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Retirement Funding

Reverse Mortgages – A Retirement Solution Whose Time has Come

  • Believe it or not, in the right situation reverse mortgages can be wonderful retirement planning tools. I don’t mean the old kind with abusive rates and terms. I mean the new kind that the U.S. government has blessed as a way to increase the retirement security of millions of Americans. Basically, homeowners who plan to stay in their homes and age in place can tap their equity in three ways: 1) pull out a lump sum to add to their retirement pile now, 2) use the loan to generate lifetime supplemental income, or 3) set up a growing line of credit to use as an emergency fund, a deferred retirement income bucket, or as a cushion in case expenses – or a taste for the high life – increase later in life. There are three important benefits of these reverse mortgages to bear in mind: 1) you never need make any mortgage payments! 2) you or your spouse don’t ever need to pay this kind of mortgage off during your lives so long as you stay in the home, and 3) if the house is worth more than is owed at the second death, the kids get the difference – but it if is worth less than the mortgage at death, the government eats the difference. In essence, these government guaranteed reverse mortgages work as a kind of social welfare program, similar to Social Security. You can get more info at Whether or not you think this is a good deal for the American taxpayer – and Camarda thinks it’s not – is really not important. What is important is that these products can make a huge difference in the quality of retirement life for millions, and at the same time actually reduce family wealth risk for some Camarda clients and friends. For these reasons, Camarda has become a big proponent, and is actually exploring entering this loan business through its Camarda Consultants affiliate. If you would like more information on whether this could be a good fit for you or someone you care about, please ask your Personal Wealth Advisor to get you more information – Jeff.

Pensionizing assets – annuities for retirement income

  • Annuities, like pensions and Social Security, offer the promise of lifetime income, something no other investment class can do. With stocks, bonds, real estate, and other alternatives, income that one cannot outlive is a risk-based probability (and a hard one to figure accurately), not a certainty. With annuities, so long as the insurance company stays in business and honors its promises, lifetime income is guaranteed. This is why lotteries and pensions often turn to annuities for funding, and it is an extremely powerful proposition. We explored earlier in this paper the various ways that annuity payouts can be figured based on single and multiple life expectancies, and contractual provisions like variable, equity index, and guaranteed withdrawal benefit rider accounts can complicate the income math and opportunity/risk permutations quite a bit.

    This lifetime income feature is so important that in many cases it counterbalances and even overcomes the many shortcomings that particular annuities may be saddled with, including high costs, high taxation, illiquidity, and others. For those whose asset levels are such that the ability to ensure lifetime income is uncertain—true for many but not all consumers—annuities should be seriously considered to fill the income gap, especially for those whose only true pension is Social Security, or for whom pension income is comfortable only so long as both spouses are living. For many, converting some assets to lifetime income—which I call pensionizing—is an important strategy, which should merit serious consideration and analysis. Unfortunately, this analysis (how much asset value to convert, what income deficit must be funded for, and when, and which annuity products offer the lowest costs, best value and most applicable features for a given consumer’s needs) can be extremely complicated, and is probably best not left to a given commission salesperson’s advice.

Plan to avoid guardianship expenses

  • Avoiding dependence on our children ranks as one of retirees’ very worst fears. No one wants to be a financial burden on their children especially when so many young families are struggling to achieve financial security themselves. But what retirees should fear more than dependency is guardianship. Guardianship is where a court appoints someone else to take the legal responsibility to manage your assets and make decisions for you. Unless you have planned to avoid guardianship, it can become required if you ever get to the point where you cannot manage your affairs, typically from cognitive ailments like Alzheimer’s, or other disabling accidents or conditions.

    Guardianship is a big problem for many reasons. The procedure is expensive and demeaning, requiring that you be proven legally incompetent, often while you are forced to look on. Once you are stripped of power and responsibility for your own affairs and the guardianship is in place, the appointed guardian, (selected by a judge– not you or your family!), is tightly managed by the court. This in itself costs an amazing amount of money and hassle for you and your dependents. In short, guardianship is a thoroughly unpleasant and needlessly expensive mess.

    Without proper planning, guardianship is a very easy mess to fall into. Fortunately, it can easily be avoided with common estate planning devices such as powers of attorney and living trusts. In my view, living trusts are far superior because they give you more flexibility and precision in controlling your estate and can help protect your heirs from lawsuits and other financial predators. Living trusts are also much more acceptable to banks, brokerages, and other custodians of your money; powers of attorney can often be rejected by asset custodians, who in the worst cases must be sued to recognize them, which can take a long time, during which you may be very uncomfortable. Living trusts not only allow much more effective estate planning, but can save their cost many, many times over by avoiding needless probate fees and loss of control.

Planning to maximize retirement income

  • Having more to predictably spend in retirement is a universal goal. Besides simply investing more effectively for higher returns, there are other levers the well-advised investor can pull, such as using a “dynamic withdrawal strategy” that adjusts spending to life expectancy and stock market performance/exposure. Also very important is tax efficiencies, such as management of tax deferral and monitoring tax brackets to time taking income at the lowest feasible rate, as well as “asset location” management, which minimizes taxes by placing high tax rate assets (like bonds) in IRA-type that are taxes at your highest rates anyway, and lower rate assets (like capital gains/qualified dividends stocks) in non-qualified accounts to take advantage of lower potential rates. These and other factors (such as total wealth asset allocation, asset pensionizing/annuity allocation, and income liability relative optimization) can increase income by nearly 30% according to some Morningstar researchers (Blanchett & Kaplan, 2012), who argue that “more intelligent financial planning decisions” are a hidden source of significant additional retirement income not widely known to investment clients.

Secrets to maximizing Social Security

  • Social Security can be enormously confusing, but some smart retirees have learned how to really work the system. While a couples’ ages, earnings history, and current work status really matter – meaning you should get a detailed analysis by a qualified retirement planner to know what’ best for you – here are three valuable principals to guide you. 1) “Split filing” – many studies have shown that a couple can maximize its Social Security wealth by having the woman file early and the husband file late. 2) “Claim and suspend” (sadly eliminated in 2016) builds on this by having the husband file to activate his wife’s spousal benefit (1/2 his) and then suspend his own benefit, keep working, and keep building the amount of his monthly benefit and his which he takes later, typically at 69 or 70, as well as building the amount of the wife’s survivor benefit. 3) “Claim now, claim more later” is a variation on the “claim and suspend” method in which the higher earner takes the spousal benefit at full retirement age, keeps working, but then switches later to their own retired worker benefit (and their spouse’s survivor benefit), which has been increasing the whole time by building up delayed retirement credits. This later approach tends to favor wealthier retires. These little known quirks can make a huge difference in the amount a couple can collect, but since Social Security has so many moving parts it is best to have a qualified retirement planning specialist (like those at Camarda) run a scenario analysis to see what combination of choices is best for you. Professional Social Security optimization software has gotten to be very powerful, and can help guide you and your family to getting the very most out of this complex and ever-changing system.

Social Security - protecting a surviving spouse

  • Spousal Social Security planning can get devilishly complicated, and our software really helps in crunching the 20,000 calculations we do to help optimize benefits. We need to juggle the retired worker’s benefit, the spousal benefit, the survivorship benefit, and the restricted application rules, where the spousal benefit is claimed (getting you ½ your spouse’s benefit now) while your own benefit continues to grow in value – you switch when it tops our or exceeds your spousal benefit.

    Getting the spousal planning is critical. With more than 70% of elderly widows struggling below the poverty line, it is important to conserve income, especially when we note that over half of these widows were not poor before the death of their husbands! Calculating the income gap created by the husband’s death is something our Social Security Maximization Analysis & Report will provide, as well as insight on how to fill it to continue a comfortable lifestyle.

Social Security is valuable but complicated…get good advice

  • The lump sum value of your Social Security benefit can be enormous, even millions of dollars in some cases. Think of it this way! Give getting advice on at at least as much care as you would deciding where to place your investment accounts.

    It goes without saying that you can’t call the Social Security administration for advice, and probably would not want it if you could! This complex area is not something many advisors are trained on or help their clients with. Many are not even allowed to! As I worked through the studies for my PhD in Retirement and Financial Planning, I really gained insight into the complexity and importance of this area, and have used this knowledge to help our clients and the public make smarter, more profitable decisions. Since many of your Social Security choices are not reversible, take care to collect good information and get it right! Make sure your advisor knows what they are doing, and runs the numbers, as we do in our free Maximization analyses. In these, we run some 20,000 calculations and add a lot of studied advice when we do the Social Security Maximization Analysis & Reports. These help project the most profitable paths in this complex area, to target the maximum individual and family net income scenarios for couples and for the surviving widow or widower. Too many permanent Social Security decisions are made on the back of napkins, and some families are shortchanged forever, with widows needlessly on the road to poverty. I hope you let us do our Social Security Maximization Analysis & Report for you, to help chart the best path for your family. No cost or obligation, just solid number crunching and information. Call 800-262- 1082 to get yours, or use the Talk to an Advisors links on this site.

Social Security retirement income planning – the critical path you can’t afford to miss

  • Like a critical life-saving operation where every move must be perfect and every minute counts, crafting and maintaining a retirement plan entails some of the most important decisions you will ever make. It should go without saying that what we do toward or past the end of our earning years has a grave finality to it, since we typically won’t be able to make more money to replace that lost to poor decisions, nor have the time to forgo withdrawals and wait on a couple of market cycles to make up lost ground. Getting retirement planning right can give us all the income we need for a satisfying lifestyle, with adequate reserves against the risks of higher health care costs and long term care, and to leave a nice inheritance to the people or causes that we care about. Getting it wrong can yield a life of misery and even a shortened one if we can’t afford to pay for the drugs, operations, and other care we may need. This guide could alert you to danger areas that you or your other advisors have overlooked, and brighten your future. If so, I am happy to have helped you and your family.

    For many people, Social Security is a very big part of this equation. Even for affluent investors with other resources and sources of income, Social Security is a major asset. Yes, I know that Social Security is a social welfare system which engineers income redistribution favoring lower income folks. Still, it is unwise to marginalize the value of Social Security.

    Social Security claiming decisions – when and how you take your benefits – can be one of the most bewildering and error-prone choices retirees make, and once done, there is usually no going back to fix mistakes. Since the old “file and suspend” “loophole” has been closed, I won’t give you indigestion telling you about it, but hats off to those readers who had the foresight and good advice to grab the “free money” before the door closed, in some cases producing hundreds of thousands of dollars in additional benefits. A big mistake for many remains taking benefits too early – as soon as available, or not before reaching full retirement age, or even later depending on your fact pattern. If you expect to live a normal life expectancy, you may be leaving lots of money on the table since total payouts to you could be much less than waiting, and getting a bigger check even for a shorter period of years. Not coordinating with your spouse’s claiming strategy is another potentially costly pitfall, as are divorcees not claiming benefits, and not carefully planning job income around Social Security tax traps. Another mistake we see is not checking for errors in the Social Security credit record – it is not uncommon to see government mistakes on past earnings that slash benefits unless corrected. Finding errors and fixing them is not as hard as it sounds, and if you take us up on the free Social Security Maximization Analysis & Report, we will show you how. If you get the free analysis done, we can also do a detailed Social Security claiming strategy analysis to help guide you toward the best decisions in your personal circumstances, and try to get ahead of this complex, error-prone area.

    Investors with portfolios, IRA’s, annuities and other assets sometimes discount the value of Social Security, but this can be a big mistake. If you’ve been a high-earning taxpayer, live long and make smart Social Security claiming choices, the present value of a successful couple’s benefits can be as high as $3,504,000 or more – that’s how much you would have to have invested in a pension to match the income stream. And if you play your tax cards right, the after- tax value could be much, much more than a pension. That’s a serious asset by anyone’s standards, and deserves careful planning.

    If you have an investment accounts of even a few hundred thousand dollars or more, making the right Social Security “claiming” decisions can become very complicated, with taxes, joint mortalities, various benefit combinations and benefit ages all impacted by the rest of your unique wealth planning. The wrong choices on investment, IRA, and other planning could mean you needlessly pay tax on nearly all your Social Security! And wrong claiming ages and benefits choices by you and your spouse could mean a difference of hundreds of thousands or more in lost lifetime income if you’re not careful.

    Having enough income to afford a long, comfortable retirement is among the top goals of most Americans. Running out of money, not having enough for health or long term care, & being forced to rely on children or spend down their inheritance to make ends meet are among their greatest fears. And with over 50% of senior widows below the poverty line, leaving a spouse financially insecure is a grave concern. Avoiding the wrong Social Security decisions – among the dozens of confusing options – can go a long way to assure funding for the retirement you want. If you’re like most investors in our experience, you’re not getting quality input from your advisors on critical Social Security decisions. That’s why I wrote this material, to fill in this gap for investors. Please take it with my compliments and wishes for greater income and security for you. I also offer a free Social Security Maximization Analysis and Report to help you apply the techniques in this report, and more, to help you squeeze every nickel you can out of this system you have likely paid hundreds of thousands into. Call my team at 800-262- 1082 to learn how to get yours.

The dangers of amateur estate planning

  • I’m not talking about wills and trusts prepared by specialized estate attorneys. I’m more concerned about the do-it- yourself variety that can have unforeseen consequences that can be devastating. Below are a couple of quick examples among many. My objective is not to cover them all, but encourage you seek advice from a competent estate planner. If you decide to take us up on our free offers mentioned below and want some guidance in this area, we will be very happy to provide it. This is such an important part of your overall plan!

    A big mistake is putting bank and brokerage accounts in joint names with your children. This is not the best way to leave money to them when you die. Use POD designations or wills/trusts instead. One reason is simple: If your child is sued, goes through a divorce, or has another legal issue – auto accident, for instance –accounts so titled are on the table and could be lost to both you and your child. Beyond this, there control, divorce risk, and other pitfalls to avoid.

    Another mistake is not using a living trust – combined with a proper power of attorney – where you have a lot of your family’s assets on which you depend for retirement income in one spouse’s name, like in an IRA or 401(k). These accounts can’t be titled in joint names. If, for example, your spouse loses competency and a judge appoints a guardian, there is no assurance that the guardian is going to see that your needs are met. His or her duty lies elsewhere. There are many other dangers that can lead to being locked out of important retirement assets, but the cure is simple – get a proper estate plan. In many cases, the cost of the work will be returned dozens – if not hundreds – of times in saved probate costs and taxes, not to mention the inestimable value of dodging the kind of bullets we’ve been discussing here. And if you are concerned about asset protection from financial predators – and you should be! – estate planning is a very effect time to address this as well. If we get a chance to sit down with you sometime, ask for a copy of my Advanced Asset Protection for Successful Families report – with my compliments!

The long term care elephant

  • There’s been lots of discussion about long term care in recent years, and for good reason, as this is a very important and expensive issue especially when we consider the possibility that you will live a long time. You should review your own needs in this regard, but my emphasis here is not your care, but on your spouse’s needs. Here are the facts: as long as Medicare lasts in its current guise, it will pay for decent long term care for those who need it. But the catch is that “needing it” means that your joint assets have been spent down to the poverty level. That means that you – and only you – are responsible for the costs of your spouse’s care until the money’s nearly gone. That could leave you without adequate funds to support yourself, and could even push you toward the poverty line, whether you need care or not. Take note: existing Medicaid laws require most couples’ assets to be completely drained before paying for long term care. Given the current debt issues in the United States, it is likely these laws will get even tougher. Fortunately, you can deal with this issue by using insurance and some more advanced estate planning techniques. The time to plan is now, before the dice break the wrong way and before your retirement dreams are potentially shattered.

Understanding your Social Security benefits

  • As with most things governmental, your Social Security benefit structure is far from simple. The first key concept is the PIA or Primary Insurance Amount, which is calculated based on the average of the highest 35 years of your earnings which were credited into the Social Security system. The PIA is a key metric that determines the various benefit permutations you have available to you. You can check yours at, or contact our office at 800-262- 1083 to arrange for a free Social Security Maximization Analysis & Report, and we will check it for you.

Annuities – guarantees against outliving your money

  • One of the most profound risks facing today’s retirees is that of longevity risk – the risk of outliving your money. For most people facing retirement today, traditional pensions, with the exception of Social Security, are very much a thing of the past. For most folks, Social Security provides a very baseline sustenance income, but is not nearly sufficient to fund a comfortable retirement. The balance must come from personal savings, but if we do not invest well, live too long, or both, odds are good that the well will run dry, even without the added risk of higher heath or long-term care costs. Annuities are really the only practical way to control this, offering lifetime, guaranteed payments. Like most things, such guarantees come at a price. We may not live as long as we hope, and risk getting less back from the insurance company than we pay for the guarantee. This, of course, is the only way the insurance companies can afford to pay for those that live much longer than expected. The other risk, though, is less obvious. Inflation (the high risk of rising prices, especially for things retirees really need, like health care, medication, and other lifestyle assistance) is not well addressed by most available annuity products. Unlike Social Security or traditional pensions, cost of living increases are not typically found in available guaranteed annuity products, or extremely expensive (read even lower payouts) when found. For most folks, a retirement income strategy combining Social Security, a limited amount of pensionized assets in quality annuities, and a pool of well-managed risk capital is probably the best compromise and best shot at achieving retirement goals. But note: doing so during a period of low interest rates – like the present – locks in the payment to you forever in many products. Think of a fixed rate mortgage with a low rate – payment is much lower that if the rate is high. For borrowers, low rates are great, but no so good for lenders, especially when rates (and inflation) go up. With annuities, think of yourself as the lender, and be wary of locking yourself into low income payments for life, when rates and prices and everything else may go up.

Are your retirement growth assumptions reasonable?

  • Making the right assumptions about future rates of return is critical.

    Investment returns assumptions can be an Achilles’ heel in retirement analysis, and standardization is yet to emerge, even in the academic research. For instance, Gustafson, Boldt, and Bird (2005) base their discussion on historical returns from 1926-2003, with unexplained adjustment, and Ervin, Faulk, and Smolira (2009) make similar assumptions with a later version of the Ibbotson’s Yearbook. Others go back even further, like Basu and Drew’s 2009 study which uses the 1900-2004 interval. Phau (2011) also analyzes this longer period, but notes that the consideration of only US data perhaps results in overly optimistic assumptions when compared to results from other countries’ markets, which may perhaps presage the next US equities era, to retirees’ detriment.

    Other, later work uses more modern periods (Schleef & Eisinger, 2011, 1970-2008), and some (Phau, Jan. 2012) suggest methodology for advisors to insert their own market returns assumptions into their retirement planning calculus.

    There are several profound problems with using historical data as a projection foundation. The first is data quality. It seems quite likely that the further back one reaches, the greater the chance that error, incompleteness, or quanta definition (how are earnings defined, for instance, or was that a dividend or return of capital back in 1916?) incomparability has crept in. The second issue embraces similar concerns with (even modern) non-US data. The third is period cherry-picking: using more or even very recent data (such as 2009-current) can distort projections disastrously. A forth is a lack of correlation of market results with underlying, complex, and constantly morphing economic trends, which, for instance, deeply distort bond market expectations if based on the past thirty years.

    In the end, future returns’ magnitudes and sequences are unknowable, a phenomenon not likely to change (if it did risk premia would likely collapse and the word return might lose much of its meaning). In light of this ignorance, prudence dictates more conservative assumptions, or at least those in which the client is fully engaged in the potential disaster engendered by more aggressive assumptions. In a constantly changing world, a regularly-adjusted, iterative planning approach is probably best, at least for the portion of retirement security tied to risk-based assets. Hopefully in the future, a standardized economic consensus forecast may emerge, that planners could be expected to incorporate into their client work.

Asset Protection in IRA's and Qualified Plans

  • IRA's, 401k's and other types of retirement plans offer excellent asset protection, especially in Florida. We have found that adroit application of retirement plan opportunities can also produce significant additional tax-deductable savings for many doctors. Remember, like life insurance and other types of assets, these accounts pass by beneficiary, and the asset protection status becomes somewhat murky once a payment is made at death. Also, like most other asset protection shelters, one should assume the protection only applies so long as value remains in shelter - once removed for consumption, investment, or other purpose, the risk of it being seized goes up considerably. While IRA and pension accounts usually offer much more flexibility in investment choices than life insurance and annuities, and typically many more low cost options are available than for insurance products, investment options are still much more limited, in most cases, than is generally true for taxable investments. Finally, most of these plans are tax-qualified, meaning that any withdrawals trigger income tax, and maybe penalties, in addition to possibly exposing the value to creditor attack. That said, the next concept - where it fits - can be a much more elegant, flexible solution.

Being tax smart with Social Security

  • As I have written extensively about for years (see my 9 Biggest Tax Mistakes and How to Avoid Them report – call 800-262- 1083 to get your copy), poor tax planning is probably the biggest impediment to wealth accumulation facing most Americans. This goes double in retirement, when every penny can become more precious.

    Many assets have different tax treatments (capital gains vs. ordinary income, expedited and heightened taxation of mutual funds vs. ETF’s, max-bracket and additional excise tax exposure in annuities and IRA’s, max-bracket on interest vs. lower rate on dividends, etc.) and it is very common to see the wrong types of investments in the wrong sort of accounts, such as stocks and other capital gains assets in IRA’s, which can double or more the effective tax rate. Paying attention to lining up account type and asset type tax treatment has been called asset location planning, but is often overlooked by investors and their advisors. But asset location and withdrawal location planning can make a huge difference, with net annual return potential said to be over 3% or more a year (View Report). On a million dollar nestegg, that could be over $30,000 more a year to spend! Other mistakes include not harvesting capital losses to offset taxable gains, not planning other income around Social Security tax issues, ballooning the amount in Social Security benefits forgone due to higher taxation, and so on.

    In many cases, it makes sense to take big money out of IRA’s – and pay the tax! – in your 60’s, then switch to Social Security later. Doing both at the same time – or taking other taxable income – can drive the portion of your Social Security that’s taxed from zero to 50% to 85% of your benefits! Good tax strategy is complex but can be priceless, but varies so much from family to family that it is difficult to generalize here. If you call for our free Social Security Maximization Analysis & Report, we will comment on yours and look for ways to improve it.

Beware inflation to preserve lifestyle

  • Price inflation has been quite tame in the US since the mid-80’s and many people have almost forgot about it. But back in the 70’s, when inflation was raging, it was a major factor in every financial decision, and was devastating for those on a fixed income. Because we’ve gotten spoiled by relatively low inflation era beginning in the 80’s, most of us don’t factor rising prices into our financial planning. If inflation gets “real” again, as many predict, the whole retirement savings game could change.

    Going forward, ignoring the impact of inflation is probably a big mistake, as the massive world-wide stimulus in the wake of the Great Recession will likely drive inflation to dangerous levels in the US, as well as the rest of the world – eventually. The odds are strong that inflation is coming, and may be truly ugly given the trillions in stimulus money it will have to soak up. Make no mistake: many believe that our government’s stimulus “money printing” measures since 2008 were all that stood between us and a true Depression, but still, the piper is waiting to be paid.

    In an inflationary environment, “safe” investments like bank accounts, bonds, and fixed annuities can spell disaster, dropping in real value, and paying an interest rate that never seems to keep up with rising prices. That means that every year you have less money even if you don’t spend a dime! After taxes are considered, you can really get hammered.

    Another thing to be aware of is that the overall inflation rate might not be your particular inflation rate. The cost of health care is expected to continue to rise much faster than other items, and this is particularly true for long term care. Also, if you are hoping to help a grandchild with college expenses, know that college costs are raising over twice as fast as most other costs.

    If the predicted mega-inflation comes to pass, the risk is that you may not be able to continue living your current lifestyle. In fact, it is possible you could run out of money just trying to keep up with what is necessary. So, how can you guard against inflation-driven purchasing power erosion? Consider reducing your exposure to investments, like those described, that lose real value during inflationary periods. Instead, invest in things with anti- inflationary properties or you could find yourself getting further behind instead of ahead. Equity investments – typically stocks, real estate, and small businesses – are often considered to fit this bill.

Beware the pure life pension

  • The final danger (for this reading at least!) is that presented by “single-life- only” pension payouts. Usually when someone takes a pension, they choose from a variety of payout options, and the monthly amount depends on the option taken. For instance, a plan that pays so long as I live only will net a larger monthly payment than one that pays as long as me or my spouse are alive, the longer the life expectancy the smaller the annual payout, and the life expectancy of two people is longer than for either alone. One that pays x for my life and ½ x (“joint and 50% survivor”) to my spouse for her life if I die will have a monthly amount somewhere between the single life only and joint and 100% survivor options. In many instances, we see pensions based on single life only selected because it paid the “most,” without enough thought given to the consequences to the survivor if the pensioner dies first. In many cases, this represents the lion’s share of the couple’s income, and the consequences can be devastating if the spouse with the pension dies. For many couples this issue is a very big deal.

    If one of you has a pension and has not yet made the election, plan long and hard with a competent, unbiased advisor working the numbers. In many cases, you will be better off taking a lower monthly income but getting survivor benefits.

    If your pension is already paying out, you probably can’t change the payout option. In this case, you will want to earmark some assets – or consider life insurance – to provide a rainy day fund to guard against the day the pension may stop. In most cases, we prefer term insurance since the insurance does not need to last forever to provide adequate protection. The goal is to make sure the assets are large enough to fund the survivor’s lifestyle from that point. Since in most cases the female has the longer life expectancy, and the male the larger pension, the risk of sharp income curtailment to the widow is quite severe – and should be very carefully addressed in portfolio and other asset planning.

Can professional financial planning increase retirement income?

  • A number of academic studies are concluding that financial planning offers sound value that helps clients get wealthier faster. For instance, Texas Tech – a national leader in advanced financial planning education – released a study (Martin & Finke, 2013) which concluded that a “comprehensive” professional financial planning approach consistently resulted in higher retirement wealth (three times as much 1 or more) and higher savings rates (more than twice as much 1 or more). The authors emphasize that these results were not observed with “non-comprehensive advisors” which they describe as non- fiduciary salespeople, and note that their “results demonstrate the importance of differentiating between advisors whose primary objective is to sell a (often underperforming) financial product verses advisors who create a comprehensive plan.” For more information on this study or about better planning in general, click on one of our FREE report offers on this website’s front page. 1 90 th quantile, pp 36-7 referenced paper)

Plan to avoid guardianship expenses

  • Avoiding dependence on our children ranks as one of retirees’ very worst fears. No one wants to be a financial burden on their children especially when so many young families are struggling to achieve financial security themselves. But what retirees should fear more than dependency is guardianship. Guardianship is where a court appoints someone else to take the legal responsibility to manage your assets and make decisions for you. Unless you have planned to avoid guardianship, it can become required if you ever get to the point where you cannot manage your affairs, typically from cognitive ailments like Alzheimer’s, or other disabling accidents or conditions.

    Guardianship is a big problem for many reasons. The procedure is expensive and demeaning, requiring that you be proven legally incompetent, often while you are forced to look on. Once you are stripped of power and responsibility for your own affairs and the guardianship is in place, the appointed guardian, (selected by a judge– not you or your family!), is tightly managed by the court. This in itself costs an amazing amount of money and hassle for you and your dependents. In short, guardianship is a thoroughly unpleasant and needlessly expensive mess.

    Without proper planning, guardianship is a very easy mess to fall into. Fortunately, it can easily be avoided with common estate planning devices such as powers of attorney and living trusts. In my view, living trusts are far superior because they give you more flexibility and precision in controlling your estate and can help protect your heirs from lawsuits and other financial predators. Living trusts are also much more acceptable to banks, brokerages, and other custodians of your money; powers of attorney can often be rejected by asset custodians, who in the worst cases must be sued to recognize them, which can take a long time, during which you may be very uncomfortable. Living trusts not only allow much more effective estate planning, but can save their cost many, many times over by avoiding needless probate fees and loss of control.

Free custom Social Security analysis offer

  • If you have an interest in getting better acquainted with me or my firm, the following offer may be of interest to you. As mentioned, to help investors with income Social Security planning and to endeavor to help increase their wealth, my firm offers a free Social Security Maximization Analysis & Report,, which you can obtain by calling us at 800-262- 1083. Part of our Social Security Maximization Analysis & Report involves helping you review retirement income strategies And remember, getting the feedback of even the most well-intentioned of your existing advisors may draw you into a “leave well enough alone” myopia that may salve all egos but leave your cupboards barer than they might otherwise be—especially if they make a lot of money on your relationship and perhaps would prefer you not dig too deep. Even if they don’t have knowledge gaps they’d rather you’d not know, and even if they might be tempted to spin answers in fear of losing your business.

    Camarda’s Social Security Maximization Analysis & Report, is conducted by a licensed, credentialed professional without cost or obligation, and can help you to get a detailed “bead” on some of the important factors, as applicable to your personal situation, regarding your current strategy. The results of this discussion—which our licensed investment practitioners will conduct free and without much effort on your part—can yield valuable pointers on “trouble spots” in your planning that you can use in any way you see fit, even if you want to stay where you are or choose to go it alone. Knowledge is power, and this test will likely give you plenty that you can put to use right away. To schedule this important test, click on a Talk to an Advisor link on this site, call us at 1-800- 262-1083 (or 1-888- CAMARDA), fax us at 904-278- 1070, or email me, Jeff Camarda, personally at, and tell us you want the FREE Social Security Maximization Analysis & Report. Be sure we get your phone numbers and email address so we can easily and quickly set this up for you.

    You may ask why Camarda is willing to give so much valuable, professional service away for free. There are two simple reasons. One, and most importantly, we feel a profound obligation to “do good” by helping the investing public maximize their financial opportunity. In a dark and stormy sea of misinformation, it is very important to us to serve as a beacon of sorts, to “light the way” and truly help people get where they want to go. This obligation goes beyond corporate cliché, and is a deeply driven and felt company value. Expanding financial education, to help people lead richer and better lives, is very important to us, and to me, personally, as firm founder and leader. The other reason is more practical: some of you may come to believe that Camarda represents a better way, and choose to use us to manage some of your financial affairs, or to refer us to others who may. But that part, if it comes, will be for later. For now, we are more than happy to only deliver this important, customized advice to you (at no cost and without pressure), simply to serve you and those you love. What happens after that is entirely your call.

    Our beliefs in this regard are well stated by this quote from George Merck. Merck has throughout its long history been one of the most visionary and altruistic of pharmaceutical firms. In all of my extensive reading and study of business, I have yet to find a corporate philosophy that better reflects Camarda’s “corporate DNA,” to borrow a phrase from Jack Welch, GE’s legendary CEO. In 1950, George Merck said:

    “I want to . . . express the principles which we in our company have endeavored to live up to . . . Here is how it sums up . . . We try to remember that medicine is for the patient. We try never to forget that (the excellence we strive for) is for the (clients). It is not for profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we remembered it, the larger they have been.”

    Many people do not feel that “Wall Street” firms live up to this principal, and you may not as well. Still, this theme and many, many others from leaders of visionary companies that have driven great social good, pretty well sum up how we feel at Camarda. Profits are important, but not most important; they spring naturally from first doing what is right. Put the people first, those that choose to become clients, and those who, as is their right, do not. Do what is right and best for people, not what may seem best (at least in the short term) for us. Do that, and we cannot help but do well, because of the good we do, first, for them. It has always amazed me, in modern corporate America, how many firms seem to ignore this simple truth, that companies must first and continuously serve well, and that lasting prosperity is a function of the good delivered. This attitude allows us to feel passionately good about what we do each day. We have been very fortunate to enjoy robust growth and to endure strongly, even through the Great Crash of 2008, but I have always felt that this is merely a by-product of our core values. Perhaps because of this, we have been quite fortunate to welcome a great many new clients over the years, many of which have first “met” us by reading reports such as this one.

    It has been my pleasure to write this article for you, and I hope that you will act on the information to brighten the financial future for you, and those you care about, while it is still fresh on your mind, before the torrent of life drives this opportunity for enhanced financial security from your grasp. So seize the day! I’m looking forward to helping you to join the happy ranks of those investors who truly feel they’re better getting where they want to go. Again, the Social Security Maximization Analysis & Report, FREE, without cost, obligation. Use it in any way you see fit: as a discussion platform to optimize your holdings at your current advisor, as the basis of the investment management you decide to do on your own, or as an introduction to the wealth management services that Camarda provides to hundreds of investors just like you. However you use it, we believe you’ll find uncommon insights to help guide your financial decisions, and better target the investment results you really want. To schedule this important test, click a Talk to an Advisor link on this site, call us at 1-800- 262- 1083 (or 1-888- CAMARDA), fax us at 904-278- 1070, or email me, Jeff Camarda, personally at, and tell us you want the FREE Social Security Maximization Analysis & Report. Be sure we get your phone numbers and email address so we can easily and quickly set this up for you.

    All the best to you and your family, Jeff

Irrational investing can sink you

  • Speaking of meaningful investment returns, in our experience most retirees – and near- retirees – tend to take either too much risk or not enough. Both can lead to disaster. Too-little risk – the stuff-it- under-the- mattress mentality, focusing on CD’s, bank accounts, bonds, guaranteed annuities, and the like – will nearly certainly not produce enough of a return to offset taxes and inflation, let alone generate enough income to keep principal intact long enough to fund an extended lifetime. The fact that interest rates have been nearly at zero for years is probably very well known to readers. On the other hand, taking too much risk can lead to obvious heartbreak as money is lost on unwise investments – as was evident in the 2008 meltdown, and in the many dips since. If you have to fund your retirement from the reduced principal amount, you can be setting yourself up for hardship and further risky behavior – and nearly depleted funds far too early in retirement.

    Whether too little or too much risk, both paths can lead to shrunken assets and constrained lifestyles. What is particularly dangerous about each of these mindsets is that they seem perfectly reasonable to those who adopt them. Mattress-stuffers believe that this is the only safe, responsible way to protect their money and are oblivious to the rich returns that could otherwise be attained. The moon-shooters never seem to recognize their folly, thinking their bets are prudent. At least until the money’s gone.

    To make your retirement years truly secure, you need to strike the right balance between safety and risk, and find the “Goldilocks” investment mix that’s best for you – then stick to it. Later in this report, you will see how to get our help with this at no cost or obligation.

Make sure you don’t outlive your money

  • Most of us want to live a long time, or at least as long as we feel good and take pleasure from life. Modern times are a fortunate time to feel this way, as lifestyle changes and rapidly advancing medical technology have extended life expectancies far beyond even those dreamed by science fiction writers just a few decades ago. Unfortunately, the dark flipside of this happy fact is that today’s retirees need a much larger stockpile of funds to support long payout periods. The cold equations of time and money yield the uncomfortable truth that many of us may not have saved enough, or invested profitably enough, to provide for a comfortable lifestyle for the long years of an extended retirement, even before the high costs of medical treatments to extend life even further are considered. Many investors – and most advisors who serve them – haven’t properly prepared to build and manage a nest egg that might have to last 35 or more years from retirement. The pile of capital need to pay for a retirement lasting from age 65 to one’s early 70’s is one thing – one can easily plan on consuming a measured amount of principal each year to accomplish this in style. It is quite another to plan the cash flow for a retirement stretching into one’s 80’s 90’s or even beyond. In this case consuming principal could be devastating; the longer the payout period, the more dependant retires are on just living off just the “interest” or other investment returns. As many of you have noticed, getting dependable returns without risk has become extremely challenging since 2007. It gets even more challenging when the trends toward increasing taxes and reduced Social Security are considered. Since you will probably live much longer than any of your ancestors, you may well face the risk of running out of money with many years of life left. The time to plan for this is now! It begins with a sober assessment of what you can safely accomplish in terms of lifestyle budget over your realistic life expectancy. Critical factors are prudent risk control, meaningful investment returns, and hard-nosed tax control, along with serious countermeasures against the other risks highlighted in this report.

Making sure the government has your Social Security benefit right

  • You probably never had a call from the IRS saying you paid too much in taxes. You probably won’t get a similar call from the Social Security Administration saying they made a mistake and owe you more than they thought. Sadly, such mistakes are common, and it pays to check to make sure you have received credit for all the Social Security taxes you and your employer have paid into your “account” over the many years. Check your records with them to spot errors like “they have me down for zero, but I know I worked in 1988!” Go to ssa.cov to learn how, or ask us to look when we do your free Social Security Maximization Analysis & Report.

    Maximizing your benefit is a little tricky, and the software we use in the free analysis can really help. Start at 62 and you get a smaller payment for a longer time. Wait until 70 and you get a bigger payment for a shorter time. Usually, the maximum value you can extract from the system comes from starting at an age somewhere in between, such as 67½. Your (and your spouse’s) life expectancy factor in, as do taxes and other sources of income, in getting and keeping the most you can from Social Security. If you’re not careful, you may wind up paying tax on most of your Social Security, cutting your actual benefit, and likely annoying you to no end!

Mature divorce can lead to poverty

  • In the “best” of times, divorce is expensive. Without proper planning, divorce can completely devastate retirement plans for one or both spouses, especially if it happens late in life. Depending on the settlement, one spouse can become almost destitute, and even with fair divisions of assets and alimony, resources can be stretched too thin to allow either divorcée much comfort. To make matters worse, the laws of most states require that a spouse at most receive only 1/3 of the other spouse’s assets at when that spouse dies, and one never knows if one’s spouse’s last will and testament leaves everything to them, since there is no requirement that this document be shown to the other spouse, or even made known to them.

    Fortunately, while your marriage is still happy – or at least civil – this risk can be controlled quite easily as part of your estate planning, by using irrevocable beneficiaries and trust provisions and the like, to craft an effective post-nuptial agreement. By entwining your children’s interests (whether yours, theirs, or both of yours) into this structure, you can make this seem far less self-serving, although the protections will benefit your spouse as well as you. Obviously, the time to do this is when all is well and both parties are amenable – and still alive! Once storm clouds gather, it can be more difficult. If divorce does threaten, be sure to engage the advice of a good divorce planner or attorney early on – the emotional gumbo that usually accompanies a failing relationship is sure to obscure one’s judgment. Many who have cut deals without professional assistance come to deeply regret their generosity later, when it is too late to change things – or recover income that may be desperately needed for retirement.

Maximizing your Social Security benefit

  • Your full retirement age – FRA – is the age at which you get your “full” benefit. This used to be 65, but is going up depending on your year of birth. Those born in 1957, for instance, don’t reach FRA until 66½. If you take benefits before FRA, such as at 62, they are permanently reduced. For instance, someone whose FRA is 66 who starts at 62 will only get 75% of their PIA – for life. will The amount of reduction depends on your FRA – the later the FRA, the bigger the reduction. If you wait until after FRA, your benefit will go up permanently, but not past 70 under existing rules. Your FRA is very important in determining what your actual benefit options are.