, the reporter or the writer only gives part of the facts, takes things out of context, or simply does not have the financial training and experience to be discussing the subject matter. Important information gets left out. The facts are sometimes incorrect, and often you, the public, are misguided.

This can do more harm than good. So before you take things as gospel, realize who is delivering the message. If it's a reporter or writer, even one from a widely read publication, chances are the information may not be totally accurate. Without years of education and experience on the subject matter, what credentials do they have to be giving out such crucial advice?

Think about this. Who would you feel had more credibility? A doctor who had years of medical education, training and experience in his or her field of expertise, or something you heard on the news?

It's ok to question. In fact, it's wise. One of two outcomes will occur: you will realize the "story" has flaws and trust your instincts, or believe anything you hear and read because it's popular opinion. Bad news sells! For some reason the public is addicted to it, maybe because that's all we're fed on a daily basis. Perhaps you've been brainwashed by the hype; or have you just given up on your ability to filter through the madness.

All I can say is trust your own instincts and develop a relationship with a knowledgeable and credible advisor who has taken the time to listen and get to know you.

After all, don't you deserve better than "cookie cutter" advice?

-Kathy

WOW ! Wall Street is starting to get it……ALMOST!

We’ve been touting this for years. Boomers are going to need income.  It is the number one concern of all boomers, and if it isn’t, it should be. A reasonably healthy 65 year old couple has more than a 50% chance that at least one partner will live beyond age 90. A single male has about a 35% chance, and a single woman, a 45% chance. That’s at least 25 years or more after retirement that income will be needed. And, oh, by the way, we haven’t even mentioned the significant impact inflation, tax increases, or health care will have on that monthly nut you will need to crack to cover your basic needs, like food, clothing, shelter and yes, medications. If you’re going to live that long, there is a good possibility that you’ll not be in 100% perfect tip-top shape.

I was so shocked to read a recent article in the Wall Street Journal, March 8, 2011 titled “Making the Case to Buy an Annuity.” Wall Street has been bashing annuities for years - remember, most stock brokers do not have the necessary licenses , training, or credentials to offer them to you. If there is nothing in it for them, why would they recommend them. Also, since an annuity is meant to be left alone to do its job, create present or future guaranteed income, and tax advantages, it not a financial instrument that is meant to be sold, cashed in or traded. Do you get what I’m saying?

Well I am so happy to see Wall Street finally recognizing the importance and the value of having annuities as a “foundation” of a good retirement plan. But once again, they did not tell the whole story. They spoke of only two kinds of annuities; an immediate annuity, which works like a pension- trade a sum of money for a period of guaranteed payments, and of course they would tout a variable annuity, which invests in, what else, mutual funds! They never mentioned one of the most popular annuities today: a fixed indexed annuity with guaranteed income riders. One might say that this type is the best of both worlds. Your principle is guaranteed (unlike
a variable), and only your interest is variable as it can be allocated to either a guaranteed fixed rate, usually better than a CD, or it can be linked to various indexes like the Dow or commonly the S & P. So, you can have the potential for growth, with none of the downside risk. In addition, you don’t have all the hidden fees associated with variable annuities.

In closing, each individual should work with an advisor who is competent and knowledgeable and not limited to one company’s products. Remember, it’s about what is best for you, not them, and each of you has your own unique situation, risk tolerance, and income needs.

WE LISTEN. We’re here to help if you need us.

-Lady Fi

Kathy

Senate to Vote on rival GOP, Democratic Budgets

In a demonstration of official Washington's often curious logic, the Senate is expected to vote down both a slashing GOP budget bill and a less painful Democratic plan to demonstrate progress instead of gridlock.

The idea is to show both sides that they need to move toward each other to break a bitter stalemate over how much to cut spending as Congress wraps up last year's unfinished budget work. The combatants are facing a March 18 deadline that already has Republicans in the House drafting another stopgap spending measure to make sure the government doesn't shut down if a broader agreement isn't reached by them.

Let me put this into average American household terms:

Say that a married couple, both working, has a home with a mortgage of $1000. That payment includes the taxes on the property and the property insurance. The couple also pays an electric bill, a natural gas bill and a cable bill each month.

Now one of the two loses their job. Down to just one income, the couple has some decisions to make about what to cut out of their household budget and what to keep in the budget. They have to cut about $1000 per month in expenses in order to make their household budge balance.

Instead of making the hard choices, they decide for starters to eliminate the cable and see how it goes. You don't need a degree in economics to figure out that it won't take long and the couple will be broke, unable to meet their household budget.

That's exactly what is happening at the Federal level currently. Given the magnitude of the US deficit and debt, it seems that there would be meaningful discussions about getting spending under control, but instead the two parties are arguing about the cable bill.

-Tom

Women - Don't Settle!

Do you know statistics show that women currently control over 50% of the investment wealth in this country? (Federal Reserve Board data) And, that by 2020 that number is expected to be closer to 75%!

A 2008 LIMRA report  found that 72% of affluent women are NOT happy with their current advisor.

So, I ask you. Are you satisfied with your current financial advisor. Is he or she listening to your concerns, letting you know that your feelings are valid, that your fears are justified?

It is no secret that men and women think differently when it comes to money. Different things are important to us. Men are more focused on how something works. Women are more concerned about what it does.
Men tend to make financial decisions quickly while women need to get to know their advisor as a person to feel comfortable.

In general, women want to work with someone who listens carefully, who respects their ideas and has the patience to walk you through the process so we can feel confident in the solutions.

Lady Fi says, it's time  to take TIME! Women often put themselves last. You are so used to doing for others first. It is our nature to nurture.

Well it's time to take care of business girl, this is serious!

It is said that by the age of 57, almost 50% of women will be either divorced, widowed or separated. In addition it is expected that "boomer women will outlive their husbands by 15 years or more!
What does this mean to you? It means it's time to wake up - smell the coffee - you need to be responsible for your finances.
If you are married it means you need to know what is going on. What assets do you have? How are they titled? Are beneficiaries updated? Do you have your own logins and passwords? This is not a matter of a lack of trust. This is just smart. It's good planning to protect yourself for the day when you are without your partner. No time to procrastinate or cry lack of interest or understanding - "Lady Fi" is here to help educate you, not break up your marriage.
If you're single you have NO EXCUSE! There is no knight in shining armor going to shower you with buckets or cash in your 80's. Yes, I know it's overwhelming to have to do it all yourself. But you're NOT ALONE! Lady Fi is here to guide you and help you do the best you can. In the end that's all any of us can do. But plan now, TODAY, you'll meet each challenge as it comes along - just as you always have!

Ask Lady Fi
Enter your concerns and questions here for our forum to discuss. I'm listening. And besides, I guarantee there are at least a dozen other women with the same concerns! Sharing helps us all.

Warm Wishes

"Lady Fi"
Kathy

Debt Has Its' Consequences

$600 Billion, that's 75 billion dollars per month, of our own money to be bought back by the U.S. to stimulate our economy? 
Huh? Yeah, I know it sounds like double talk. It is. Created a buzz for a while, kinda like a few glasses of cheap wine. But don't expect the euphoria to continue. The market is already starting to show signs of increased volatility.

Take heed...the bond bubble is about to burst.

As I wrote in the summer issue of The County Woman, here comes the implosion of the US TREASURY bubble. The last time this occurred in 1976, the five years following were among the most extraordinary in economic history. They're about to be repeated again, but this the the trend will be bigger, it will move faster, and the fallout will be far greater. We weren't 1.65 trillion dollars in debt. We did not have underfunded Social Security and Medicare disasters looming, and we did not have 76 million baby boomers retiring at the rate of 10,000 a day for the next 15-20 years! And above all, we were not recovering from the worst credit crisis in our history!

Now, in order to save the day, we need the rest of the world to keep buying our debt, 'cause we're pretty tapped out, wouldn't you say? Russia and China have already begun buying oil in their own currency, not the US dollar. We are looking at worldwide currency devaluation if the US Dollar gets replaced as the world currency.

The day of financial reckoning is near when other countries and even our own citizens lose confidence and nobody shows up to buy our bonds. When that day comes, we'll crank up the printing presses and print more money. In effect, we will be silently defaulting on our own debt, bonds will crash, the Dow and the dollar will nosedive, and inflation will quickly start to spin out of control.

And what of the overall market? The next downleg is coming. Could be as early as April, but I think no later than July. Believe me, I'd rather be wrong about this than right, but I mingle with and follow some really smart people that have no personal vested interest in their predictions. If your nest egg can't withstand another major hit, it doesn't hurt to sit on the sidelines for while. Me, I'd rather be safe than sorry. Again.

Usually the contrarian opinion ends up being the right one in the end. I don't smell roses. Smells like crap (or should I say poop!).

-Kathy

The Fleecing of America

Anyone get gas today?
If not you're in for a surprise! This is just a plain fleecing. We don't even purchase oil from Libya. If you are as outraged as I am, Call Your Congressman and Senator.
Realize this - we elected them to take care of us - to look out for our interests. They don't pay for gas, they have expense accounts. So, in reality we are paying for their gas.
This is outrageous. Call them to voice your displeasure and threaten to withhold your vote and tell them that you'll remember this at election time - this will get them to do something, even if it is just to listen to our venting.
This price hike is not about supply and demand - it's about fleecing the American public.

- Tom

THE NUMBER ONE FEAR FOR BOOMERS?  

Can you ever retire?

Imagine.  The day you’ve been looking forward to is almost here.  Retirement.  Time to do the things you’ve always wanted to, but were too busy earning a living, perhaps raising a family.  But wait, will you have enough income?  Will you have to live like a hermit?  Will you have to eat cat food?  Geez, you start to question whether you can ever retire and live comfortably without running out of income.

You know what your monthly expenses have been and you want to maintain your standard of living, so you consult a recent mortality table and discover that if you make it to your 65^th birthday, you can expect to live to at least 85 years old.  When you calculate your Social Security payment, together with all of your savings, you think you have enough, with expected future earnings on your money, to make it.  But what if you live longer?  What if investment returns are not what you expected at the start of your retirement and your plan gets derailed early on?  How will you get back on track?  Where will the money come from?

These questions are increasingly urgent in our country today.  The old ways of spending down your assets in retirement need to be revisited.  Why?  There are basically five known challenges to the old system, all  converging on us at the same time:

           

1.      The decreasing return on your Social Security benefits.  Those of you currently in your working years will receive a much lower return on your contributions than your parents did.  This is especially true for those whose earnings were taxed at the maximum levels (for Social Security) whose expected return is 0.4%

2.      The demise of traditional pensions known as defined benefit plans with the replacement of 401k’s and 403b’s, known as defined contribution plans.  Under a traditional pension plan, you receive a fixed monthly income for as long as you live.  Under the defined contribution plan, there are no guarantees, and the burden, and the risk of retirement income is solely your responsibility, whether you know what you’re doing or not.  Add to that reduced eligibility and taxation, the sustainable income gap gets wider yet.

3.      The aging baby boomers (born 1946-1964) will continue to exit the workforce for at least another eighteen years!  That’s approximately 27% of the US population, and 48% of all households who will become dependent upon  Social Security,  retirement plans, and any additional savings or investments  you managed to accumulate.

4.      Boomer babies-Generation X (born  1965-1979) and Gen Y (born 1980-2001)  will bear the double burden of  preparing and saving for their own retirement  as well as supporting  Social Security and Medicare payments to the boomers as there will be 7.2 people withdrawing and only 3.7 people contributing according to the Census Bureau.

5.      Increased longevity-When Social Security began in 1940, the average person did not live until age 65.  Now, if you reach age 65 in decent health, 50% of women can expect to live past age 88, and 25% past age 94!  If a couple makes it to 65 in good health, the odds are 50% will live beyond age 92 and 25% will live beyond age 97!

So, can you ever  retire ?

The answer is yes!  With the proper planning, done as early as possible, together with disciplined spending, you can enjoy those golden years.  In comes the lifetime income annuity.  Begin by “annuitizing”( turning a lump sum into a permanent income stream-your “person pension”) Use  enough of you assets so that you can provide as much as  100% of your supplemental income needed after Social Security, and any pension benefits, to meet your acceptable monthly  income level.  The cost of not being able to cover even your basic needs far exceeds the potential upside of taking on investment risk exposure to accomplish this.  Unless,  of course, moving in with the kids is an option you would consider choosing! Eeek! 

Depending on your risk tolerance, once you know you have the income to have your basic needs covered, you may be able to invest with a bit more confidence and you’ll have the time to wait out any volatility .  Sounds simple, right?  In fact it’s so easy there must be something wrong with it. Right?

                                     

            Why isn’t everyone doing this?    Many of you believe, or have been told, that stocks are the way to go for the long run, but unless stocks consistently perform at the level you expect, you can be left with inadequate monthly income.  The same can be said for bonds.  Life annuities have evolved considerably over the past several years.  Some other annuities even provide an “income doubler” should there be a need for long-term care.  Others, still, have a built in inflation protector by allowing for payments to increase.  Every benefit has some cost to it, but you can pay now or pay later at much higher rates.  You and your trusted advisor can evaluate what best fits your individual mindset and circumstances.

Will you lose control over the funds you use to create a life annuity?  Pretty much, the good news is yes.  You’ll have a guaranteed, insured check deposited directly into your bank account every month, every year, for as long as you live.  You can’t overspend.  You can’t lend it to the kids.  It won’t ever go down, or be discontinued.  It has a neat benefit like no other investment called an exclusion ratio, which means a good portion of the income is not taxable (if it’s not qualified).  So what’s wrong with all that?  You’ve got to eat first, in order to live.  By covering your basic living expenses with a life annuity, you can stop worrying about how you’re going to make it, and really enjoy the life you have yet to live. Your life!

Now you’ll know exactly how much you can allocate to other investments.  We adhere to an “absolute return strategy” when it comes to investing.  Your personal risk tolerance, together with the ability to grow your money in an up, down, or flat market, is an investment philosophy that can serve you well.  After all, it’s not all about the return on your money, as it is about the return of your money.  A well-balanced plan that incorporates income as a priority and growth as a necessity as well as tax efficient spending will have you enjoying a reasonably good life for many years to come!

At, Family Focus Financial Group, we listen.  We listen to what you want to be able to live a good life.  Together, we will help you get there, and more importantly, stay there.

You’ve found a home with us. Let us help you stay the course.

For a complimentary copy of our newsletter, The Focus, or to schedule a consultation, call us at (732) 364-5462  or visit us online at www.ffrgonline.com.  We welcome the opportunity to be of service to you.