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.