Saving on Fitness Membership Costs

The cost of a membership to your local fitness center can be pricey, especially if you are looking for a modern facility with a wide selection of the most current equipment. But there are ways to improve your physical fitness without denting your fiscal fitness.

Ways to Save on a Fitness Center Membership

Don’t Pay List Price—There are ways to save on the quoted fee schedule.

• Take advantage of free trials. They may be as short as one day or up to 30 days. It will allow you test the club’s vibe and its members.
• Search for coupons. Fitness centers may offer coupons that reduce the cost.
  Visit the fitness center website and “deal of the day” websites to see if coupons
  are available.
• Negotiate. Let the manager know you are looking around, the prices you’re being quoted and ask him or her to make a best offer. Shopping during the slow season or at the end of the month gives you greater leverage.
• Join with a friend. A fitness center may have special pricing. If they don’t, it’ll certainly increase your negotiating leverage.
• Exercise during off-peak hours. Some fitness centers, especially the 24-hour ones, may offer discounts for using the facility in off-peak hours.

Get Someone Else to Pay for It—Forward thinking employers recognize that a physically fit employee is likely to be a healthier and more productive worker. Insurance companies also like healthy people since they cost less in medical care. Ask your employer or insurance company if they offer any perks that subsidize memberships, or have any affiliation with centers that offers discounts.
Don’t Buy a Membership—The fact is that many Americans’ resolve to exercise can be ephemeral, leaving them with membership bills that keep coming. To protect against this risk, consider:

• Buying a month-to-month membership until you’re sure you’re going to stick with it.
• Starting your new exercise regime by buying an exercise video or walking/running outdoors.

The decision to exercise is always a good one. Now, make the decision that will also be good for your bank account.

Resource: http://www.authenticcounsel.com/resource-center/lifestyle/saving-on-fitness-membership-costs

Choosing a Retirement Plan that Fits Your Business

One survey found that 53% of nation’s nearly six million small businesses may not have the retirement plan that’s most appropriate for their needs.¹
To choose a plan, it’s important to ask yourself four key questions. Their answers may help identify the plan that’s the best fit for your small business.

How much can my business afford to contribute?

The cost of contributions may be managed by the plan type.
A simplified employee pension plan (SEP) is funded by employer contributions only. SEP contributions are made to separate IRAs for eligible employees.²
Savings incentive match plan for employees of small employers (SIMPLE) IRAs blends employee and employer contributions.³ Employers either match employee contributions up to 100% of first 3% of compensation, or contribute 2% of each eligible employee’s compensation.
A 401(k) is primarily funded by the employee; the employer can choose to make additional contributions, including matching contributions.⁴
A defined benefit plan is entirely funded by employer contributions.⁵

What plan accommodates high employee turnover?

The cost of covering short-tenured employees may be reduced by eligibility requirements and vesting.
With the SEP-IRA, employees at least 21 or older and employed in three of the last five years must be covered.
The SIMPLE IRA must cover employees who have earned at least $5,000 in any prior two years and are reasonably expected to earn $5,000 in the current year.
The 401(k) and defined benefit plan must cover all employees at least 21 years of age and who worked at least 1,000 hours in a previous year.
Vesting is immediate on all contributions to the SEP-IRA, SIMPLE IRA and 401(k) employee deferrals, while a vesting schedule may apply to 401(k) employer contributions and defined benefit.

Do I want to maximize contributions for myself (and my spouse)?

The SEP-IRA and 401(k) offer higher contribution maximums than the SIMPLE IRA. For those business owners who are starting late, a defined benefit plan may offer even higher levels of allowable contributions.

My priority is to keep administration easy and inexpensive?

The SEP-IRA and SIMPLE IRA are straightforward to establish and maintain. The 401(k) can be more onerous, but complicated testing may be eliminated by using a Safe Harbor 401(k). Generally, the defined benefit plan is the most complicated and expensive to establish and maintain of all plan choices.

1. Fidelity Investments, February 22, 2012; (most recent information available). The online survey conducted among 638 owners of business with few than 100 employees.
2. Like a Traditional IRA, withdrawals from SEP-IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.
3. Like a Traditional IRA, withdrawals from SIMPLE IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.
4. Distributions from 401(k) plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, you must begin taking required minimum distributions no later than April 1 of the year after you reach age 70½.
5. Distributions from defined benefit plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.

Resource: http://www.authenticcounsel.com/resource-center/retirement/choosing-a-retirement-plan-that-fits-your-business

9 Facts About Retirement

Retirement can have many meanings. For some, it will be a time to travel and spend time with family members. For others, it will be a time to start a new business or begin a charitable endeavor. Regardless of what approach you intend to take, here are nine things about retirement that might surprise you.

1. Many consider the standard retirement age to be 65. One of the key influences in arriving at that age was Germany, which initially set its retirement age at 70 then lowered it to age 65.¹
2. Every day for the next 15 years, another 10,000 baby boomers will turn 65. That’s roughly one person every 8 seconds.²
3. In 2010, people aged 65 and older accounted for 13% of the population in the U.S. By 2025, they are expected to make up 18% of the population
4. Ernest Ackerman was the first person to receive a Social Security benefit. In March 1937, the Cleveland streetcar motorman received a one-time, lump-sum payment of 17¢. Ackerman worked one day under Social Security. He earned $5 for the day and paid a nickel in payroll taxes. His lump-sum payout was equal to 3.5% of his wages.⁴
5. In 2001, people aged 65 and older owned 31% of the U.S.’s financial assets. By 2040, it is estimated they will hold 44% of the country’s financial assets.⁵
6. Nine of ten adults aged 65 years and older take at least one prescription drug every day.⁶
7. In 2010, nearly one-third (32%) of those 65 and older depended on Social Security for 80% or more of their income. The average monthly Social Security benefit at the beginning of 2014 was $1,294.⁷
8. Centenarians — those over age 100 — are the fastest-growing demographic group in the U.S. Between 2000 and 2010, this group roughly doubled in size. In the 2010 census, nearly 83% of centenarians were women.⁸
9. Seniors watch more television—live, on the internet, and on mobile devices—than any other age group, even teenagers. In the first quarter of 2013, the 65-and-older age group averaged over 275 hours of television per month, compared with 120 hours for kids aged 12 to 17 years.

   Conclusion

   These stats and trends point to one conclusion: The 65-and-older age group is expected to become larger and have more influence in the future. Have you made arrangements for health care? Are you comfortable with your investment decisions? If you are unsure about your decisions, maybe it’s time to develop a solid strategy for the future.
   

   Postponing Retirement?

   22% of workers now intend to keep working until age 70 and beyond. And 7% don’t intend to retire at all.
   

   Chart Source: Employee Benefit Research Institute, 2014.

   
   

   
   

   Resource: http://www.authenticcounsel.com/resource-center/retirement/9-facts-about-retirement

Products and Services

We provide assistance in the following areas:

Investments

• Bonds
• Common Stock
• Educational IRA
• Traditional IRA
• Roth IRA
• SEP IRA
• Simple IRA
• Brokerage Accounts
• Treasury Bills
• Government Securities
• Treasury Notes
• Variable Annuity

Financial Planning

• Retirement Plans
• Tax Plans
• 401 (k) Planning
• 403 (b) Planning
• College Plans
• Estate Plans
• Money Purchasing Plans
• Profit Sharing Plans

Insurance

• Disability Income Insurance
• Life Insurance
• Long Term Care Insurance 

Resource; http://www.authenticcounsel.com/p/products-and-services

What Is an Annuity?

Individuals hold more than $1.7 trillion in annuity contracts; a tidy sum considering an estimated $5.4 trillion is held in all types of IRAs.¹
Annuity contracts are purchased from an insurance company. The insurance company will then make regular payments — either immediately or at some date in the future. These payments can be made monthly, quarterly, annually, or as a single lump-sum. Annuity contract holders can opt to receive payments for the rest of their lives or for a set number of years.
The money invested in an annuity grows tax-deferred. When the money is withdrawn, the amount contributed to the annuity will not be taxed, but earnings will be taxed as regular income. There is no contribution limit for an annuity.
There are two main types of annuities.
Fixed annuities offer a guaranteed payout, usually a set dollar amount or a set percentage of the assets in the annuity.
Variable annuities offer the possibility to allocate premiums between various subaccounts. This gives annuity owners the ability to participate in the potentially higher returns these subaccounts have to offer. It also means that the annuity account may fluctuate in value.
Indexed annuities are specialized variable annuities. During the accumulation period, the rate of return is based on an index.
Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contact. Withdrawals and income payments are taxed as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies). The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities are not guaranteed by the FDIC or any other government agency.
Variable annuities are sold by prospectus, which contains detailed information about investment objectives and risks, as well as charges and expenses. You are encouraged to read the prospectus carefully before you invest or send money to buy a variable annuity contract. The prospectus is available from the insurance company or from your financial professional. Variable annuity subaccounts will fluctuate in value based on market conditions, and may be worth more or less than the original amount invested when the annuity expires.

Case Study: Robert’s Fixed Annuity

Robert is a 52-year-old business owner. He uses $100,000 to purchase a deferred fixed annuity contract with a 4% guaranteed return.
Over the next 15 years, the contract will accumulate interest tax free. By the time Robert is ready to retire, the contract should be worth just over $180,000.
At that point the contract will begin making annual payments of $13,250. Only $7,358 of each payment will be taxable; the rest will be considered a return of principal.
These payments will last the rest of Robert’s life. Assuming he lives to age 85, he’ll eventually receive over $265,000 in payments.
Robert’s annuity may have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. His annuity also may have surrender fees that would be highest if Robert takes out the money in the initial years of the annuity contact. Robert’s withdrawals and income payments are taxed as ordinary income. If he makes a withdrawal prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).

Two Phases

Deferred annuity contracts go through two distinct phases: accumulation and payout. During the accumulation phase, the account grows tax deferred. When it reaches the payout phase, it begins making regular payments to the contract owner — in this case annually.

1. Insured Retirement Institute, 2013

Resource: http://www.authenticcounsel.com/resource-center/retirement/what-is-an-annuity

9 Facts About Social Security

Social Security’s been a fact of retirement life ever since it was established in 1935. We all think we know how it works, but how much do you really know? Here are nine things that might surprise you.

1. The Social Security trust fund is huge. At $2.52 trillion at the end of 2011, it exceeds the gross domestic product (GDP) of every country in the world except the five largest: the U.S., China, India, Japan, and Germany.¹
2. Most workers are eligible for Social Security benefits, but not all. For example, until 1984, federal government employees were part of the Civil Service Retirement System and were not covered by Social Security.²
3. You don’t have to work long to be eligible. If you were born in 1929 or later, you need to work for 10 or more years to be eligible for benefits.³
4. Benefits are based on an individual’s average earnings during a lifetime of work under the Social Security system. The calculation is based on the 35 highest years of earnings. If an individual has years of low earnings or no earnings, Social Security may count those years to bring the total years to 35.⁴
5. There haven’t always been cost-of-living adjustments (COLA) in Social Security benefits. Before 1975, increasing benefits required an act of Congress; now increases happen automatically, based on the Consumer Price Index. There were COLA increases in 2009, 2010, and 2012, but not in 2011.⁵
6. Social Security is a major source of retirement income for 68% of current retirees.⁶
7. Social Security benefits are subject to federal income taxes — but it wasn’t always that way. In 1983, Amendments to the Social Security Act made benefits taxable, starting with the 1984 tax year.⁷
8. Social Security recipients received a single, lump-sum payment from 1937 until 1940. One-time payments were considered “payback” to those people who contributed to the program. Social Security administrators believed these people would not participate long enough to be vested for monthly benefits.⁸
9. In January 1937, Earnest Ackerman became the first person in the U.S. to receive a Social Security benefit—a lump sum of 17 cents.⁹

By the Numbers

The first three digits of a Social Security number indicate the state where the individual applied for the number. The lowest numbers are allocated to states in the Northeast; the highest numbers are assigned to the West Coast.

Source: Social Security Administration, 2011. To protect the integrity of Social Security numbers, the Social Security Administration began randomizing Social Security numbers for all those issued after June 25, 2011.

Resource: http://www.authenticcounsel.com/resource-center/retirement/9-facts-about-social-security

Retirement Income and the Traditional Portfolio

The challenge with taking withdrawals from a traditional portfolio is the “sequence of returns” danger. Experiencing negative returns early in retirement can potentially undermine the sustainability of your assets. So you may want to consider a couple of strategies to help mitigate this concern.
The first is to have a pool of very liquid assets to fund two-to-three years of retirement spending; this may keep you from selling longer-term assets at an inopportune time. Through time, and depending upon market conditions, you may have the opportunity to replenish this cash reserve using gains from your retirement portfolio.
Another complementary strategy is to integrate annuities into your retirement strategy.

Taxed As Ordinary Income

The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contact. Withdrawals and income payments are taxes as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).
Until now, portfolio optimization has largely focused on the blending of different asset classes in the appropriate measure to create optimal portfolios. What is often overlooked is how to integrate different retirement investment vehicles to enhance asset optimization.
One of the industry’s leading thinkers, Ibottson Associates, has done a great deal of research around this very idea.

Retirement-Income Challenge

In a landmark study, “Retirement Portfolio and Variable Annuity with Guaranteed Minimum Withdrawal Benefit,” Ibottson’s research came to several key conclusions that hold important ramifications for meeting the retirement-income challenge.
One of the study’s conclusions was the addition of variable annuity with a guaranteed minimum withdrawal benefits to retirement portfolios—replacing cash or fixed-income allocations—increases total income while it decreases income risk.”¹
A successful retirement is so much more than undertaking sound investment strategies.
It’s also about developing an approach to help protecting you, your spouse, and your heirs. Consider the benefits of extended medical insurance and Medigap insurance. Review your estate strategy to ensure that it reflects your wishes and is positioned to execute on them.
Finally, stay active—physically and mentally—so that you can fully enjoy your
retirement years.

1. The Ibbotson study assumed the investor had a retirement income period of 25 years or longer. For an investor with a shorter horizon, the strategy may not be as beneficial. The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities are not guaranteed by the FDIC or any other government agency.Variable annuities are sold by prospectus, which contains detailed information about investment objectives and risks, as well as charges and expenses. You are encouraged to read the prospectus carefully before you invest or send money to buy a variable annuity contract. The prospectus is available from the insurance company or from your financial professional. Variable annuity subaccounts will fluctuate in value based on market conditions, and may be worth more or less than the original amount invested if the annuity is surrendered.

Resource: http://www.authenticcounsel.com/resource-center/retirement/retirement-income-and-the-traditional-portfolio

Retirement Income and the Traditional Portfolio

The challenge with taking withdrawals from a traditional portfolio is the “sequence of returns” danger. Experiencing negative returns early in retirement can potentially undermine the sustainability of your assets. So you may want to consider a couple of strategies to help mitigate this concern.
The first is to have a pool of very liquid assets to fund two-to-three years of retirement spending; this may keep you from selling longer-term assets at an inopportune time. Through time, and depending upon market conditions, you may have the opportunity to replenish this cash reserve using gains from your retirement portfolio.
Another complementary strategy is to integrate annuities into your retirement strategy.

Taxed As Ordinary Income

The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contact. Withdrawals and income payments are taxes as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).
Until now, portfolio optimization has largely focused on the blending of different asset classes in the appropriate measure to create optimal portfolios. What is often overlooked is how to integrate different retirement investment vehicles to enhance asset optimization.
One of the industry’s leading thinkers, Ibottson Associates, has done a great deal of research around this very idea.

Retirement-Income Challenge

In a landmark study, “Retirement Portfolio and Variable Annuity with Guaranteed Minimum Withdrawal Benefit,” Ibottson’s research came to several key conclusions that hold important ramifications for meeting the retirement-income challenge.
One of the study’s conclusions was the addition of variable annuity with a guaranteed minimum withdrawal benefits to retirement portfolios—replacing cash or fixed-income allocations—increases total income while it decreases income risk.”¹
A successful retirement is so much more than undertaking sound investment strategies.
It’s also about developing an approach to help protecting you, your spouse, and your heirs. Consider the benefits of extended medical insurance and Medigap insurance. Review your estate strategy to ensure that it reflects your wishes and is positioned to execute on them.
Finally, stay active—physically and mentally—so that you can fully enjoy your
retirement years.

Resource: http://www.authenticcounsel.com/resource-center/retirement/retirement-income-and-the-traditional-portfolio

Are Women and Financial Strategies a Mismatch?

Although 90% of women say they are the chief bill-payer and shopper at home, more than 70% believe they are behind schedule when it comes to saving for retirement.^1,2 And a full 60% say they haven’t tried to calculate how much they need to save in order to live comfortably in retirement.

These figures suggest that most women don’t shy away from the day-to-day financial decisions needed to run a household, but when it comes to projecting and strategizing for retirement, some women may be leaving their future to chance.

Women and College

The reason behind this disparity isn’t a lack of education or independence. Women today account for 60% of college students in the U.S., and they earn more master’s degrees and doctorates than men.⁴ So what keeps them from taking charge of their long-term financial picture?
Research suggests that one reason may be a lack of confidence.Sixty percent of women believe their investing skills are below average.⁵ Women may shy away from discussing retirement because they don’t want to appear uneducated or naïve and hesitate to ask questions as a result.

Insider language

Since Wall Street traditionally has been a male-dominated field, women whose expertise lies in other areas may feel uneasy amidst complex calculations and long-term financial projections. Just the jargon of personal finance can be intimidating: 401(k), 403(b), fixed, variable.⁶ To someone inexperienced in the field of personal finance, it may seem like an entirely different language.
But women need to keep one eye looking toward retirement since they may live longer and could potentially face higher health-care expenses.
If you have left your long-term financial strategy to chance, now is the time to pick up the reins and retake control. Consider talking with a financial professional about your goals and ambitions for retirement. Don’t be afraid to ask for clarification if the conversation turns to something unfamiliar. No one was born knowing the ins-and-outs of compound interest, but it’s important to understand in order to make informed decisions.

Compound Interest: What’s the Hype?

Compound interest may be one of the greatest secrets of smart investing. And time is the key to making the most of it. If you invested $250,000 in an account earning 6%, at the end of 20 years your account would be worth $801,784. However, if you waited 10 years, then started your investment program, you would end up with only $447,712.

This is a hypothetical example used for illustrative purposes only. It does not represent any specific investment or combination of investments.

Resource: http://www.authenticcounsel.com/resource-center/retirement/are-women-and-financial-strategies-a-mismatch

Certified Financial Planning Board

Team
We believe our teamwork approach adds a broader perspective to all we do and can help provide increased benefits to our clients. Our team has a collective 45 plus years of investment industry experience. Our goal is to ensure that our business model allows us to be available to communicate, listen and support the needs of the families we serve with the a high level of integrity and personalized service.
Listening and asking good questions are the key to our process. Your confidence and discernment of your overall financial picture and direction is our highest priority.

Chad Frantzen

CERTIFIED FINANCIAL PLANNER™
214-785-2355
chad.frantzen@lpl.com

Chad is an avid outdoorsman and family man. He enjoys helping others as a trustworthy person who can listen and encourage. He and his wife Kelli have been married 10 years and have a 4 year old son, Tyler. They are active in their community and one of their great joys is encouraging others along in their faith and walk with Christ.Chad  holds a business degree from Texas A&M University where he also played football as a linebacker. 
His wife  Kelli has an Interior Design degree from the University of Texas.
They enjoy traveling, good food, quality time with friends and family, and almost any outdoor activity or  adventure together!

Resource: http://www.authenticcounsel.com/team

Your Changing Definition of Risk in Retirement

During your accumulation years, you may have categorized your risk as “conservative,” “moderate” or “aggressive” and that guided how your portfolio was built. Maybe you concerned yourself with finding the “best-performing funds,” even though you knew past performance does not guarantee future results.
What occurs with many retirees is a change in mindset—it’s less about finding the “best-performing fund” and more about consistent performance. It may be less about a risk continuum—that stretches from conservative to aggressive—and more about balancing the objectives of maximizing your income with sustaining it for a lifetime.
You may even find yourself willing to forego return potential for steady income.
A change in your mindset may drive changes how you consider shaping your portfolio and the investments you choose to fill it.
Let’s examine how this might look at an individual level.

Still Believe

During your working years, you appreciated the short-term volatility of the stock market but accepted it for its growth potential value over longer time periods. You’re now in retirement and still believe in that concept. In fact, you know stocks remain important to your financial strategy over a 30-year or more retirement period.¹
But you’ve also come to understand that withdrawals from your investment portfolio has the potential to accelerate the depletion of your assets when investment values are declining. How you define your risk tolerance may not have changed, but you understand the new risks introduced by retirement. Consequently, it’s not so much about managing your exposure to stocks, but considering new strategies that adapt to this new landscape.¹

Shift the Risk

For instance, it may mean that you hold more cash than you ever did when you were earning a paycheck. It also may mean that you consider investments that shift the risk of market uncertainty to another party, such as an insurance company.
The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contact. Withdrawals and income payments are taxes as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).
The march of time affords us ever-changing perspectives on life and that has never been truer than for the time we spend in retirement.

1. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.This is a hypothetical example used for illustrative purposes only.

Resource: http://www.authenticcounsel.com/resource-center/retirement/your-changing-definition-of-risk-in-retirement

Can Group, Private Disability Policies Work Together?

According to The Council for Disability Awareness, a 35-year-old male has a 21% chance of becoming disabled for three months or longer, with the average disability lasting almost seven years.¹
Loss of income for such a duration has the potential to cause significant financial hardship. And while Social Security Disability Insurance may help, it’s critical to understand that 65% of initial applications were denied in 2012 and 93% of SSDI recipients receive less than $2,000 a month.²
Disability coverage may be available through your employer, who may pay all or a portion of the cost for your coverage.
Employer plans typically pay up to 60% of your income.³ This limited coverage might not be enough to meet your bills, which is why you may want to supplement employer-based coverage with a personal policy. Supplemental policies may be purchased to cover up to generally 70-80% of your income.⁴

Taxation of Disability Benefits

When you purchase a personal disability policy, the benefit payments are structured to be income tax-free. Consequently, you may not be eligible for coverage that equals your current salary since your take home pay is always less.
If your employer paid for your coverage, then the income you receive generally will be taxable. If you paid for a portion of the employer-provided coverage, then the pro-rata amount of the benefits you receive are structured to be tax-free.

Choices, Choices, Choices

Consider the waiting period before disability payments begin. A longer waiting period saves you money, but it also means that you may have to live off your savings for a longer period. You are the best judge of how much of this risk you are comfortable assuming.
You also may want to coordinate the waiting period with any short-term disability benefits you could have. For example, if your short-term disability covers you for 90 days, look to have at least a 90-day waiting period so that you can potentially lower the cost on the long-term policy.
Ask how a policy defines an inability to work. Some policies will say “the inability to do any job or task”; others will say “own occupation.” You may prefer the latter definition so you’re not forced to perform some less-skilled, lower-paid work. That type of work may not help you meet your bills.

1. The Council for Disability Awareness, July 3, 2012
2. The Council for Disability Awareness, July 3, 2012
3. USA Today, May 7, 2013
4. Forbes, April 11, 2013

Resource: http://www.authenticcounsel.com/resource-center/insurance/can-group-private-disability-policies-work-together

Protecting Your Business from the Loss of a Key Person

Charles de Gaulle once remarked, “The graveyards are full of indispensable men.”¹ While we know that life goes on regardless of the loss of any “indispensable” person, for a small business, the loss of a key person is not only a human tragedy, it can represent the potential for significant financial loss.
Though business owners cannot protect themselves from the unexpected and sudden loss of a key employee, they may be able to protect themselves from the financial consequences of such a loss through the purchase of what is called “key person insurance.”

Who’s Key?

There is no legal definition for who a key person is, but he or she is someone whose loss due to death or disability would cause a material financial setback to the business. For example, a key person may be a top salesperson whose production would take considerable time to replace. Or, perhaps it’s someone who is guaranteeing the business access to needed future capital.
Key person insurance is a standard insurance policy that is usually owned by the business and whose premiums are paid by the business. These premiums are generally non-deductible. The benefits of the policy are paid to the business in the event that the insured key person dies or becomes disabled.² (Coverage for death and disability are separate policies.)

Calculating Costs

When considering the coverage amount the business owner should first calculate the financial impact of the loss of a key person. The next step is to ascertain the cost of insurance for that amount. With that information, the business owner will then be able to make a decision that balances his or her protection needs with what the business can afford.
The proceeds may be used in any manner deemed appropriate. For example, the proceeds may be needed to meet day-to-day expenses, pay off debts, or to recruit new talent to the organization.
For most businesses, their most important asset is their people. Yet, while they insure their other assets—such as buildings and cars—they often overlook the wisdom of doing the same for those individuals who are critical to their business success.

Resource: http://www.authenticcounsel.com/resource-center/insurance/protecting-your-business-from-the-loss-of-a-key-person

Understanding Long-Term Care

Addressing the potential threat of long-term care expenses may be one of the biggest financial challenges for individuals who are developing a retirement strategy.The U.S. Department of Health and Human Services estimates that 70% of people over age 65 can expect to need long-term care services at some point in their lives.¹ So understanding the various types of long-term care services—and what those services may cost—is critical as you consider your retirement approach.

What Is Long-Term Care?

Long-term care is not a single activity. It refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability—most commonly associated with aging.
Long-term care can include everything from assistance with activities of daily living—help dressing, bathing, using the bathroom, or even driving to the store—to more intensive therapeutic and medical care requiring the services of skilled medical personnel.
Long-term care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home. And long-term care is not exclusively for the elderly; it is possible to need long-term care at any age.

How Much Does Long-Term Care Cost?

Fast Fact: Getting Care Now. Some 1.4 million adults currently live in skilled nursing facilities. Another 2.5 million age 65 and older remain in their own homes but get help with personal care from other people.
Sources: American Health Care Association, 2011; Centers for Disease Control and Prevention, 2011

Long–term care costs vary state–by–state, and region–by–region. The national average for care in a skilled care facility (single occupancy in a nursing home) is $79,935 a year. The national average for care in an assisted living center (single occupancy) is $37,572 a year. Home health aides cost an average $21 per hour, but that rate may increase when a licensed nurse is required.^2,3

What Are the Payment Options?

Often, long-term care is provided by family and friends. Providing care can be a burden, however, and the need for assistance tends to increase with age.⁴
Individuals who would rather not burden their family and friends have two main options for covering the cost of long-term care: they can choose to self’insure or they can purchase long-term care insurance.
Many self-insure by default—simply because they haven’t made other arrangements. Those who self-insure may depend on personal savings and investments to fund any long-term care needs. The other approach is to consider purchasing long-term care insurance, which can cover all levels of care, from skilled care to custodial care to in-home assistance.
When it comes to addressing your long-term care needs, many look to select a strategy that may help them protect assets, preserve dignity, and maintain independence. If those concepts are important to you, consider your approach for long-term care.

Default Choice or Best Approach?

Nearly four out of five adults age 55 and older with annual incomes of more than $100,000 have opted to self insure rather than purchase long-term care insurance. Individuals who elect to self insure may rely on personal savings and investments to fund any long-term care needs.

Source: The Urban Institute, March 2011

Resource: http://www.authenticcounsel.com/resource-center/insurance/understanding-long-term-care

U.S. Personal Savings Rate

The U.S. personal saving rate stood at 4.9% at the end of 2013, a bit higher than its 10-year average of 3.9% and well below the recent five-year high of 8.7% in December 2012.¹
The personal saving rate is the federal government’s estimate of what percent of their incomes U.S. households are saving. But market watchers and economists are mixed on what can be learned from swings in the saving rate.

Why Economists Struggle

They struggle with the personal saving rate because it’s a derivative number — that is, it’s not measured directly. Instead, the Bureau of Economic Analysis derives the saving rate from other estimates. Here’s how it’s calculated:²

1. The Bureau of Economic Analysis subtracts payroll and income taxes from personal income to get disposable personal income.
2. The Bureau then subtracts its estimate of personal outlays — expenditures, interest payments, and payments — from disposable personal income to get an estimate of personal saving.
3. The Bureau concludes by dividing personal income — the number the Bureau started with — by personal saving.

As currently structured, the U.S. Personal Saving Rate does not include capital gains from the sale of land or financial assets in its estimate of personal income. This effectively excludes capital gains — an important source of income for some.³

Fast Fact: Other Measure. Some economists prefer to track gross national savings as a percent of gross domestic product. In 2012, the latest year for which data is available, the gross national savings of the U.S. was 13.1%, below the world average of 18.7%.
Source: EconomyWatch.com, 2013

Another consideration is that the index includes contributions to qualified retirement accounts, such as IRAs and 401(k) plans, as a personal outlay. It does not consider IRAs or 401(k) plans personal savings.⁴

Gaining Insight

Gaining a bit of insight into a popular economic indicator can help you better understand trends as they are discussed in newspapers and websites. However, don’t let your long-term savings program be influenced by a national number.

Economic Indicator?

The saving rate trends higher when the economy is contracting and trends lower when the economy recovers.

Sources: Federal Reserve, 2013; for the period October, 2004 through September, 2013.

Resource: http://www.authenticcounsel.com/resource-center/money/u-s-personal-savings-rate

Should You Choose a Fixed or Variable?

Buying a home is the single largest financial commitment most people ever make. And sorting through mortgages involves a lot of critical choices. One of these is choosing between a fixed- or variable-interest-rate mortgage.
True to its name, fixed-rate mortgage interest is fixed throughout the life of the loan. In contrast, the interest rate on a variable-interest-rate loan can change over time. The mortgage interest rate charged by a variable loan is usually based on an index, which means payments could move up or down depending on prevailing interest rates.¹
Fixed-rate mortgages have advantages and disadvantages. For example, rates and payments remain constant despite the interest-rate climate. But fixed-rate loans generally have higher initial interest rates than variable-rate mortgages; the financial institution may charge more because if rates go higher, it may lose out.
If prevailing interest rates trend lower, a fixed-rate mortgage holder would have to refinance, and that may involve closing costs, additional paper work, and more.²
With variable-rate mortgages, the initial interest rates are often lower because the lender is able to transfer some of the risk to the borrower; if prevailing rates go higher, the interest rate on the variable mortgage may adjust upward as well. Variable-rate mortgages may allow borrowers to take advantage of falling interest rates without refinancing.³
One of the biggest advantages variable-rate mortgages offer can be one of their biggest disadvantages as well. Rates and payments are subject to change, and they can rise over the life of the loan.

Fast Fact: Death Pledge? The word “mortgage” comes from the Old French words “mort,” meaning “dead,” and “gage,” meaning “pledge.”
Source: American Heritage Dictionary of the English Language, 2013

Should you choose a fixed or variable mortgage? Here are four broad Fast Fact considerations:
First, how long do you plan to stay in the home? If you plan on living in the home a short time before selling it, you may want to consider a variable-rate mortgage. With a shorter time frame, the loan will have less time to move up or down.
Second, what’s happening with interest rates? If interest rates are below historic averages, it may make sense to consider a fixed rate. On the other hand, if interest rates are above historic averages, it may make sense to consider variable rate loan. Then if interest rates decline, your interest rate may fall as well.
Third, under what conditions can the lender adjust the rate and payment? How frequently can it be adjusted? Is there a limit on how much it can be adjusted in each period? Is there a lifetime limit on how high the interest rate and payment can be raised?
And fourth, could you still afford your monthly payment if interest rates were to rise significantly? How would it affect your finances if your payment were to rise to its lifetime limit and stay there for an extended period?
For most, buying a home is a major commitment. Selecting the most appropriate mortgage may make that long-term obligation more manageable.

1,2 Board of Governors of the Federal Reserve, 2013
Bankrate.com, 2013

Average Interest Rate: 30-Year Fixed-Rate Mortgages

The average rate on 30-year fixed-rate mortgage fell to 3.35% in December 2012, which, at the time, was the lowest level since the federal government began tracking mortgage rates in the early 1970s.

Resource: http://www.authenticcounsel.com/resource-center/lifestyle/should-you-choose-a-fixed-or-variable

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