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GAO Suggests Retirees Delay Social Security & Look Toward Other Solutions

In a time in which many question the very certainty of Social Security altogether, the Government Accountability Office (GAO) recently suggested that individuals postpone drawing benefits, waiting until at least their full retirement age, or 66 for those born from 1943 to 1954, before tapping into the system.   This comes as unwelcomed advice to many, following the Social Security trustees’ report in May of this year which indicated the system would not be able to pay recipients in full, beginning in 2036.2

CLICK HERE for the full report from the U.S. Government Accountability Office.

According to the recent GAO study, “The risk that retirees will outlive their assets is a growing challenge.” Lengthened life expectancies with ever-increasing health care costs paired with significant drops in both financial markets and home values have deepened American retirees’ concerns about how to manage their savings in retirement, the report said.  Many facing this dilemma seek the highest possible benefit payment from Social Security, and it’s no mystery that monthly payouts are significantly higher if benefits are postponed as long as possible. The problem for many? Bridging the income gap from the time one retires until one is eligible for his or her maximum Social Security benefit.

According to the GAO study, a husband and wife, both age 65, have about a 47% chance that at least one will live to age 90.  Nearly half of those nearing retirement are expected to run out of money and be unable to pay for basic expenses and uninsured healthcare costs.1 Among the solutions proposed by the study was the traditional annuity – the only financial vehicle widely used – on a guaranteed basis* – to help protect retirees from the risk of outliving their savings. 

While annuities, like any other financial product, are not the right solution for everyone, they have been critically important retirement-income components in the overall financial strategies for many of our clients.  While many Americans have watched their invested retirement accounts suffer significant losses throughout the past 3-4 years, our clients who leverage the principal guarantees* and lifetime distribution option of annuities as a component of their financial strategy have enjoyed the reassurance of knowing every penny is protected,* and their income is assured* – no matter how long they live.

We believe that life goes on well after retirement.  Would you like your income to do the same?  If you’d like to schedule a complimentary retirement income analysis or discuss your unique financial goals, simply contact us today.  We specialize in helping valued clients to and through retirement, and we’d love to do the same for you.
 

1 Retirement Income: Ensuring Income throughout Retirement Requires Difficult Choices. Report to the Chairman, Special Committee on Aging., U.S. Senate. June 2011.

2 “Delay Social Security, add annuity to outlive savings, GAO says.” Margaret Collins. Bloomberg News. July 4, 2011.

*Insurance products such as annuities are guaranteed subject to the financial strength and claims-paying ability of the underwriting  insurer.

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Protecting Yourself from the Thief of the New Millennium

Protecting Yourself from the Thief of the New Millennium

It’s happened to far too many individuals.  You’re enjoying dinner when the phone rings with a collection agency on the other end, demanding payment for overdue charges on an account you never knew you had.  Maybe a statement shows up in the mail with purchases you never made on a credit card you haven’t used in over a year.  Whatever the situation, the reality is that we’re all potential victims of identity theft, and it’s critically important to take steps to protect your personal information.

Generally speaking, identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes. The Federal Trade Commission estimates that as many as 9 million Americans have their identities stolen each year.1  While some victims of identity theft are able to quickly resolve their issues, others are forced to spend thousands in legal fees and countless hours in an effort to repair their good name and credit record.  Job opportunities, loans for housing, automobiles or education – all may be unavailable simply because unprotected information was stolen and abused.

So what can be done to help protect yourself?  First, CLICK HERE to watch a short video from the Federal Trade Commission on how you can deter, detect and defend against ID theft.  Then, take a look at these practical steps you can take to avoid becoming a victim of identity theft.

TRUST YOUR INSTINCTS…UNLESS YOU’RE THE TRUSTING TYPE.
There are a million schemes running everyday to catch the unsuspecting consumer.  From free trips to the Bahamas to new laptop computers to mandatory “information updates” to your credit accounts, ID thieves employ every trick imaginable.  If you’re contacted by phone or email requesting information, do not divulge or confirm any information.  Remember, even in today’s “digital age,” there is still nothing that has to be done over the internet or by phone that can’t be done in person or by mail. Be cautious of anyone telling you otherwise. Even if you are the one who initiated contact with a company online, never release personal information without knowing whether or not the company is reputable.

GUARD YOUR SOCIAL SECURITY NUMBER AT ALL COSTS.
Only provide your Social Security number when required by law. Never have it printed on your checks (as was custom for quite some time), and review your annual Social Security statement for major discrepancies.

SHRED, SHRED, SHRED.
Every document containing any personal information whatsoever should be shredded before being discarded.  This includes everything from credit card and bank account statements to new credit card offers, insurance policy statements, voided checks and any personal correspondence containing information you wouldn’t want shared.  Home office shredders can be purchased at any office supply store for roughly $35 – a wise investment to help you protect yourself from thieves.

MIND YOUR MAIL.
As simple as this seems, it’s one of the most important steps you can take. Identity thieves have been known to steal personal information straight from your mailbox, so make sure your daily mail is promptly removed, and whenever possible, deposit any outgoing mail at the post office as opposed to leaving it in your mailbox unattended. Whenever you’ll be away from home for more than a day, ask a trusted neighbor or relative to retrieve your mail or ask the post office to hold it until you return.

DON’T USE THE OBVIOUS.
Whenever you are creating personal identification numbers (PINs) or passwords for various accounts, resist the urge to use easily remembered numbers such as your birth date, the last four digits of your Social Security number, your street number or any other information which could easily be uncovered by thieves. Instead, use create more abstract PINs, and if you must write them down (rather than committing them to memory), be sure those “cheat sheets” are well hidden in a lock box or other secured location.

CARRY A BARE MINIMUM.
Despite the urge to keep everything “handy,” do not carry your Social Security card, all credit cards and your passport in your purse or wallet unless absolutely necessary. 99% of the time, you should only need your driver’s license, an insurance card and your primary credit card on your person at any given time. As a precautionary measure, make copies of all credit cards, and record all account numbers, keeping this information in a secure location such as a lock box, along with the telephone numbers for the fraud departments for each institution so you can quickly notify them if an issue arises.

INSTALL A LITTLE PROTECTION.

A firewall is a protective device which can be installed on your computer to help prevent identity thieves from obtaining personal identifying information and financial data from your hard drive. Virtually any computer retailer can assist with the installation and maintenance of your firewall, and they can also assist in “wiping” your computer clean before disposing of an old one. This is very important as you don’t want to rely solely on your own deleting abilities to remove any sensitive information from your device.

CHECK YOUR CREDIT REPORT.
On an annual basis, it’s wise to review your credit report to check for errors and fraudulent use of your accounts. You can now get a free copy each year of your credit report by visiting www.annualcreditreport.com or calling (877) 322-8228.

Have you or someone you know already been a victim of identity theft?  CLICK HERE for a free copy of “Take Charge: Fighting Back Against Identity Theft.”  This 52-page guide from the Federal Trade Commission gives you the immediate steps you should take to file a report as well as the follow-up steps you can take to help resolve any resulting issues. 

While there may be no absolutely “fool-proof” way to avoid ID theft, there are concrete ways to greatly reduce your risk.  Take action now, and if you’d like more information on this topic, simply contact our office today!

1 http://www.ftc.gov/bcp/edu/microsites/idtheft/consumers/about-identity-theft.html#Howdothievesstealanidentity. 2011.

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Now, More than Ever Before, Responsibility is Yours

The spring tornado season of 2011 will easily go down in history as one of the deadliest on record, with both storm counts and death tolls more than doubling the previous year’s figures. In Tuscaloosa, AL, over 335 lives were claimed in the second deadliest day of twisters in U.S. history.1 In Joplin, MO, an EF5 ripped a path three quarters of a mile wide and 6 miles long – killing over 130 and marking the deadliest single tornado since 1950.   On May 24th, deadly twisters claimed 18 additional lives in Oklahoma, Kansas and Arkansas. Other states are reeling as well. There were 34 deaths in Mississippi, 34 in Tennessee, 15 in Georgia, five in Virginia, two in Louisiana and one in Kentucky.2 The devastation this spring has been unbelievable, and our deepest sympathies and condolences go out to all those impacted by these many disasters. 

In analyzing the contributing factors to this year’s deadly season, many meteorologists note an incredibly unstable environment.  “This is just remarkable from a meteorological point of view,” says City College of New York’s Professor of Earth and Atmospheric Science Stan Gedzelman. “The instability of the storms that hit Tuscaloosa is just about as large as I have ever seen,” he says.

CLICK HERE to read the entire article.

Unfortunately, weather patterns aren’t the only source of instability facing our country. Treasury Secretary Timothy Geithner recently informed Congress that the U.S. government had officially reached its $14.3 trillion debt ceiling.  (CLICK HERE to view the full text.) What is the debt ceiling? It’s the maximum amount of money the government can borrow to finance existing obligations such as Social Security and Medicare benefits, military salaries and interest on existing national debt.  Geithner said he will immediately halt investments in two major government pensions to allow borrowing to continue, but repeated a warning that if lawmakers don’t increase the borrowing limit by August 2nd, the government is at risk of an unprecedented default on its debt.

With private sector pensions virtually obsolete, even major government pension investing freezing and the future existence of Social Security as a real source of retirement income hanging in the balance, the burden of creating a sound retirement strategy is falling squarely on the shoulders of the individual.  Much like the storms of the Midwest and the South, there have been warnings regarding recent financial storms, several of which have gone unheeded. 

You may have seen our previous post in which we relayed the findings of a recent study showing that 44% of Boomers aren’t sure they’ll have enough to retire – 25% reporting they don’t think they’ll see a day when they can. In this same national study, 11% reported feeling “deeply confident” that they could retire comfortably.3  Much as meteorologists have no ability to control the weather they analyze, there is very little we can do to control the factors swirling on the national economic radar. 

However, in the midst of one of the worst financial storms in recent times, there is safe shelter to be found.  While many in this country saw losses to their investments and retirement accounts in excess of 30-40% over the past three years4, several of our clients enjoyed the knowledge that their hard-earned assets were safeguarded from all loss, potentially even earning interest while others around them saw dramatic drops.  As millions now head into retirement wondering what the forecast may bring, we have scores of valued clients knowing exactly what to expect – at peace with even their worst case scenario – because of the guaranteed* retirement income (through the use of annuities) and overall strategies we’ve helped them put in place.

If you’d like to prepare for the instability ahead and help ensure you’re not in the path of the storm, simply contact us today! 

To help those affected by recent tornado devastation, please consider supporting American Red Cross Disaster Relief or other local relief agencies. Ours has always been a nation willing to roll up its sleeves and help in times of need, and to get started, simply CLICK HERE.

Sources:
1
http://www.huffingtonpost.com/2011/04/30/2011-tornado-outbreak-deaths_n_855646.html,  April 30, 2011.
2
http://www.cbsnews.com/stories/2011/05/23/eveningnews/main20065478.shtml#ixzz1ObMXFhLX, May 23, 2011.
3
Associated Press – LifeGoesStrong.com Poll, http://work.lifegoesstrong.com/retirement-poll, April 5, 2011.
4 USA Today. “401(k) losses: Older investor’s retirement funds hit hard. October 31, 2008.


* Guarantees subject to the financial strength and claims paying ability of the issuing insurer.

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Staggering Numbers Approach Retirement Feeling Unprepared

The past two to three years have marked a major shift in the way Americans approaching retirement view this “third act” of life.  Once regarded as “Golden Years” in which many of life’s dreams could finally come to fruition, retirement now signifies a time of anxiety, unrest and uncertainty for many.

Significant losses to 401(K)s and IRAs, a prolonged recession and continued volatility on the market have millions of Boomers wondering if the retirement they’ve always envisioned is really still within reach. In fact, a broadcast from ABC News recently revealed some staggering new statistics regarding retirement:

  • 44% of Baby Boomers surveyed aren’t sure they’ll have enough to retire
  • 60% of Boomers have lost significant value in their investments, homes and retirement plans in the last three years
  • 42% are delaying retirement
  • 25% feel they will not see the day they can retire
  • 64% of people see Social Security as the key part of their retirement safety net
  • Only 11% of people feel deeply confident that they can retire comfortably

Source: Associated Press – LifeGoesStrong.com Poll, http://work.lifegoesstrong.com/retirement-poll, April 5, 2011.

CLICK HERE to watch the actual broadcast (originally broadcast on April 5, 2011).

Where do you find yourself among those surveyed above?  Are you still right on track for each of your retirement goals, or will you have to delay them or settle for less than anticipated?  Are you really even sure?

Fortunately, despite a volatile economy and a number of factors which indicate that real recovery will be slow in the making, those looking for guarantees are not without hope.  In fact, one of the most frequently requested services we offer is the “insuring” of our clients’ retirement income through the use of guaranteed* financial products such as annuities.

What is an annuity?  It is an insurance product which can distribute income as part of an overall retirement strategy. Annuities have become a very popular choice for individuals who want to receive a steady, predictable, guaranteed income stream throughout retirement. Here’s a general description of how an annuity works: you deposit a sum of money into the product, and it then makes payments to you on a future date or series of dates. The income you receive from an annuity can be paid out to you monthly, quarterly, annually or, in some cases, even in a lump sum payment. You have several payment options including (but not limited to) receiving payments for a set number of years for the rest of your life.  This latter option has made these products incredibly popular, as life expectancies continually increase, the prevalence of employer-sponsored pensions decrease and the future of Social Security becomes increasingly uncertain.

(CLICK HERE for a look at commentary from President Obama himself on the value of annuities, published in the New York times in January of 2010.)

Translation? With a true financial professional at your side helping you navigate the road to and through retirement, the future doesn’t have to be uncertain.  The dreams you’ve envisioned don’t inherently have to wait, be “down-sized” or abandoned altogether.  If you’d like to see where you currently stand and ensure you’re making the best possible moves for your financial future, just give us a call today!

* Guarantees subject to the financial strength and claims paying ability of the issuing insurer.

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Does Your Life Insurance Policy Still Pass the Test?

When it comes to life insurance, there’s a common saying: “The best kind of policy is the one that’s in place when you need it.” While there’s no question that some form of coverage is always better than none, there’s still a very important difference between having coverage and having the right coverage.

A simple policy review can help determine whether you have the right coverage in place or give you the chance to make any necessary adjustments.  Why is this so critical?  Because your needs are constantly evolving. Such is life, right?  Those pants from a few years ago may now be fitting a little snug.  That motorcycle which seemed like a great idea at 21 isn’t quite as practical at 30. Situations change, and those who take a “set it and forget it” approach to life insurance coverage may very well find that their intentions aren’t carried out as effectively or efficiently as they’d hoped them to be.

Will I have to buy more coverage?
A policy review isn’t an automatic precursor to purchasing additional coverage. There are actually several different possible outcomes. Depending on your present needs, you may find that:

• Your coverage effectively meets your goals
• Your coverage ineffectively meets your goals
• Your coverage exceeds your current needs
• Your coverage does not meet your current objectives

What are common reasons for a policy review?

• It’s been 2 years or longer since a financial professional reviewed your coverage with you
• You want to make sure your immediately family is still adequately protected
• Your health has changed – either for the better or worse
• You have paid off major expenses which you were previously insuring with your life policy (Ex. Mortgage, children’s college education, etc.)
• You’re curious as to whether or not you can find more affordable coverage
• You’d like to explore a term vs. permanent life insurance comparison
• You’d like to learn more about possibly converting your  existing term life insurance policy into a permanent one

What’s covered in a typical policy review?
A thorough policy review will examine any relevant changes in your life, your current life expectancy, any applicable economic factors or conditions and recent changes or developments in new life insurance solutions. We offer complimentary policy reviews to help ensure the coverage you initially put in place continues to meet your needs into the future.  We’ll look at questions such as:

• Would your current death benefit cover today’s estimated estate settlement costs?
• Could your current goals be met more economically with different coverage?
• Is you’re current ownership structure of your policy as tax-efficient as possible?
• Are your beneficiary designations still current?
• Are there new product options or riders that may better suit your needs?
• If applicable, is the cash value in your policy capable of sustaining your coverage?

Some individuals may feel their life insurance is something they could easily monitor themselves.  However, mistakes here can be very costly. We encourage you to take advantage of a free policy review in which we can quickly uncover the factors that need to be analyzed, facilitate any necessary changes, offer our expertise and keep you abreast of any new products or solutions available. To schedule this complimentary review, simply contact us today!

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Social Security Trusts to Run Dry in 2036

Some concerning news was recently released by the Social Security Board of Trustees. In its annual report outlining Social Security’s financial health, Trustees reported that the joint assets of the Old-Age and Survivors Insurance and Disability Insurance trusts will be exhausted in 2036. What does this mean to those relying on Social Security as a component of their overall retirement income?  It means beneficiaries could expect their benefits to be reduced by nearly 25% from previously scheduled levels.

(CLICK HERE for the full 2011 OASDI Trustees Report from www.socialsecurity.gov)

“The current Trustees Report again reflects what we have long known to be true – we need changes to ensure the long-term solvency of Social Security and to restore younger workers’ confidence in the program,” reported Commissioner of Social Security, Michael Astrue.

In a press briefing on the report, Labor Secretary Hilda Solis said, “While trust fund income and earnings are projected to cover costs for a few years, the trust fund assets will ultimately be used to pay for benefits.”

Unfortunately, the rapid depletion of the trusts isn’t the only concern. Not only is our government paying out more in Social Security benefits than ever before, we are also in the midst of an environment in which less than anticipated is being paid in to the program.

“This is especially important as the unemployment rate remains unacceptably high,” Solis added. “Loss of wage income has and continues to be devastating for working families across the country. But it also erodes the payroll tax base – the revenues from which are needed to pay current program benefits.”

(CLICK HERE for recent employment statistics from the U.S. Department of Labor.)

For many years, millions of Americans have questioned the certainty of Social Security for the generations to come.  Now, it’s apparent that the issue may come home to roost even sooner than expected – affecting the retirement of millions of Baby Boomers. An expiring public retirement program paired with the virtual disappearance of traditional employer-sponsored pension plans places the burden of generating a reliable retirement income squarely on the shoulders of the retiree.

After a lifetime of earning wages, investing and saving, the transition to using your retirement savings for income purposes can be a very tricky one.  Without knowing exactly how long you’ll need your retirement income to last, determining which financial vehicles to use can often feel like a “shot in the dark” or an educated guess at best.

When it comes to our clients’ retirement, we don’t subscribe to the notion of educated guesses and crossing your fingers.  In fact, we believe “retiring on hope” is altogether foolish.  For years now, we’ve be helping valued clients create sound retirement strategies – solutions which help increase their peace of mind, ensure their continued lifestyle and provide guaranteed retirement income they can’t outlive – no matter how long they need it. While much of the current financial uncertainty seems outside our control, there are still several steps you can take to help ensure the days ahead.  To take advantage of a complimentary Retirement Income Analysis, simply contact our office today!

Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.

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Chris Featured in TheStreet.com

I was recently featured in an article on TheStreet.com. Here is an excerpt from the piece:

 “Private sector payroll growth slowed so much in May, which strengthens the argument that the slowdown story will continue,” said Chris Hobart, president and founder of Hobart Financial Group. “This could potentially be a reflection that the business world is a little worried about the end of QE2. Businesses might be pulling back a little bit ahead of that.”

 “Industry is scared to hire right now because there is too many fractures in the economy. This just serves as a reconfirmation to the investor that we do have continuing problems,” he said.

The complete article can be accessed through the following link http://www.thestreet.com/story/11139188/1/stock-market-story-june-1.html?cm_ven=RSSFeed

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The Steep Road to Recovery

If you’ve experienced a drop in your retirement account values of the past 2-3 years, you’re not alone.  Unfortunately, millions of Americans weren’t adequately prepared for the events of 2008, and many saw losses to their retirement accounts in excess of 30-35%, representing billions of dollars nationwide.

A common question we often field from new clients looking to recover from losses is, “What do I need in order to bounce back?”

One of the more compelling aspects of investing is the math of gains and losses. Simply put, a 50% gain does not allow a portfolio to recover from a 50% loss. In fact, a 100% gain is required to restore a 50% loss. (The figure below illustrates the gain necessary to recover from a variety of different percentage losses.)

Figure 1: Recovering from a Portfolio Loss

As shown in Figure 2, there is a nonlinear relationship between losses and the required subsequent gain needed to recover from the loss. The term “nonlinear” simply means that as the loss gets bigger, the gain needed to restore the loss increases at an increasing rate.

Figure 2: The Steep Road to Recovery

(This is a hypothetical example and is for informational purposes only.)

For example, a loss of 35% requires a 54% gain to restore the portfolio to whole. That said, how long might it take the S&P 500 to generate a 54% gain? Obviously, no one knows that answer, but let’s just look at the past four decades for an indicator. From 1970 through 2010, the S&P 500 Index never had a one-year return in excess of 54%.
1 Thus, while you can lose 35% in a year’s time, the likelihood of making up that loss in an equivalent time frame is slim to none.

Smaller losses, such as a 20% loss, may be more quickly resolved. The S&P 500 Index generated a single-year gain of 25% or more (25% being the minimum gain needed to restore a portfolio following a loss of 20%) in 10 separate years between 1970 and 2009. 1More serious losses require longer recovery time frames, if recovery is even possible at all given your specific retirement horizon.

This brings us back to what many consider Rule #1 of Investing: Avoid losses wherever possible.  Whether you’re looking for continued conservative accumulation for retirement or you’re ready to convert the savings you’ve built into income you can rely on, the quickest way to derail your strategy is to incur losses from which you can’t recover.

1 www.finance.yahoo.com. May 2, 2011.
17794 088261

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A Long, Active Retirement: Are YOU Financially Prepared

One of the most pressing concerns we’re able to help address in the course of our meeting with clients is the pressing and real fear of outliving one’s retirement savings. Many felt they were completely “on track” prior to the disaster that was in 2008, and when they’ve come to us for an initial consultation, one of the most common questions we address is, “What impact is all this going to have on us in retirement?”

It’s a very valid question.

The National Retirement Risk Index (NRRI) measures the percentage of working-age households that are at risk of being unable to maintain their pre-retirement standard of living in retirement. It addresses one of the most compelling challenges facing the nation today: ensuring retirement security for an aging population. Significant advances in medicine and technology have created an “age wave” in the United States in which people are living far longer than ever before. That trend is expected to continue, and many scientists now point to a time in the not-so-distant future in which people might be living an average of 95, 100 or even 110 years. While longevity continues to increase, the prevalence of traditional retirement income sources such as defined benefit and pension plans continues to decrease. The net result? A much higher responsibility on you – the individual – to have a sound plan in place to ensure that your accumulated retirement savings lasts as long as you do.

Check out a few of the key findings from the NRRI:*
• The retirement landscape is shifting dramatically, making the outlook for retiring Baby Boomers and Generation Xers far less optimistic than for current retirees.
• 51 percent of households are “at risk” of not having enough to maintain their current living standards in retirement
• Explicitly including health care in the Index drives up the share of households “at risk” to 61 percent.
• Incorporating long-term care costs further increases the Index to 65 percent.
• Saving more and working longer may be required to improve the outlook.
(To view the full report, along with Issues in Brief and other useful resources, simply CLICK HERE.)

We don’t feel the ups and downs of the market or today’s volatile economy should have ANY bearing or impact on your lifestyle and income in retirement. That’s why, along with a number of solutions built for accumulation of retirement assets, we also provide guaranteed retirement income solutions. These solutions not only provide income you cannot outlive, but many of the options available give you the opportunity for annual increases in income to help offset the effects of inflation. They also offer liquidity – or penalty-free access – to portions of your money should you need it for emergencies. If you haven’t secured your retirement income plan or you haven’t had it reviewed to ensure it will withstand today’s uncertain environment, you owe it to yourself to schedule a consultation with a qualified retirement income specialist.  You’ve worked far too hard getting to retirement – don’t let financial worries make you settle for less than you deserve.

Respond and learn how annuities can be used in various planning strategies for retirement.  Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.

* National Retirement Risk Index. Center for Retirement Research at Boston College. October 2010.

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The Most Costly Mistake You Should NEVER Make

Quick question: When is the last time your financial professional sat down with you to review your beneficiary designations?  If it’s been ANY longer than 12 months, quite frankly, you should be concerned.  Why?  Because circumstances have a mysterious way of changing, and failing to maintain current, accurate beneficiary designations can be one of the most costly financial mistakes you could ever make.

One of the most poignant examples of this mistake comes from an article in the New York Post.  The story tells a twisted tail of Anne Friedman’s nearly million-dollar pension. Anne was a lifelong New York City school system employee.  In 1974, Anne named her mother, uncle and sister on her beneficiary form with the Teachers’ Retirement System.  A year later, Anne met and married Bruce Friedman to whom she was happily married for the next two decades.

During her entire marriage, Anne never updated her beneficiary designation.  At her death, Anne’s sister was the sole surviving beneficiary of Anne’s retirement plan and only her sister had the right to receive Anne’s pension money.  Anne’s sister exercised her right, took nearly a million dollars of Anne’s pension and left Bruce with

nothing.  Bruce sued, lost, appealed and lost again.1

CLICK HERE for a closer look at this “Pension Pickle.”

The moral of the story?  Keeping your beneficiary designations current – especially after a life-changing event such as marriage, divorce or the birth of a child – is absolutely critical. Here are just few additional examples of common situations that could create very undesirable outcomes.

Example #1
Roger & Leslie divorced after nearly 15 years of marriage. Both eventually remarried, but Roger failed to update his designations and replace Leslie with his new bride.  At his untimely passing, Leslie received over $400K from his IRA and roughly $300K in proceeds from a life insurance policy that still had her named as the sole beneficiary.

Example #2
Walter was a 62-year old doting grandfather. When he last reviewed his accounts nearly 8 years ago, he had two grandchildren.  He named these boys the beneficiaries of an IRA he’d always earmarked for his grandkids.  Walter’s daughter later had twin girls, but because he failed to ever review his designations, they were never updated, and the twins never received an equal share of his account as inheritance.

Example #3
Veronica and Jim had been married for over 25 years.  Childless, they had each designated each other as the sole beneficiaries of each other’s retirement accounts and small life insurance contracts.  Jim predeceased Veronica, but her designations were never updated, and at her passing, over $800K became part of her taxable estate rather than passing on to a secondary beneficiary.

Each of these is an outcome that could’ve easily been avoided with a simple, annual review of the individuals’ beneficiary designations, and if you haven’t sat down to review yours in the last year, the time is now. To schedule a complimentary Beneficiary Designation Review, simply call us at (704) 553-0123 or visit us at www.ChrisHobart.com today!

These are hypothetical examples and are for informational purposes only.

1 “Pension Pickle.” New York Post. January 31, 2005.