An estate plan is an important part of your financial strategy. It protects your heirs from risk and addresses how your assets should be distributed after you pass away. You can also use it to minimize taxes and a wide range of other potential costs. One of the biggest costs your estate may face is probate. Probate is the legal process for settling one’s estate. The process is managed by your estate executor and the local probate court. It usually consists of a variety of tasks, including notifying potential heirs, paying debts, liquidating assets and more. As you might expect, probate can take weeks or even months. During that time, your estate may rack up costs for lawyers, accountants, real estate fees and more. It can also delay the distribution of your assets, as that may not happen until probate is complete. Fortunately, there are steps you can take to eliminate the impact of probate on your estate. Below are three such steps. If you haven’t planned for probate, now may be the time to do so. These steps could ease the process for your heirs after you pass away. Gift your assets to loved ones. You can minimize the impact of probate by simply reducing the amount of assets in your estate. The fewer assets you have when you die, the fewer that have to go through probate. One way to do this is by gifting assets to heirs and loved ones while you’re still alive. Be careful, though. Many states have laws about how long an asset must be out of your estate for it not to be included in probate. There are also gift tax and income tax laws that apply to gifting. You’ll likely want to consult with a financial professional to see how those laws apply to your strategy. Finally, be sure to consider how your loved ones may feel about the gifts. Some may feel that they’re not fair. If the gifts will create conflict, you may want to consider an alternate plan. Use a trust to distribute your assets. A trust is another effective strategy for minimizing the impact of probate. A trust is a legal document that’s used to manage investments, savings, property and other assets. You create the document with the help of a legal or financial professional and then retitle assets to ownership by the trust. Upon your death, the assets are distributed to your trust beneficiaries. Since you name the direct beneficiaries in the trust, the assets bypass probate. That could help your heirs receive their inheritance faster and at less expense. Take advantage of qualified accounts. Trust assets aren’t the only assets that bypass probate. Any account with a beneficiary designation avoids the probate process. That includes life insurance, annuities and qualified accounts such as IRAs and 401(k) plans. Consider ways you can maximize these assets to take advantage of the probate bypass. For example, you may consider putting assets into an annuity. Many of these products have other attractive features like guaranteed* rates of return and market risk protection. A financial professional can help you determine the best strategy for your needs. Ready to develop your probate plan? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation. *Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18086 – 2018/10/1
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Many workers dream about early retirement as their ultimate goal. Early retirement gives you the opportunity to enjoy your free time while you’re still young and healthy. You may be able to do things in life that wouldn’t have been possible if you’d waited to retire at an older age. However, there’s nothing exciting about early retirement if you’re forced into it before you’re ready. An unplanned or unwanted early retirement can lead to serious financial challenges, and it may hurt your ability to support yourself and your desired lifestyle through the remainder of your retirement. Unfortunately, many workers face the threat of forced early retirement every year. For some, it could be due to layoffs or termination and difficulty finding a new job. Other workers may suffer an injury or illness that leaves them disabled and unable to continue working. Either instance is a very real possibility as you approach retirement. If you should be forced into retirement without a plan in place, you could face serious financial difficulties. Below are a few steps you can take to prepare and protect yourself: Make yourself valuable to your employer. With retirement in sight, it may seem like there’s no point in continuing to learn new skills or to develop as a leader. After all, you’ll be out of the working world in a few short years. What’s the point of learning new technology or methodologies? That continued learning could be the difference that keeps you out of the next round of layoffs. Look for ways to develop and make yourself as valuable as possible to your employer. Keep coming up with innovative ideas and improvements. Volunteer to take on those difficult assignments. You need to finish your career with an uninterrupted stretch of earning and saving. Take steps to ensure your employer views you as a valuable part of the team. Protect yourself against the risk of disability. Think disability won’t happen to you? Think again. According to the Council for Disability Awareness, more than 60 percent of workers believe they have a 2 percent or less chance of suffering a long-term disability. The actual likelihood is closer to 25 percent.1 Disability can happen, and it can have severe financial consequences. You can minimize the risk by protecting yourself with disability insurance. Your employer may offer coverage. However, you also may want to talk to your financial professional about a more robust individual policy to use until you retire. Keep a disciplined budget. Budgeting is always a good idea, but it’s even more important as you approach retirement. Now is the time to cut expenses, save more money and practice living on your projected retirement income. A lean budget will also be helpful if you’re forced into early retirement. Look for ways to cut costs. Paying down high-interest debt is one way. Scaling back on discretionary expenses is another. You can even downsize to a smaller home to free up cash flow. Now is the time to cut costs and practice living frugally. That way you’re prepared should you be forced into early retirement. Ready to plan your retirement strategy? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation. 1http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18087 – 2018/10/1 Is retirement quickly approaching? Do you also have children in the home who will be heading off to college at some point in the future? If so, you may be feeling pressure to save for both retirement and your children’s future college expenses.
The challenge for many families is finding enough extra money to save for both college and retirement. You may be in the same position. There could be extra funds available to save for college or retirement, but not for both. In that situation, which goal should be the priority? Both are obviously important. You likely want your child to have access to the best education, but you probably also want to enjoy a comfortable retirement. How do you balance the two? Thinking about purchasing life insurance? That could be a smart decision, especially if you have a spouse, children or other dependents who rely on you for financial support. If you pass away, those loved ones may find themselves struggling with a lack of income, debt and other financial challenges. Of course, there are other reasons for purchasing life insurance. Perhaps you recently took out a loan to buy a home, business or other significant asset. You may need life insurance to pay off the balance if you pass away. Or maybe you’re in a business partnership and need life insurance to fund a buy-sell agreement. Perhaps you want to use life insurance to leave a tax-free legacy to your loved ones. No matter your motivation, it’s important that you take time to find the policy that’s right for your needs and objectives. You also may want to examine each policy’s available riders. These are options that provide additional benefits, sometimes at extra cost. In the right circumstances, these riders can address a critical need. Below are a few of the most common life insurance riders and how they may benefit you: Waiver of Premium This is a common rider that many insurers include in the base coverage. It waives your premium if you become disabled and are physically unable to work. It helps you maintain your life insurance protection even if you can’t pay the premium. Don’t think disability is likely? You may want to think again. The Council for Disability Awareness estimates that 25 percent of today’s adults will suffer a long-term disability that prevents them from working at some point in their career.1 While disability may not be probable, it is certainly possible. Disability Income Many life insurance policies offer disability protection above and beyond a simple waiver of premium. In fact, some offer disability income replacement. This rider provides monthly income if you suffer a long-term disability that prevents you from working. This type of rider usually increases your premium because it’s essentially an additional form of insurance. However, it may make sense if you don’t have group disability insurance through your employer, or if you don’t have an individual disability policy. Guaranteed Insurability Buying insurance when you’re young and relatively healthy? You may want to consider this rider. It allows you to buy additional insurance in the future without having to go through underwriting. That could be invaluable if you have an increased need in the future but your health has declined. Even if you’ve been diagnosed with cancer or suffered a heart attack, you have the option to increase your coverage with this rider. Accelerated Death Benefit This is another rider that’s fairly common and is often included in the base policy. The accelerated death benefit rider advances a portion of your death benefit in the event that you are diagnosed with a terminal illness and short life expectancy. Each insurer has its own rules about what qualifies as a short life expectancy. You can use the funds to pay medical bills, living expenses, debt or more. Your policy will state the maximum amount you can take as an accelerated benefit. However, this could be a valuable benefit to help you and your family during a difficult period. Return of Premium This rider is offered on term policies and is attractive to those who are worried about losing their premium payments. Clearly, outliving your term policy is always a good thing. However, you may not feel good about paying for years of insurance and not having anything to show for it at the end of the term. That’s often the case with term insurance, as those policies usually don’t accumulate cash value. As the name suggests, this rider returns a portion of your premiums if you outlive your term policy. The rider will likely increase your premium amount, however, so be sure to do a careful cost analysis to determine whether it’s worthwhile. Ready to plan your life insurance protection strategy? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and choose the policy that’s right for you. Let’s connect soon and start the conversation. 1http://disabilitycanhappen.org/disability-statistic/ Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 17964 – 2018/9/4 Are you thinking about buying life insurance for the first time? That could be a smart move. While no one likes to think about dying, it’s a risk that everyone must face at some point. If you’re relatively young and healthy, your death may be unlikely. However, people do pass away unexpectedly, and your passing may leave your family in a difficult financial situation. Life insurance minimizes the financial risk associated with death. Your life insurance policy will provide a tax-free lump-sum death benefit to your designated beneficiaries. They can then use those funds to overcome financial challenges such as debt, loss of income, education expenses or any other purpose. If you’ve never purchased life insurance before, you may be overwhelmed by the options. It’s difficult to know which type of policy is right for you or how much coverage you need. Below are three common questions many people have during the purchasing process. Your financial professional can also help you find the right protection for your needs. How much coverage should you buy? This is the major dilemma many people face with regard to life insurance. Clearly, you want enough coverage to protect your spouse, children or other loved ones after your death. However, you also don’t want to overpay for too much coverage. What’s the answer? The best approach is a needs-based analysis. This involves an evaluation of the specific costs your family may face after you pass away. For example, would they need to replace your lost income? Would they need money to pay off the mortgage or other debts? Perhaps you’d like to leave enough to help your children pay for college or your spouse to fund retirement. In a needs-based analysis, you and your financial professional examine your specific objectives and then determine the appropriate amount of coverage. Which type of policy is right for you? Not all life insurance is the same. Policies fall into one of two broad categories: term and permanent. Term insurance provides protection for a limited period of time, like 10 or 20 years. It’s a cost-effective tool if you need insurance while you have young children in the home or while you’re paying down a mortgage. Permanent insurance provides coverage for life, assuming you meet all premium requirements. Permanent policies also have cash value that accumulates on a tax-deferred basis. You may be able to use that cash value at some point as an emergency reserve or supplemental income. There are many different types of permanent policies available There’s no easy answer as to which type of policy is right for you. If you’re budget-conscious, you may want to consider a term policy. If you have a permanent, ongoing need for protection, a permanent policy may be a more appropriate fit. However, the only real way to answer the question is to consult with a financial professional and analyze your goals. Whom should you name as your beneficiaries? Your beneficiary is the person who will receive your death benefit after you pass away. It’s actually possible to have multiple beneficiaries, which may be appropriate if you want to split the benefit among children or some other group of people. Be careful leaving your death benefit to minor children, though. Some life insurance companies won’t make a payment to minors. Instead, the court may appoint someone to manage the money on their behalf, and that person may not share your goals or wishes. Instead, consider setting up a trust on behalf of your children and specifying your wishes in the trust document. You can leave the life insurance to the trust instead of directly to your kids. Finally, remember to check your beneficiaries regularly. If your life changes, you also may wish to change one or more of your beneficiaries. For example, people sometimes get divorced and forget to update their beneficiary. When they pass away, the ex-spouse still gets the benefit, even if that’s not what the deceased intended. Ready to find the right coverage for your needs? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your goals and develop a plan. Let’s connect soon and start the conversation. Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 17965 – 2018/9/4 Are you thinking about the kind of legacy you will leave for your loved ones after you pass away? Your estate plan should prioritize your objectives and offer a strategy. It should also identify risks and challenges, such as taxes, end-of-life costs and even probate expenses.
One risk you may want to consider is debt. Many retirees try to minimize debt before they end their careers. However, that’s not always possible. Unexpected costs always arise, even in retirement. You could have credit card debt, mortgages, medical bills and more. It’s possible that your debt could impact the amount of assets that are distributed to your heirs. When you pass away, many of your assets will likely pass through a process called probate. That’s the legal process for settling an estate, and it often includes tasks like notifying heirs, liquidating assets and distributing inheritances. According to Fidelity’s most recent study on health care in retirement, the average 65-year-old couple can expect to spend nearly $280,000 on out-of-pocket health care costs in retirement.1 Think that estimate sounds high? Consider that you will likely have to pay for things like premiums, copays, deductibles and more. Many retirees assume that Medicare will pay for most or all of their health care costs. However, that’s usually not the case. Your Medicare coverage depends on your specific options. The more robust your coverage, the higher your premiums are likely to be. And some treatments, such as long-term care and rehabilitation, aren’t covered by Medicare at all. If you haven’t planned for your health care needs in retirement, now may be the time to do so. Fortunately, there are steps you can take to minimize your risk exposure and perhaps reduce your out-of-pocket costs. Below are a few tips to help you get started: Be a proactive, informed patient. They say prevention is the best medicine, and that’s certainly true in retirement. If you’re approaching retirement, now may be a good time to consult with your physician about your current health and what you can do to minimize risk. For instance, perhaps you could improve your diet or exercise routine. Maybe you should undergo that long-delayed procedure now so you won’t have to deal with it in retirement. Think about what you can do to improve your health. You can also be more proactive when it comes to treatments and services. Once you’re on Medicare, don’t be afraid to ask which tests and procedures are necessary and how they relate to your symptoms. After all, you’ll likely have to pay at least something for much of your care, in the form of either copays or deductibles. Don’t hesitate to ask which services are truly necessary and which aren’t. Review your Medicare options. Medicare coverage is offered in a variety of different programs known as “parts.” Part A is standard for every retiree and is free. It covers hospitalizations and inpatient services. Part B covers doctor visits and outpatient care. Part D covers prescription drugs. Part C is an innovative program also known as Medicare Advantage. It allows private insurers to offer coverage that includes traditional Medicare protection but also enhanced coverage. These policies may offer flexibility with deductibles or premiums and often provide protection for services not traditionally covered by Medicare, such as dental visits or eye care. Take time to choose the Medicare package that best fits your needs. While you can’t predict your future health, you can make an educated decision based on your medical history. If you have a chronic condition or need regular care, robust coverage may be best for you. Use a health savings account (HSA) to fund your out-of-pocket costs. You’ll likely have some level of out-of-pocket medical expenses that you’ll need to fund with your retirement savings. However, you can use a unique tool to save for those costs on a tax-advantaged basis. An HSA allows you to make tax-deductible contributions and then increase your funds on a tax-deferred basis. If you use the money for qualified health care costs, you can take tax-free distributions. That means you can start saving today to pay for your medical expenses in the future, and you can do so in a tax-favored manner. Ready to plan your health care strategy? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation. 1https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 17859 – 2018/7/31 If you’re approaching retirement, it’s likely that you’ll have to make a decision about filing for Social Security at some point. Social Security provides income to more than 45 million retirees and their dependents. In fact, 90 percent of those over the age of 65 rely on Social Security retirement benefits for income.1 Your Social Security benefit amount is based on a few factors. Your career earnings play a large role, but so too does your decision on when to file. Generally, the earlier you file, the lower the benefit amount. On the other hand, the earlier you file, the more years you will receive benefit payments. There’s no universal right answer on when to file for Social Security benefits. The decision should be based on your own unique needs, goals and objectives. Below are a few guidelines to keep in mind as you decide on when to file: Filing Early You can file for benefits as early as age 62. However, any filing before your full retirement age (FRA) is considered early, and you will likely face a benefit reduction. The closer you are to your FRA when you file, the lower the reduction. For instance, if your FRA is 67 and you file at age 62, your benefit is reduced 30 percent. If you file only a year before your FRA, the benefit is reduced 6.7 percent.2 It’s important to remember that these reductions are permanent. If you file early, your benefit never reverts to the full amount, even when you hit your FRA. You may get increases in the future for cost-of-living adjustments, but you’ll always be below the amount you would have if you’d waited until your FRA. However, that doesn’t necessarily mean filing early is always bad. If you file five years early, that means you get an additional five years of payments, albeit at a reduced amount. If you don’t live long into retirement, it could turn out that filing early was the wiser option. Filing at Your FRA Filing at your FRA allows you to get a full benefit. If you wait until the month of your FRA, your benefit amount is based entirely on your earnings and is not reduced. Most people reach their FRA between their 66th and 67th birthdays. If you plan on working in retirement, it also may pay to wait until your FRA to file. After your FRA, you can earn as much as you want without seeing a reduction in your benefits. If you file before your FRA and continue working, your benefit could be reduced because of your earnings. Filing Late If you want the highest benefit possible, you may want to wait beyond your FRA to file. You can delay your filing all the way to age 70. The Social Security Administration offers an 8 percent benefit credit for every year past your FRA that you wait. For example, if your FRA is 66 and you delay your filing to age 70, you could permanently increase your benefit by 32 percent.4 Ready to plan your Social Security strategy? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation. 1https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf 2https://www.ssa.gov/planners/retire/applying2.html 3https://www.ssa.gov/planners/retire/retirechart.html 4https://www.ssa.gov/planners/retire/delayret.html Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov 17846 – 2018/7/30 Retirement is a time for you to kick back and enjoy life. There are many things people consider doing in their post-work years. With newfound free time, it’s easy to start spending money on costly things you never would have considered before.
For many retirees, it’s difficult to balance the desire to enjoy their newfound freedom with the need to stay within budget. Most retirees live on a semi-fixed income, so large cash outlays can have a substantial impact on their finances. Before making a big purchase, consider how it may affect your ability to live comfortably in later years. Below are three common ways retirees spend through their savings. Think carefully before going through with any of these transactions. The financial support you are offering your adult children is toxic. You are hurting them, you are hurting yourself, and until you realize it’s not money that they need, everyone involved will feel the pain.
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