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Reduction in Social Security Benefits

June 6, 2011 | Filed Under Finance, Retirement Savings, Tax Articles | Comments Off

Social Security has been a heavy burden upon the government for some time.  The number of baby boomers reaching retirement will flood the Social Security roll call to an unsustainable level.  The government has borrowed against Social Security, leaving it highly susceptible to collapse.

In an effort to solve the Social Security dilemma, if at least for political gain, proposals are being offered to reform the program to shore up it’s financial coffers.

One of the proposals suggests changing the formula used to calculate the Cost-of-Living-Adjustment(COLA).  Automatic annual increases to benefits occur to offset the rising cost of living…inflation. The modification would reduce the increase by three tenths of one percent(0.3%).  The adjustment for inflation is a valuable aspect of Social Security, one not often found in pension benefit programs.   A reduction in the adjustment, however slight, will erode further the retirees’ ability to survive financially.

As it stands today, an estimated 29% of Americans in the second-highest income bracket will run short of money after 20 years in retirement and approximately 40% in the lowest pre-retirement bracket will run short in just 10 years, according to projections by the Employee Benefit Research Institute(EBRI)’s 2010 Retirement Readiness Rating ™.

A 0.3% reduction may not sound like much,  but the impact will have a compounding effect on the benefits one receives and is predicted to be almost immediate with no grandfathering in of current recipients to the old rates.   Compounding interest is great when it is in your favor, but it will eat away at your buying power when it is against you.

The National Academy of Social Insurance(NASI) estimates a 3.3% reduction in the COLA will cut lifetime benefits by about 9% for someone reaching the age of 92.

Here are 5 Tips to counter measures proposed to reduce one’s overall Social Security benefits:

  • Save as much as you can now.  A rule of thumb is 10% of your income.
  • File for Social Security benefits later rather than earlier.  The longer you wait to draw on Social Security, the greater the benefits you may receive over your lifetime.  For example, someone starting to take benefits at age 62, will likely receive 25% less in benefits then someone who waits until the age of 66.   If you wait until age 70, your benefits could increase by as much as 32%!
  • Keep working.  Not a prospect most of us are looking forward to, but the longer you work, the more you can contribute to your 401(k) with hopefully company matches.  You’ll also delay onset of receiving
  • your SS benefits.
  • Reduce  your fixed costs, in particular, your mortgage.
  • Stay ahead of inflation with investments that outperform or at least keep pace with inflation.

Some reform measures look to raise the retirement age(this is just a forced delay in taking your Social Security benefits…one that profits the government and not you), or raising Social Security taxes.  These ideas I think will merely benefit the politicians and hurt the rest of us.  Reducing the Cost-of-Living-Adjustment would keep a little more in the Social Security storehouse, and will seem less of a threat to many retirees lifestyle, that it may just pass.  This however, is seen by some experts to be a bigger threat to retirees future financial security.

Affording Retirement

May 18, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

Are you among the 40% of working Americans that feel you will never be able
to afford to retire? A Harris Interactive survey of 1005 American workers,
reported figures to the American Institute of Certified Public Accountants,
that reveal the pessimistic outlook many Americans have regarding their
future days in the sun.  The study also showed that 55% of workers don’t
know how much they’ll need to retire.  Those who have some figure in mind,
are likely to underestimate how much they’ll need in savings.

The current state of the economy has left a hefty 56% of Americans who say
they can’t afford to save, and almost a third who feel they are financially
worse off now then they were a year ago.

“These statistics suggest we are on the verge of a retirement crisis in
America,” said Jordin Amin, chairman of the National CPA Financial Literacy
Commission(AICPA).  “Americans don’t know how to prepare for their twilight
years, and many have put off figuring it out because they’re struggling to
make ends meet now.”  Concerns over rising gas and food prices have 60% of
Americans interviewed by the AICPA Commission making adjustments to their
financial planning.  Worries over retirement however, are still looming over
90% of those interviewed, outranking concerns over uninsured medical
expenses, gas prices, and expanding educational costs.

The American Institute of CPA’s is trying help Americans gain financial
health through free educational programs and tools, and a task force of
volunteer CPA’s.

Despite the cloudy outlook, it is encouraging to find that nearly 60% of the
survey participants see savings as part of their lifestyle, regardless of
their current means to provide for it.

“Here’s  the best advice I can give for retirement planning: Start!”, Amin
said, “Set aside a $1 a day for an IRA, or $100 a quarter for a 401(k).
Small change adds up.”

In addition, the Commission offers these tips in establishing a financial retirement

  • Track your expenses for three to six months. Then think about how those expense                                                might change in your retirement years.
  • Create a concrete plan, determining how much you’ll need to save.
  • Develop a transition plan.  Many Americans reaching age 65, discover that their working                                           years still lie ahead.  Consider doing part-time or consulting work to supplement                                                      your  savings in order to transition into full retirement.

For more personal counsel about retirement planning, contact Shari Mattingly-Bevan
& Associates to help get you on track  for retirement.  864-283-6906 or

Planning for Retirement

April 19, 2011 | Filed Under Finance, Insurance, Investment, Retirement Savings | Comments Off

The National Retirement Planning Coalition, a group of prominent financial industry, educational and advocacy organizations, is working to raise public awareness of the need for comprehensive retirement planning.    The members of the Coalition believe it is still possible to “Retire on Your Terms” if comprehensive retirement plans are properly developed and managed. This week the Coalition sponsored the National Retirement Planning Week to help raise awareness and educate Americans.

Cathy Weatherford, CEO and President for the Insured Retirement Institute (IRI), which heads the Coalition, said, “ Planning for retirement can be a daunting task, especially given the recent economic climate. And while by most accounts the financial forecast appears to be improving, millions of Americans have yet to begin preparing for their retirement.  Wanting to spend their later years content, secure and financially sound is the goal of anyone thinking about retirement.”  The IRI has developed a consumer guide to aid in planning for one’s retirement.  Their “Top 10 Ways to Prepare for Retirement” are useful tips to map out a course for a secure financial future.

Top 10 Ways to Prepare for Retirement:

  • Select a target date for when you want to retire.
  • Calculate how much money you need to accumulate by the time you want to retire.
  • Find out how to maximize your Social Security benefits.
  • Take full advantage of tax-advantaged plans such as employer retirement plans, individual retirement accounts and annuities.
  • If you employer doesn’t have a pension or retirement plan, ask that one be started.
  • Don’t touch our savings for anything but retirement.
  • Diversify your assets and be sure to include guaranteed income for life.
  • Ask questions.  Get help.  Seek the assistance of a professional financial advisor.
  • Start now, set goals.
  • Do a retirement plan and monitor your progress.

Just a few short years ago millions of Americans relied up their employer sponsored retirement plan to achieve their future financial goals.  But with more than 2.4 million active 401(k) participants affected by employers suspending their savings match at the beginning of the market decline, along with so many others who have lost jobs or have had their employer benefits reduced, it is even more vital now that people meet with an ethical, and competent financial advisor to start a retirement plan today.

Please contact Shari Mattingly-Bevan & Associates for additional information on retirement planning solutions at 864-283-6906.

Financial Wisdom from Benjamin Franklin

April 14, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

“Buy what thou hast no need of and ere long thou shalt sell thy necessities.”

Quote-Benjamin Franklin lived from 1706 until 1790. He was one of the most well-known Founding Fathers of the United States, an author, printer, scientist, politician, publisher, inventor, philosopher, civic activist, and diplomat.

Fixed Indexed Annuities Ideal in Today’s Market

April 8, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

Between 2007 and early 2009, variable and traditional fixed annuities have been the leaders in the annuity market.  Since mid 2009, however, fixed indexed annuities have led the way.  An indexed annuity is a product that allows the owner to have the advantages of gains linked to the stock market without the risk of loss to principal.

Why the shift, what does fixed indexed annuities have over the traditional or variable annuity? According to Joseph Montminy, assistant vice-president and head of annuity research at the Windsor, Conn.-based insurance industry group LIMRA, is that, “Equity market volatility and the ability of Fixed Indexed Annuities to partially shield policyholders from that volatility, while also affording them a measure of upside participation, is a major selling point.”

Insurance companies are also working to simplify and fortify their Fixed Indexed Annuity products to attract more clients.  Products with shorter surrender periods, and optional guaranteed lifetime withdrawal benefits, similar to those available with variable annuities, make fixed indexed annuities highly competitive with their counterparts.

Time for a Financial Check-Up

April 1, 2011 | Filed Under Finance, Insurance, Investment, Retirement Savings | Comments Off

We’re coming to the end of the first quarter of 2011, and if you haven’t taken time to examine your financial plans, now is a perfect time to take a fresh look at where you are heading financially.

I encourage you to meet with your qualified planner or contact our office to assess the current state of your finances.  Your advisor should help you to re-evaluate your financial plans and show you how to make any necessary changes that move you closer to your goals.

Here are some things to consider:

  • Are your plans still providing comfort, confidence and security?
  • Are they keeping track to fund your retirement or do you see yourself outliving your money?
  • Is your desire to leave a financial legacy behind for your loved ones still possible?
  • Be sure that you are living within your means.
  • Communicate your plans with loved ones so they can follow through with your wishes in the event of the unexpected.

The future is as uncertain today as it was last year, or 80 years ago.  Reviewing your financial plans every year with a trusted financial advisor, will help you face the challenges in the future.

“Change is only painful if you lack knowledge about how to prepare for its consequences.”  [1]

[1] Van Mueller, LUTCF

Annuities – Good For Your Portfolio

March 16, 2011 | Filed Under Finance, Insurance, Investment, Retirement Savings | Comments Off

“Retirees may get more financial security by combining insurance products and mutual funds, some analysts say”

This week in the Wall Street Journal, an article appeared entitled, “Making the Case to Buy an Annuity”.  The article addresses the importance of adding  annuities with lifetime-income guarantees to your retirement portfolio.

When the stock market makes a downturn during the early years of your retirement, you may face running out of money, if you are  invested in the markets.  Annuities with lifetime-income guarantees can offset that risk.

The importance of annuities and income riders was highlighted by Chief Investment Officer of Morningstar, who said, “”The longer we live, the greater stress that puts on our ability to pay for our retirement-income goal, an income stream that lasts as long as we do.  We need to go beyond the universe of mutual funds and ETFs and consider longevity-risk products.”

According to a researcher, “a typical 65-year old should have as much as 50% of their money in annuities, and the typical 75-year old should have about 65% invested through annuites. ”

There are two main types of annuites, variable and immediate, or indexed.   One important disadvantage to variable annuities is the typical high fees compared to the lower fees of an indexed annuity. Both, however, can provide life-time income.

For additional information on this topic, please contact me at Shari Mattingly-Bevan & Associates at (864) 283-6906.

To read the full article, go to

Tax Reformers Targeting Life Insurance

March 11, 2011 | Filed Under Insurance, Retirement Savings, Tax Articles | Comments Off

Is the cash value in your life insurance policy on its way out with tax reform?

In an attempt to tackle the federal deficit and increase revenue, Congressional members are tossing around ideas to alter the tax treatment in insurance policies and retirement plans.  House Budget Committee chairman and a leader of the tax reform effort, Republican Paul Ryan, R-Wisconsin., said in January to the National Press Club, that he would not rule out removing the tax treatment policyholders receive on the cash that is built up in their life insurance policies.

This comes in the wake of a Congressional defeat of similar proposals offered by the President’s National Commission on Fiscal Responsibility and Reform in December 2010.  Mr. Ryan voted against that commission’s proposals.  But a month later, in a response to questions regarding tax reform and the favorable tax treatments in insurance policies, Mr. Ryan said, “We’re looking out for the American people,”  “We’re looking out for the American economy. We’re not looking out for this narrow special interest that has a little piece of the tax code carved out which serves as a direct barrier to entry against….competitors.”  He stated, however, that it is too early to tell whether he and his GOP colleagues will eliminate the tax benefits in insurance policies through future tax reform.

In defense of it’s policyholders, the insurance industry will fight against any attack on the tax-deferred buildup of cash value in life insurance policies, and the tax-free death benefit.  Terry Headley, president of the National Association of Insurance and Financial Advisors, said “What we don’t want to do is for the American public to be disinclined to provide for their own financial security and, therefore, creating a greater dependence on government.”

Death and Inheritance Taxes

March 9, 2011 | Filed Under Insurance, Retirement Savings, Tax Articles | Comments Off

A lot of attention has been paid to the Federal Estate Tax, but there are 20 states in the Union, including D.C. that have their own Estate or Inheritance Tax. Two states, Maryland and New Jersey, have both!

Many people are unaware that they may be living in a State that has it’s own Estate or Inheritance Tax. According to Constance Fontaine, an Associate Professor of Taxation at American College, “People are writing checks in the thousands who didn’t expect to be.”

Exemption levels are often low, so many beneficiaries are surprised the estate they inherited qualifies to be taxed.  In Ohio, for example, the Estate Tax exemption level is only $338,333.  In New Jersey, the exemption level is $0.

Estate tax rates are typically in the teens, unless you live in Minnesota. The top estate tax rate there is a whopping 41 percent for estates totaling more than $1 million.  Inheritance tax rates are usually in the teens as well.  In Indiana, however, you will pay 20% of your inheritance back to the state, if you inherit more than $150.

Many people in these 20 states are affected more by these state taxes than they are of the federal taxes.

Life insurance policies can sometimes be used to pay for the expected taxes, since their benefits are exempt from these taxes in most states.  However, you have to be careful the insurance benefit goes to an individual and not to the estate or executor.

Estate Tax                                2011 Exemption                                  2011 Top Rate

  • Connecticut                             $3,500,000                                          12
  • Deleware                                 $5,000,000                                          16
  • District of Columbia                 $1,000,000                                          16
  • Hawaii                                     $3,600,000                                          16
  • Maine                                      $1,000,000                                          16
  • Massachusetts                        $1,000,000                                          16
  • Minnesota                               $1,000,000                                          41
  • New Jersey                             $   675,000                                          16
  • New York                                $1,000,000                                          16
  • North Carolina                        $5,000,000                                          16
  • Ohio                                        $   338,333                                           7
  • Oregon                                   $1,000,000                                          16
  • Rhode Island                          $   850,000                                          16
  • Vermont                                  $2,750,000                                          16
  • Washington                            $2,000,000                                          19

Inheritance Tax                        2011 Exemption                                 2011 Top Rate

  • Indiana                                    $100                                                  20
  • Iowa                                        $0                                                      15
  • Kentucky                                 $500                                                  16
  • Maryland                                 $150                                                  10
  • Nebraska                                 $10,000                                             18
  • New Jersey                              $0                                                      16
  • Pennsylvania                           $0                                                      15
  • Tennessee                                $1,000,000                                        9.5

Shari Mattingly Bevan- “Managing Risk”

February 24, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

Managing risk successfully in various areas of one’s life requires
knowledge, skill, and a little bit of luck. When evaluating any investment,
risk exposure is central to the determination you make. Typically, the
better the return, the higher the risk. Before, you can make the best
choice for you, you need to understand your own comfort level of risk.
Personal circumstances, preferences, personality, knowledge base, affect
one’s ability to handle different levels of risk.. When you are reviewing
your portfolio or considering a new investment, your primary thought should
be how much risk are you willing to bear, can you withstand the potential
loss, and then to consider what returns might you gain. Whether, your
neighbor invests in derivatives and has gained a small fortune, or you are
focused solely on a rate of return those should not be what drives your
investment decisions.
The goal of investing is better expressed as having enough cash on the day
a bill comes due.

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