Defined Benefit Plans are one of the most useful of all retirement plans that can favor the older business owner with large income tax deductions while securing significant retirement and estate benefits. This is a brief outline of the potential benefits of these plans. Actual benefits must be calculated and certified by a qualified actuary. General Plan Design: These plans work best when the business owner(s) are older than the general employee population. A Defined Benefit Plan favors older employees because larger contributions are required in light of the shorter time to retirement. Contributions are mandatory each year based on the plan’s benefit formula, unless that formula is amended prior to the accrual of any benefits during the plan year (i.e. first few months of the plan year) or if the plan is terminated. These plans are best suited for those companies that have consistent profits and have a need for ongoing business tax deductions. Integration of a Defined Benefit Plan with a 401(k) Plan: We will strive to have the benefits of the non-key employees funded in the 401(k) plan, while the Defined Benefit plan will fund the benefits for the owners and older employees. Plan Contributions by the   Read more…

When Willard Scott was on TV as America’s weatherman, he’d often insert into the show birthday wishes to those turning age 100 and place their faces on a Smucker’s jar. In 2014 it was estimated that over 72,000 American seniors were age 100 or older, worldwide the number was about 450,000.  By 2050 there may be 3,676,000 seniors living on the planet.  So even without any significant medical advancement, the numbers of senior centenarians could be dramatically higher. In light of the greatest mortality revolution, should you start planning to live to age 100?  You may need to prepare yourself for age 100 if your family tree already contains longevity or if you exercise religiously and are committed to a healthy diet. There also seems to be a gender advantage towards women in life expectancy stats. Preparing for geriatric living starts with guaranteed income you can’t outlive via lifetime annuities with a cost of living rider.  Preparing for elder years should include retro-fitting your home for single level living with stairs turned into ramps, converting bathtubs into walk-ins and kitchen shelves that lower to the counter. Most baby boomers are vehemently against living in a nursing home facility, so preparing   Read more…

There seems to be a relatively new approach to retirement portfolio management. The basic methodology separates the portfolio into two financial goals: growth and income. For most Americans, the need for growth often times is a strategy to combat inflation to maintain the purchasing power of the retirement dollar. Not many retirees have discretionary monies for growth. But if they do those investments should be viewed as inflation and growth positions and not income plays to pay essential budgetary items that are fixed. So holding large portions of a portfolio hostage to generate 4% income may not be the best positioning of money during retirement. It maybe better to use a portion of your portfolio to purchase guaranteed lifetime annuity for guaranteed domestic expenses. ETFs, mutual funds and individual stock and bonds were not designed to address guaranteed income for paying obligations and longevity during retirement. The market fluctuations can’t generate predictable income to pay monthly bills unless the portfolio is sizable. Most of the senior market has less than a million dollars, so it’s important to consider using lifetime income annuities that are subsidized by longevity credits. Lifetime income annuities with a cost of living adjustment can generate predictable   Read more…

There is no other investment or savings funding tool that can guarantee lifetime income except annuities. As an individual the average male lives 86.6 years and the average female lives 88.8 years. The surviving spouse in a marriage averages living to age 93.  87% of the time the surviving spouse is a female. Half of all Americans will live longer than those averages.  If the surviving spouse average is age 93 that’s 31 years from age 62, which is the starting age for many guaranteed lifetime annuities. So the average internal rate of return for lifetime annuities is benchmarked at age 62 for 31 years. Those returns could be somewhere around 3% net of all product expense loads. It could be 4% plus if those at age 93 live to age 100. How can annuity manufacturers guarantee lifetime income? The answer is mortality credits. The theory uses the law of large numbers and those who don’t survive the averages are credited to those who did survive the averages. Mortality credits are not correlated to the market returns like those of bonds and their credited interest or stocks and their dividends earnings. They’re based on surviving the odds. If Jeanne Calment   Read more…