Like many, I have certain expectations of camping. Hard ground. Hot food. Cold drinks. The simple things in life. I certainly do not expect an eye-opening conversation about tax codes and retirement policies. So, when the topic came up this last weekend around a campfire, I was quite surprised. One of my friends, generally very astute, was convinced that there was no reason to invest in a traditional IRA. A Roth, she told us, was just plain better. Why pay taxes when you don’t have to? I tried to interject to give an even-handed comparison. “They are different plans,” I protested, “for different circumstances. Neither one is always better.” My friend ignored me. She continued. And I was amazed. A Roth, it turns out, is no mere retirement account. It can hold stock in Apple and Microsoft. It compounds in value every nanosecond. It’s gluten free. Bluetooth compatible. Standard and metric. Faster than a speeding bullet. My account is slightly exaggerated. Well, borderline untrue. Fine – a complete and utter fabrication. But hearing the way many people, my friend included, talk about Roths, it doesn’t seem all that far-fetched Let’s be clear: there are many advantages to a Roth. The funds can be withdrawn or transferred with relative ease. It is more flexible in estate planning. It is not subject to a required minimum distribution at age 70. And it can save money in the long run, depending on your tax situation. But that is the key: depending on your tax situation. Roth IRA contributions are included in your taxable income, while traditional IRA contributions reduce it. All else being equal, the person who uses a traditional IRA will be able to invest more in their plan than the person who uses a Roth IRA, because their tax load is lower. Assuming both plans are invested identically, with similar tax brackets in retirement, the traditional IRA will have exactly as… | Read More »
Planning for the possibility of being disabled and needing custodial long-term care services isn’t by nature a fun topic of discussion. However, it is a critically important topic. Even with the most careful retirement planning, LTC costs can devastate retirement portfolios if you haven’t come up with a strategy for disability in retirement. Traditional LTC insurance is a very strong option for those who want to protect themselves or a spouse. However, this product can have inherent flaws that many people can’t seem to get past. One of the main objections to traditional LTC Insurance is, “If I never need care, I have spent thousands of dollars and gotten no form of return on my money.” This is absolutely true. Too many people think of traditional LTC as an investment when in actuality it is purely insurance protection. Another objection to traditional LTC is that premiums are not fixed and there is a high likelihood that premiums will be raised in the future. Even for those who are fine with the fact that the policy may never pay out a benefit, and with the relative certainty that the premium will increase, underwriting (medical records review) has been and will continue to be more difficult to pass. The LTC companies don’t want to subject themselves to undue risk. What can a person do to get around these issues? Hybrid Life/LTC Insurance and Annuity/LTC solutions, in my opinion, are great alternatives to traditional LTC Insurance. I have found some great hybrid options to offer our clients. We have one product that functions like traditional life insurance but has a chronic illness rider that allows the insured to access the death benefit for LTC needs while living, as long they are deemed chronically ill and needing help with two activities of daily living by a medical professional. This product is great because it doesn’t require the care to be provided by a professional… | Read More »
Harper Lee’s most poignant story may be one she never penned. The dramatic release of her second novel, Go Set a Watchman, reads like creative non-fiction and begs a few possibly eternal questions: Did Lee really agree to publish it? Is the book, written before her Pulitzer Prize winning To Kill a Mockingbird, a sequel or a first draft? Is Lee’s silence by choice or circumstance? The controversy brings to mind the most famous of To Kill a Mockingbird’s oft cited quotes, “Mockingbirds don’t do one thing but make music for us to enjoy. They don’t eat up people’s gardens, don’t nest in corncribs, they don’t do one thing but sing their hearts out for us. That’s why it’s a sin to kill a mockingbird.” It’s a sin to kill a Mockingbird’s legacy as well, and therein lies the debate. Until her death at age 103 last November, Alice Lee, once Alabama’s oldest practicing attorney, worked tirelessly to protect her younger sister, Nelle Harper Lee, who maintained a half-century vow to avoid the public (and especially the media’s) eye. So, it is interesting that, just three months after Alice’s death, the attorney who succeeded her discovered an unpublished Harper Lee manuscript in a safe deposit box. That lawyer, Tonja Carter, wrote an op-ed piece describing her recollection of the events leading up to Tuesdays’ release of Go Set a Watchman that only raised more questions. Did Harper Lee, a stroke victim described as both deaf and blind, say, as Carter asserted in 2011 in regards to a different book, a biography of the Lee sisters “Rest assured, as long as I am alive any book purporting to be with my cooperation is a falsehood”? Or, is this a more accurate description of Harper Lee’s state of mind, written by Alice, also in 2011: “Poor Nelle Harper can’t see and can’t hear and will sign anything put before her by anyone… | Read More »
For more than 30 years we’ve been strong proponents of financial success through education. We teach classes, host seminars, run an active blog and write a weekly market commentary. We hold the industry’s highest credentials, including the CFP®, CFA®, CMT®, and CPA because we respect both our clients and our fiduciary relationship with them. That’s why we’re so appalled by item 61 in the Wisconsin state budget, which expands the types of financial products a payday lender can sell, including insurance, annuities and other financial products. It is hard to imagine a more complicated financial product than an annuity and a less suitable person to break it down for consumers than a pay day lender. Consider the nature of the pay day loan business model, which lures clients in with the promise of immediate cash inflow, charges exorbitant interest for that privilege, and then hopes for a cycle of repeated loan requests. According to a report from the Consumer Financial Protection Bureau, over 80% of payday loans are rolled over or followed by another loan within 14 days. This results in a digital debtor’s prison in which consumers have little hope of breaking free. Clearly, the very first piece of advice any reputable financial advisor might give a client is to avoid doing business with a payday lender. That these same lenders should offer financial advice, sell insurance products, and vet investment opportunities strikes us both absurd and dangerous. We urge the Wisconsin legislature to reconsider this proposal and, should this budget remain intact, we stress again the importance of seeking financial advice from a reputable professional, preferably one with a fiduciary responsibility to his or her clients.