Category Archives: Money Talks

Money Talks is a regular department in Agency Sales magazine. This column features articles from a variety of financial professionals and is intended to showcase their individual opinions only. The contents of this column should not be construed as investment advice; the opinions expressed herein are not the opinions of MANA, its management, or its directors.

How To Save For Retirement

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Savings are very important in retirement planning. This is what you are going to spend during your retirement period. Do you have enough savings to cover you for your retirement? Saving is not easy, especially when you have a lot of expenses to pay, like monthly bills, food and emergencies. These are ways that will help you save enough money for your retirement.

Money jarFirst, calculate how much money you need. Then calculate how much money you have to save every year. Only a few people are doing calculations when it comes to retirement savings. Most people are just guessing how … Read the rest

Should You Cash Out Your Retirement Fund To Pay Off Debts?

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Spilled Money JarWhen your debt problems are spiraling out of control, at a certain point of time, you might feel a strong urge to withdraw a portion of your 401k account money to pay off your current credit card debts. The temptations tend to get stronger when you see that you can borrow money from your pension account at an astonishingly lower interest rate. However, deep down inside your sub‑conscious mind, the question might arise, “Is it worth sacrificing your old‑age protection and perhaps the little money that you would like to convey to your children as an inheritance, for credit card … Read the rest

Enough Money to Live to 100

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No one knows how long he or she will live. Death is a mystery.

photoThe hardest part of retirement planning is calculating how many years we are going to live after we retire. As human beings, we don’t know how long the thread of our lives will be. It might be tomorrow or it might be more than 100 years. Still, we want to ensure that we will have enough money to last throughout our retirement.

What happens if we don’t? At best we become a burden to those we love in every way imaginable.

Most people who plan their … Read the rest

How Are Your Investments Seeded?

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The spring daffodils poking their heads up is a clear sign that the college basketball season has wrapped up and the celebrated NCAA Division I Men’s Basketball Tournament — often nicknamed “March Madness”— has seen its last highlight. In anticipation of that month-long event people all over the country scrambled to fill out their brackets and cheered on their favorite teams.

For the uninitiated, the tournament begins with 68 teams and operates in a knockout format, concluding with just one team left standing after three emotion-filled weeks and 67 exciting games.

It’s also the foundation for recreational office pools and

… Read the rest

The Subject is Taxing

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2012 and FORWARD 

We entered the New Year surely unsure of the future of taxation in the United States. All of the Bush tax benefits end on December 31, 2012 unless Congress acts. It seems that the last time Congress acted was for a variety show. Hopefully I underestimate them.

Of immediate interest is that certain things already have dropped out of the tax code unless Congress reinstates them postmortem. For the past several years individuals have had an opportunity to deduct sales taxes as an itemized deduction if it exceeded their state income tax payments (a certainty for states … Read the rest

How to Manage Money as a Couple

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Combine the expectation of divorce for new couples hovering around 50 percent with a variety of studies that suggest money is the most divisive topic for couples, and you get a formula for disaster. But one expert thinks it doesn’t have to be that way.

Jane Honeck, CPA, and author of The Problem With Money? It’s Not About the Money! (www.theproblemwithmoney.com), maintains that while a SmartMoney Magazine survey revealed that 70 percent of all couples talk about money at least once a week, the communication isn’t very effective. Honeck has some good advice that can help couples make arguments about

… Read the rest

The Silver Bullet of Investment Success

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You know that sinking feeling you get in the pit of your stomach when you receive your investment statement in the mailbox. You worry that it might contain disturbing news. You anxiously let the package rest on the counter wishing it would just vanish. Finally you rip the envelope open and there it is in black and white. “Statement-shock!”

Instead of that monthly statement shock, wouldn’t it be great to discover a “silver bullet” — that one piece of information that can help you improve the performance of your investment and retirement portfolios?

I’m happy to share with you that … Read the rest

Protecting Family Assets From Devastating Nursing Home Costs

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It’s the conversation people don’t have until they have to, but by then, it’s too late.

The fact is that in 2010, more than 7,000 people turned 65 years old or older every day, a figure that is predicted to rise in 2011. Further, an AARP survey revealed that only 4 out of 10 of those people feel they will be financially secure for their golden years.

For many, that lack of financial stability will transform from being a worry to becoming a crisis if they discover they’ll need any kind of assisted living. That’s why Gabriel Heiser, an attorney … Read the rest

Are Impulse Buys Killing Your Retirement?

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As a registered investment advisor, Steve Orr is used to juggling millions, but he knows those millions started out as pennies.

“It’s the little things,” said Orr, president and owner of the Orr Financial Group. “It’s the dollar here, two dollars there things that we pick up every day that start to add up. The insidious thing is that it still doesn’t add up to so much that we think it could make a difference in our futures, because we only see those expenses in terms of the dollars we spend, but not the dollars — plus the interest — … Read the rest

The End (of 2011) is Near

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We have been in a recession for years. For many years now the government has been trying to help businesses last. The Bush years and the first years of the Obama administration produced many helpful laws. But now the (Congressional) worms have turned. Some members of Congress seem to want to end it all (the tax breaks). Some want the tax breaks to continue. Some don’t seem to know what they want. Their ability to act seems hopeless. But what we have before us are sunsets. Not the pretty kind. When these helpful laws were passed, they all had time … Read the rest

Recent Budget Crisis Creating Economic Anxiety

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This year’s budget crisis catapulted us into stock market turmoil and reaffirms the consequences of ignoring Sir Francis Bacon’s 400-year old words, “The only thing we have to fear is fear itself.” Those sage words were echoed during FDR’s inaugural speech and still ring true today. We clearly see how the fear of future failures and potential losses drives down expectations so we operate from a place of weakness instead of strength. It’s the proverbial bogeyman in the closet.  The more we focus on him, the bigger and more ferocious he gets!

So how can we as individuals move beyond … Read the rest

Protect Your Pension

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The Pension Protection Act of 2006 (PPA) turns five years old this year.  As companies rush to shore up pensions or cancel underfunded plans, you need to protect yourself from common pension mistakes. PPA was designed to close loopholes in the pension system and addresses problems for the roughly 34 million Americans covered by traditional pensions known as defined-benefit plans.

PPA requires pensions be fully funded by 2015. It also prevents companies with big pension deficits to skip annual contributions and still pronounce their plans healthy. Another major goal of the bill was to shore up the health of the … Read the rest

Review of 2011 Recent Developments

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The IRS has recently announced that the mileage rate for automobiles has been increased from 51 cents per mile to 55.5 cents per mile for the six months that began July 1, 2011, and ends December 31, 2011.  This rule applies to those taxpayers who use the business mileage allowance instead of the actual costs of operating a business auto.  These costs include depreciation, gasoline, insurance and all repairs and maintenance.  The only allowed additional costs to mileage are tolls and parking.  The increase seems reasonable.  Assuming that gas has increased in price about 60 cents per gallon, if … Read the rest

Planning Your Children’s Retirement

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When our generation was growing up, we were taught about Social Security, and many of us had grandparents who were reasonably comfortable with a combination of their investment income and their government checks.

 

Today, not so much.

Over the last few years, we have seen the market crash and burn, and Social Security is on its way toward doing the same. So, if we’re scrambling to salvage our retirement income, imagine what it will be like for your kids. If you haven’t done that already, here is some good news for you.

When we were just starting out … Read the rest

When and How a Sales Rep Should Retire

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Sales reps, especially after many years in the business, often start to think from time to time about retiring. Much to the surprise of many, they have trouble focusing on the decision. As the younger generation would say “What’s up with that?” Many sales reps always thought they would want to retire at some time in the future, but now they are beginning to wonder if maybe they really don’t, shouldn’t, or won’t be able to let go of the business they have known for most of their lives.

When considering these questions, remember that what you are facing is

… Read the rest

The Subject is Taxing

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By now everyone has to be familiar with the new tax law passed in December 2010. For the most part, the tax law of 2010 was brought forward through 2011 and 2012. This article covers some things that may be less familiar.

We’ll start with the auto mileage rate for people not keeping track of actual auto expenses but who do keep track of business mileage. The rate for 2011 is 51 cents per business mile. It’s up one cent from 2010. This will be unwelcome news to most of us who have seen gas zoom up the last

… Read the rest

The Retirement Distribution (R/D) Factor

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 My approach to retirement is based on balancing your savings between tax-deferred, after-tax, and tax-free accounts. Many (unwise) people today aren’t concerned with balancing their savings. They simply save money in their company’s 401(k) and spend everything else. When these people enter retirement, they’ll have nothing but their tax-deferred savings to draw on.

 

This will be coming at a time when, I believe, the IRS will be even more aggressive in taxing these assets. Aggressive taxation goes against what we were originally told — IRA and 401(k) accounts were created so we could defer income now until we retire

… Read the rest

The Annuity Payout Option

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All employer plans are required to offer you an annuity payout in the form of monthly income. These payments will continue for the rest of your life (in the case of your 401(k), you can surrender the balance to an insurance company that will guarantee payments for life; the amount of monthly payment will depend on the balance in the account and your age). When considering early retirement, the annuity payouts will be smaller, because you have a longer life expectancy. The payments are taxed as ordinary income and don’t qualify for any special tax treatment for federal income … Read the rest

Here’s What You Can Do To Make Your Savings Last Longer Than You Do

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Most people know what inflation is, but few truly understand how inflation can hurt them, especially when they’re saving and preparing for retirement. Quite simply, inflation is the measure of how much the things we buy increase in cost each year. During the past 30+ years, the inflation rate in the United States each year has ranged from less than 2% to more than 15%, with an average of more than 3.7% per year, compounded. That means that, with few exceptions, the cost of the things we buy goes up consistently.

Despite this fact, we hear relatively little about … Read the rest

When to Begin Taking Social Security Benefits

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When should I start drawing my Social Security benefits?

I’m asked this question more often than any other by my clients who are retiring before Social Security’s normal retirement age. They all want to know if they should begin receiving benefits early with a smaller monthly amount, or wait for a larger monthly payment later they may not receive as long. In answering this question for yourself, you should take the following factors into consideration.

You could consider drawing Social Security benefits early if:

• The financial challenges facing Social Security in the future, which I discuss in more … Read the rest

The Subject Is Taxing

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This article is reprinted from the December 2010 issue of the IHRA REPorter.

The following are highlights of the tax implication of the newly passed Small Business Jobs Act of 2010.

Items Decreasing Tax

Business Loans — The government will loan money for five years to small banks (those with assets under $10 billion) to loan to small businesses. The banks will have to pay interest. Unlike when the Bush administration sent out money without strings attached, the rules require banks to report to a newly created loaning agency both the amount and the number of small business loans that

… Read the rest

What to Do After an Investment Setback

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Warren Buffett, one of the world’s most successful investors, has two simple rules of investing:

  1. Never lose your principal.
  2. See rule number 1.

Unfortunately, during the recent economic downturn, many people have lost some if not most of the principal in their retirement accounts. As a result, either they have to delay their retirement plans and keep working, or they have to find a way to quickly recoup the funds they’ve lost.

But regaining the lost principal takes more work and higher returns than people realize. Here’s a quick riddle that illustrates this point: Do you know when 30 plus … Read the rest

Keep Your Retirement Funds Safe by Avoiding the Stock Market Mistake

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Relying on the stock market as your retirement investment tool of choice is like using Las Vegas as your financial advisor. Unfortunately, many people have retirement portfolios that are heavily invested in mutual funds and other stock market items. Even worse, the average American doesn’t realize how weighted in stocks their retirement portfolios are, and then they wonder why their retirement accounts fluctuate so drastically.

First, here are a few facts about the stock market and its performance over the years. In 1999, Congress was under pressure to invest Social Security funds in the stock market because of the extreme … Read the rest

Sweating Out the Pursuit of a Cool Commission

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Though this court case seemed like an easy win for the principal, this rep firm managed to get reimbursed for lost commission.

Consider these brutal but undisputed facts in the case of an independent rep seeking to recover, in court, a commission on the sale of a product (a cooling tower used in the beverage processing industry):

  • The rep, MAK Automation, Inc., had an oral contract with its principal, GC Evans Sales and Manufacturing Co., Inc., that was non-exclusive, and did not furnish a specific geographical territory. The only undisputed contract term was that MAK had to generate or procure
… Read the rest

Stimulus Act Accompanies Tax Changes

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Tax law changes from the Stimulus Act could affect how you file in April.

On February 17, 2009 the American Recovery and Re investment Act (ARRA) of 2009 (the Stimulus Act) was signed into law by President Obama. The law was designed to get money into the hands of taxpayers to help stimulate the floundering economy. Time will tell whether it is the catalyst the politicians hoped it would be.

However, there are some potential tax savings for small- to medium-sized business owners, both on an individual and business level, that could help out as April approaches. While reviewing your … Read the rest

The Golden Key to Spousal Business Succession

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A state of temporary confusion typically engulfs a loved one when notified that their husband or wife has just been in a serious accident or passed away. The atmosphere is often charged with high emotion. Suddenly the world is turned upside down for the surviving spouse. Soon life-altering decisions will have to be made, especially when a family business is involved.

Consider the story of Amanda whose husband Tory was seriously injured while riding his motorcycle. Even though she had worked in their business, she was totally unprepared to replace Tory as principal operator. It was apparent that the business … Read the rest

Key Budgeting Tips for Your Management Team

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Most companies with sales under $10 million, and some much larger, don’t use budgets to help them meet profit goals. CEOs and operating owners reason that the effort to learn how to build, and then use, a workable budget is just too much. They seem to feel it’s more frustrating than just hoping the numbers will all work out, if they only sell enough products or services. There is no need to quote business failure rates among companies of this size, nor the steady stream of survey findings that say a lack of good management practices is usually to … Read the rest

Getting More Out of Retirement

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The Tax Increase Prevention and Reconciliation Act of 2006 provides plenty of tax breaks for individual taxpayers and business owners alike. One of the biggest of those breaks is scheduled to happen in 2010: being able to convert traditional (both non-deductible and deductible) IRAs into Roth IRAs and pay the taxes over a two-year period. With the proper planning this can help individuals grow their wealth. They will never again pay taxes on this money.

Roth History and Background

Roth IRAs were created by the Taxpayer Relief Act of 1997. After-tax dollars are contributed, allowing individuals to receive tax-free distributions … Read the rest

How Interest Rate Changes Affect You

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The rise and fall of interest rates is one of the biggest factors influencing the economy and financial markets. It is important to have a basic understanding of how interest rate changes affect your pocketbook and investment portfolio.

Typically the Federal Reserve lowers interest rates to jump-start the economy. Lower interest rates mean consumers may be willing to spend more money and incur more debt. This stimulates the economy in a variety of ways, including increased revenues from products sold to the consumers and taxes generated from those sales. Investors, on the other hand, have a different perspective.

Bond Investors:… Read the rest

Market Volatility and Your Retirement: Can Timing Alter Your Plans?

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Investors saving for long-term goals can usually overlook short-term market volatility in the interest of long-term gain. But for retirees, who increasingly rely on their investments to fund their living costs, market volatility can mean the difference between living comfortably and just scraping by. In fact, retirees are particularly vulnerable to market downturns, especially in the early years of retirement, because of their dependence on portfolio income, their limited investment horizon and their need to make sure their savings last throughout their retirement.

Market Volatility — An Historic Inevitability

Unfortunately, the timing of market losses and gains is something that … Read the rest