Keys to Living a Longer, Happier Life

Posted by dfederman on Mar 20, 2012 in Investor Education | Comments Off

What is the secret to living a longer, healthier, happier life? An article in the AARP Bulletin reviews the answers to this question as provided by Robert Butler, M.D., one of the country’s foremost experts on aging.

The 83 year-old Butler is the founding director of the National Institute on Aging at the National Institutes of Health. He is a gerontologist, psychiatrist, and Pulitzer Prize-winning author. His advice is founded on sound scientific research and a keen understanding of longevity. Dr. Butler asserts that research clearly shows that a healthy lifestyle can make a big difference in helping people live longer and push back or avoid the onset of chronic illness, lack of mobility, and cognitive decline. Dr. Butler’s latest book, The Longevity Prescription: The 8 Proven Keys to a Long, Healthy Life, serves as a guide to healthy aging designed to assist readers with living longer and better lives. For example, in his book Dr. Butler prescribes “cognitive calisthenics” to maintain a healthy brain, preserve mental sharpness, and stave-off dementia. He recommends engaging in activities that challenge one’s brain for at least twenty minutes each day, five days a week, gradually increasing the level of challenge over time. He suggests activities such as learning a word a day, reading a book, learning to play an instrument, learning a new language, or pursuing a passion. He also advises increasing human interactions by volunteering, entertaining, or even playing games. Maintaining a healthy brain is just one key to living a longer, happier life. Dr. Butler stresses that the other seven keys – nurturing relationships, getting regular sleep, reducing stress, varying social connections, exercising more, eating healthier, and receiving preventative medical care – are just as vital. These suggestions seem like common sense to many, but it’s putting them into practice that can be difficult. Dr. Butler’s book uses easy-to-follow, step-by-step strategies and checklists to assist readers with getting on the path to a healthier lifestyle.

In his interview with the AARP Bulletin, Dr. Butler also offers the following interesting facts on health and longevity:

– Genes account for only about 25% of an individual’s health and longevity, while our environment and personal behaviors account for the rest.

– The life expectancy today of the average 65 year-old man is 81 years. The life expectancy of the average 65 year-old woman is 85 years. More than 17% of 65 year-old men and 31% of 65 year-old women are expected to live to 90 years or more.

– Within species like dogs and mice, small body size tends to extend life span, and shorter people are relatively resistant to most forms of cancer, compared with taller people. Shorter people may be relatively long-lived or at least resistant to certain major classes of disease.

– Resveratrol, the ingredient found in blueberries, peanuts, and the skin of grapes, may help extend life and is ten times more abundant in red wines than whites.

– Aerobic exercise three times a week can reduce eye pressure – a major risk for glaucoma.

– A thirty minute nap a day may reduce heart disease risk by as much as 30%. Longer naps can interfere with good sleep.

– Old age is now perceived as a “time of continuing vitality.” About 44% of Americans over the age of 65 years describe the present as “the best years of my life.”

The financial advisers at Ariba Asset Management and attorneys at The Estate Planning & Elder Law Firm can assist families with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.

Contact a financial adviser at Ariba at 1-800-808-7488 to discuss a financial plan for your future.

Use Annuities to Plan for Your Future

Posted by dfederman on Mar 19, 2012 in Investor Education | Comments Off

Ariba comment: For some people, annuities may be a good fit as part of a diversified overall financial plan. Features include asset protection, tax deferred growth and guaranteed income. However, you must carefully review the costs because they can be high, and there may be penalties and surrender charges if you need to take your money out. These are insurance products, which means they are SOLD. We recommend getting a second opinion from an independent financial adviser before you decide to purchase an annuity.

Description

This unique investment option offers tax deferral for individuals investing for retirement.

Synopsis:

If you’re investing for retirement and are looking for an investment vehicle that may complement your existing portfolio, you may want to consider an annuity. Why? Because an annuity provides potential growth that is tax deferred, which means its investment earnings can accumulate and compound untouched by federal, state, or local income taxes until you begin making withdrawals. One trade-off of this tax deferral benefit is that withdrawals made from an annuity are taxed as ordinary income. In addition, withdrawals made before age 59½ may be subject to a 10% federal penalty tax. Furthermore, the issuing insurance company may also have its own set of surrender charges for withdrawals taken during the initial years of the contract.

So what really is an annuity? Essentially, it’s a contract between the purchaser and the issuing insurance company. Until the 1970s, most annuities were sold through insurance companies and offered only a fixed amount to be paid out. Annuities today are sold through banks and insurance companies and are much more flexible. They may include both fixed accounts and potentially higher-returning variable investment options.

Another important advantage of an annuity is that it generally allows unlimited after-tax contributions, whether you have earned income or not, and your contributions can continue even after retirement. At withdrawal, only the investment earnings on your annuity contributions are taxable.

Key Points

• What Are Annuities?
• Features of Annuities
• Deferring Taxes May Help Build Value
• A Choice of Investment Options
• Balance Costs and Benefits
• Points to Remember

Annuities are one of the most popular investment products available today. One reason annuities are attractive is that they can help build more value over time. By providing potential growth that is tax deferred, an annuity’s investment earnings can accumulate and compound untouched by federal, state, or local income taxes until you begin making withdrawals, which is usually after retirement. Keep in mind that withdrawals made from an annuity before age 59 ½ are taxed as ordinary income and may be subject to a 10% federal penalty tax. In addition, the issuing insurance company may also have its own set of surrender charges for withdrawals taken during the initial years of the contract.

In addition to tax advantages, annuities also offer a choice of investment options. These may include fixed accounts, which may help protect principal from market risk, and variable investment accounts in stock and bond portfolios, which offer the potential for higher returns.

Together, these features make annuities attractive to those who seek investments that can help supplement future retirement benefits, and to retirees who want greater control over their income and the flexibility to continue deferring taxes on investment earnings.

What Are Annuities?

Annuities are essentially contracts between the purchaser and the issuing insurance company. Until the 1970s, most annuities were sold through insurance companies and offered only a fixed amount to be paid out. Annuities today are sold through banks and insurance companies and are much more flexible. They may include both fixed accounts and potentially higher-returning variable investment options.

Money is accumulated in an annuity through contributions and investment earnings.

Deferring Taxes May Help Build Value

The power of tax-deferred growth can be substantial compared with a comparable taxable investment. Compared with other tax-deferred accounts, such as IRAs or 401(k)s, you have much greater control over the income generated from your annuity. The same 10% tax penalty that applies to early withdrawals from retirement accounts also applies to annuity withdrawals made before age 59½. In some instances you may be able to defer making withdrawals until several years past retirement. (Check your annuity contract for details.)

Another important advantage of annuities is that they generally allow unlimited after-tax contributions, whether you have earned income or not, and your contributions can continue even after retirement. At withdrawal, only the investment earnings on your annuity contributions are taxable.

Here are six ways to help maximize the value of an annuity:

1. Take advantage of low fees. Fees charged for annuities are similar to those on other investments, but with additional expenses of insuring the total value of premiums paid. In choosing an annuity, you may want to compare both annual expenses and insurance charges as well as sales charges. Many annuities collect a surrender charge if the contract is canceled prematurely. But if you plan to use your annuity as a long-term investment, you’ll likely be more concerned with front-end sales loads and annual contract charges than surrender fees.
2. Choose an annuity that offers a variety of investment options. Many experts suggest that individuals in their 30s or 40s concentrate their long-term investments in stocks, which provide the greatest potential for long-term capital appreciation over time. Of course, these investments also carry higher risk. You might also want to diversify your investments to help reduce investment risk.¹ As your lifestyle changes or your financial needs change, you will want the flexibility to rearrange your investments to keep in step. Look for annuities with no-fee exchanges and a variety of investment options.
3. Dollar cost averaging could potentially boost long-term returns. By investing the same amount at regular intervals, you essentially buy more when prices are low and less when prices are high. This may help smooth out some of the normal fluctuations of the stock markets over the years. Using this strategy, however, does not assure an investment profit or protect against loss in declining markets. Before you consider dollar cost averaging, be sure to review your financial ability to invest during periods of declining prices.
4. Increase the potential return on aggressive investments. Even though the maximum federal capital gains tax rate is well below the top income tax rates, you may still benefit by deferring taxes on your long-term capital gains until you make withdrawals. Annuities can make your aggressive investments even more rewarding as taxes on both long- and short-term capital gains are deferred.
5. Enjoy the benefits of diversification. Spreading your money among different types of investments has been shown to lower your investment risk. Annuities offer opportunities to diversify among fixed account and variable investments, thereby reducing your risk while still allowing you to potentially benefit from higher returns.¹
6. Use annuities to pass money along to heirs quickly. Annuities can offer a number of advantages in estate planning. For example, if you designate family members as beneficiaries to the annuity, your loved ones will (in most cases) receive the insurance benefit directly, without having to wait for your estate to be settled. If your spouse is named beneficiary, he or she may even be able to keep the annuity in place and continue tax deferral on any investment earnings.

Balance Costs and Benefits

An annuity can be an excellent retirement investment vehicle if you are able to forgo use of the money for several years. Annuities also offer unlimited contributions, protection of principal on fixed accounts, and the potential to earn higher rates of return on your investments in variable accounts. Annuities may also entail higher fees and expenses than some other investment vehicles, in part due to the insurance feature annuities provide.

Although annuities today are flexible investment vehicles that can be used to meet a variety of financial needs, most people don’t appreciate their usefulness. If you have been investing in mutual funds, a variable annuity might be the next logical step for a portion of your retirement investment plan.

Points to Remember

1. Annuities are available in fixed accounts and variable investment accounts.
2. An annuity offers a choice of investment options.
3. Money is accumulated in an annuity through contributions and investment earnings.
4. An annuity’s earnings are tax deferred.
5. Annuities allow unlimited after-tax contributions.
6. Your contributions to annuities can continue even after retirement.
7. Annuities allow you to diversify, thereby reducing your risk, while still allowing you to potentially benefit from higher returns.

Source/Disclaimer:

¹Diversification does not ensure against loss.

Required Attribution

Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2012 McGraw-Hill Financial Communications. All rights reserved.

March 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP(r), a local member of FPA..

Alzheimer’s Disease and Family Caregivers

Posted by dfederman on Mar 14, 2012 in Investor Education | Comments Off

In its 2011 Alzheimer’s Disease Facts & Figures Fact sheet, the Alzheimer’s Association reports that 5.4 million Americans are living with Alzheimer’s disease.
Most people survive an average of four to eight years after an Alzheimer’s diagnosis, but some live as long as 20 years with the disease. In 2010, 14.9 million family members and friends provided 17 billion hours of unpaid care to those with Alzheimer’s and other types of dementia.

In recognition of the unselfish work that caregivers provide to Alzheimer’s patients and other loved ones every day, we want to provide you with important information from the Alzheimer’s Association brochure, “How to Manage Stress: 10 Ways to be a Healthier Caregiver.”
1) Understand what is happening as early as possible. Symptoms of Alzheimer’s may appear gradually. It can be easy to explain away changing or unusual behavior when someone seems physically healthy. Instead, consult a doctor when you see changes in memory, mood, or behavior. Don’t delay; some symptoms are treatable.
2) Know what community resources are available. Contact your local Alzheimer’s Association office for assistance in finding Alzheimer’s care resources in your community. Adult day programs, in-home assistance, visiting nurses and meal delivery are just some of the services that can help you manage daily tasks.
3) Become an educated caregiver. As the disease progresses, new caregiving skills may be necessary. The Alzheimer’s Association offers programs to help you better understand and cope with the behaviors and personality changes that often accompany Alzheimer’s.
4) Get help. Trying to do everything by yourself will leave you exhausted. Seek the support of family, friends, and community resources. Tell others exactly what they can do to help. The Alzheimer’s Association 24/7 helpline (800-272-3900), online message boards, and local support groups are good sources of comfort and reassurance. If stress becomes overwhelming, seek professional help.
5) Take care of yourself. Watch your diet, exercise and get plenty of rest. Making sure that you stay healthy will help you be a better caregiver.
6) Manage your level of stress. Stress can cause physical problems (blurred vision, stomach irritation, high blood pressure) and changes in behavior (irritability, lack of concentration, changes in appetite). Note your symptoms. Use relaxation techniques that work for you, and talk to your physician.
7) Accept changes as they occur. People with Alzheimer’s change and so do their needs. They may require care beyond what you can provide on your own. Becoming aware of community resources ? from home care services to residential care ? should make the transition easier. So will the support and assistance of those around you.
Make legal and financial plans. Plan ahead. Consult a professional to discuss legal and financial issues including advance directives, wills, estate planning, housing issues, and long-term care planning. Involve the person with Alzheimer’s and family members whenever possible.
9) Give yourself credit, not guilt. Know that the care you provide does make a difference, and that you are doing the best you can. You may feel guilty because you can’t do more, but individual care needs to change as Alzheimer’s progresses. You can’t promise how the care will be delivered, but you can make sure that the person with Alzheimer’s is well cared for and safe.
10) Visit your doctor regularly. Take time to get regular checkups, and be aware of what your body is telling you. Pay attention to any exhaustion, stress, sleeplessness, or changes in appetite or behavior. Ignoring symptoms can cause your physical and mental health to decline.
© 2011 Alzheimer’s Association
*The Estate Planning & Elder Law Firm thanks the Alzheimer’s Association for allowing us to publish this important information. This brochure, as well as additional resources and important information, is available at the Alzheimer’s Association website at: http://www.alz.org.
The attorneys at The Estate Planning & Elder Law Firm can assist clients with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.

For a review of your financial plan and investments, contact the professionals at Ariba Asset Management 1-800-808-7488.

How Can I Reduce Debt From Outstanding Medical Bills?

Posted by dfederman on Mar 14, 2012 in Investor Education | Comments Off

Description
Try to negotiate a mutually acceptable payment plan with your health care provider and tap your emergency cash reserve to make the payments.

Key Points
Millions of working-age Americans from all income groups are struggling to pay medical bills and manage accumulated medical debt. Many will continue to face problems with medical bills for years after their care was provided.
If you have been hit with unexpected, costly medical expenses, consider some of these tips for coping with your situation.

Talk to your health care provider.
If you find your medical bills are piling up faster than you can pay them, don’t hesitate to call your service provider and be honest about your situation. Ask for a reduction in fees or discuss setting up a payment plan that is satisfactory to both of you. It never hurts to ask, and you may be pleasantly surprised to find that it is not that difficult to negotiate a solution.

Avoid using credit cards or bank loans to finance the debt.
Perhaps the only positive aspect of medical debt is that health care professionals rarely report payment information to credit monitoring bureaus unless the debt has been passed off to a collection agency. On the other hand, credit card and installment loan data is routinely reported. So the wiser strategy may be to deal directly with the doctor or hospital to work out a payment plan, especially if you are concerned about maintaining a healthy credit score.

Review your bills carefully.
Medical bills typically arrive long after the service was rendered and they are notoriously complex, including multiple line items for physician time, laboratory tests, radiology, etc. Take time when the bills arrive to read through them and make sure you agree not only with the services performed, but also the details of how much coverage is provided by your health insurance.

Tap your emergency fund.
If there ever was a good argument for maintaining an emergency fund, an unexpected medical bill is it. While emergency funds may not cover your entire debt, they can help finance a payment plan that enables you to chip away at the debt a little each week, each month, etc.

Obtain disability insurance.
Disability insurance is a critical safety net to deploy in the event that you become ill and cannot work. This type of policy, which is often available through employers, will pay you a portion of your salary for a predetermined period of time, depending on the type of policy.
For additional help with medical debt, contact The Access Project at www.accessproject.org or call 617-654-9911. The Access Project provides free counseling to people with medical debt, regardless of their income.

Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2012 McGraw-Hill Financial Communications. All rights reserved.
March 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP(r), a local member of FPA..

Long-term Care Insurance Developments

Posted by dfederman on Mar 7, 2012 in Investor Education | Comments Off

Recently, the Department of Health and Human Services announced the Community Living Assistance Services and Supports Act (“CLASS Act”) was not viable and would not go into effect.

The CLASS Act was enacted as part of the Patient Protection and Affordable Care Act that would have created a long-term care insurance option for the public; however, a nineteen month study concluded that pricing the benefits low enough to attract consumers would not cover the expected claims.

Individuals still need to plan in order to cover the cost of long-term care. The Center for Retirement Research at Boston College says about one-third of Americans turning 65 this year will need at least three months of nursing home care sometime during their lives, and the cost of this care continues to rise. According to Genworth Financial, in 2011, the median annual cost of a private nursing home rose 3.4 percent to $77,745 and the median cost for assisted living rose 2.4 percent to $39,135.

Although the CLASS Act may no longer be available, consumers interested in insuring against the potential risks of long-term care costs still have the option of purchasing private long term care insurance. According to the American Association for Long Term Care Insurance, the best time to purchase long-term care insurance is between the ages of 52 and 64. In fact, a 2005 study of long-term care insurance policy applicants found that the percentage of applicants between 50 and 59 who qualify for good health discounts ranged from 42 to 58 percent. The study also revealed that the percentage who qualify for good health discounts drops to 32 percent for those in their 60s and to 19 percent for those who wait to apply until their 70s.

Kevin M. Shea, CFP®, CPA, is a Financial Services Professional with CB&H Wealth Management Services LLC, and advises consumers of a few factors to consider when selecting long-term care insurance:

– Purchase a sufficient daily benefit. In Virginia, a semi-private room currently averages $190 per day. A policy with inadequate benefits will require using personal funds to fill in the gaps or trying to qualify for public benefits in the future.

– Understand the “waiver of premium” feature. Typically, once the insured is receiving benefits from the insurance company, the premiums on the policy are “waived.” If the insured’s health improves and he or she is no longer eligible for benefits, then the premiums will resume.

– Consider policies with an inflation rider. The cost of long-term care insurance continues to increase faster than inflation. With the most recent studies showing the cost of care rising 7% annually, insurance companies are offering policies with riders that provide inflation protection. The decision to select simple or compounded inflation protection can usually be made based on the age of the purchaser.

– Consider purchasing a “paid up” policy. Because a policy’s premiums may rise, consider purchasing a “paid up” policy that no longer requires a premium once the insured reaches a certain age or after a given number of years.

Given the sector’s complex laws and frequent regulatory changes, it’s best to work with a financial planning professional experienced in the field. Choosing the right policy can reduce family stress and give you greater control over your future care.

The attorneys at The Estate Planning & Elder Law Firm can also assist clients with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.

For a free portfolio review and analysis of your financial situation, call the professionals at Ariba Asset Management 1-800-808-7488.

Financial Tips for Living Solo

Posted by dfederman on Mar 7, 2012 in Investor Education | Comments Off

Description

Single individuals face unique challenges when it comes to financial planning. It is important to consider retirement planning, parenthood, insurance, health care planning, and housing issues when managing one’s finances at all stages of life.

Social Media Message:

Are you flying solo when it comes to planning for your financial future? Consider these tips for easing the financial burden.

Living the single life no longer is an anomaly: According to the U.S. Census Bureau, 45% of households nationwide are maintained by a single person.1 Being single affects many areas of financial planning, including retirement, financing health care later in life, and other key issues.

If you are single, or expect to be as a result of a pending divorce, consider the following as you plan your finances:

Retirement

An increasing percentage of preretirees are planning for retirement on their own. According to the January 2012 issue of Financial Planning magazine, one-third of preretirees between the ages of 55 and 64 are single. What steps should solo planners take to shore up their finances for a comfortable retirement?

• Set long-term retirement savings goals. If you have access to an employer-sponsored retirement plan, contribute as much as you can afford. For 2012, the maximum employee contribution is $17,000, and workers aged 50 and older can contribute an additional $5,000 catch-up contribution.
• If you can save even more for retirement, consider maintaining an IRA. For 2012, the maximum contribution is $5,000, and investors aged 50 and older can contribute an additional $1,000.
• Investing as much as you can afford for retirement over the long-term is beneficial because you will not have the luxury of falling back on a partner’s pension. In addition, your household will have one Social Security check to fund retirement expenses.

Parenting

• If you have children, your financial planning could be especially challenging because you may be required to fund tuition, child care, and other costs on one salary. As you raise your family, be sure not to shortchange your needs. Put away something for retirement, even if it is only a small amount each week. Over time, this amount may compound and serve as the basis of your retirement nest egg. Be sure to appoint a guardian for your children in the event that you are not able to care for them.

Insurance and Health Care

• Review your options for disability insurance and long-term care insurance. It is critical to purchase these types of insurance while you are healthy and the premiums are affordable. These insurance purchases increase the chances that you will have adequate cash flow if you are not able to work because of a disability, or if you require assistance with activities of daily living later in life.
• Make sure your plans include preparing for health care expenses. You may need to direct a lawyer to draft a health care proxy in which you designate a loved one to make medical decisions on your behalf if you are not able to do so yourself.

Housing

• Think carefully about the type of housing situation that suits your needs. Carrying a single-family home, especially in an expensive housing market, frequently is difficult on one income. Be sure that your home is affordable enough to permit you to invest for retirement and other financial goals.

Your situation may present additional considerations, but the suggestions mentioned here can help you manage your finances successfully.

Source/Disclaimer:

¹Source: U.S. Census Bureau, Unmarried and Single Americans Week, September 18-24, 2011.

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January 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP®, a local member of FPA.

Required Attribution

Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2012 McGraw-Hill Financial Communications. All rights reserved.