Retirement Planning Made Simple

Posted on March 8, 2016 by robertjrussellcompanies

Many people looking towards retirement are finding how much things have changed through the years. Clients’ time horizon until retirement is just one of the factors they need to review along with estimating how much they may need to retire.

Comparing today’s retirement outlook with that of your client’s parents and grandparents helps with a long-view of their upcoming retirement. People generally didn’t “job hop” 20 – 30 years ago as they do today. Staying with the same employer was the traditional way their parents built a hefty pension and health benefits to have a financially secure retirement, along with Medicare and Social Security.

With shorter life expectancies health care costs may not have been seen as much of a concern as it is in today’s environment. Changing jobs is more common than not in today’s’ business environment, either because of the economy or as a by-product of technology advances that has changed the traditional business models.

Consequently many “Baby Boomers” are finding their retirement benefits lacking or void of the previous “guaranteed” from previous generations. Health care and long-term care costs seem to continue to create havoc in retirement planning, depending on what part of the country clients choose to retire in.

Lifestyle choices are also impacting retirement planning with many caring for grandchildren or going back to school, starting a business or volunteering. With people living longer finances may have to last as long in retirement as many careers endured.

How Much Do Clients Need to Retire On

History shows that inflation has varied considerably through the years, with recent average hovering around 2.9%, with historical average of 4%, however inflation can spike or dip substantially. Many financial experts often say people could need between 60% and 80% of their final working year’s salary each year during retirement.

When considering the lifestyle they want to live a need to cut back expenses or continue to work, at least part time are factors many are now considering. Setting a reasonable savings goal and viewing extra income as a bonus could be prudent.

All clients should go to SocialSecurity.gov and get their earning history and estimated Social Security income to understand their baseline income projection for planning purposes. An average annual benefit is $15,132 for a single person and up to $24,576 for a retired couple. Women, many times, are far less likely than men to receive income from an employment-based pension plan or retirement annuity, while those who may be eligible for pension benefits often receive a smaller annual pension benefit than men. Taking extended periods of time off work, for example to raise a family, affects Social Security and pension benefits, sometimes substantially in retirement.

So about three months before your client’s birthday they should receive a statement estimating their Social Security benefits. Their employee benefits administrator, if they have a pension plan, should be able to provide an estimate of their annual pension benefit. They should make sure they have been credited for the correct salary and number of working years.

Posted in Seniors | Tagged , , | Leave a comment

IRS gives double tax benefits of health FSAs a boost

Posted on March 7, 2016 by robertjrussellcompanies

As we start 2016, many clients are gearing up for a potential reduction in covered health benefits as employer-sponsored health plans are modified and insurers have begun cancelling coverage in anticipation of the Patient Protection and Affordable Care Act (PPACA) effective date. Planning for these costs is heating up, and the IRS has placed the significance of the health flexible spending account (FSA) as a tax-free funding tool in the spotlight. While reducing taxable income in light of higher tax rates is a priority for many clients, the potential for increased out-of-pocket medical expenses under PPACA may provide an even stronger motivation in 2016. As a result, the double tax benefits offered by FSAs have become more valuable than ever, and the IRS has recently taken steps to ease the restrictions that may have previously dissuaded clients from taking advantage of these vehicles.

Flexible Spending Accounts: The basics

A client whose employer offers the health FSA option is permitted to contribute up to $2,500 annually in pre-tax dollars to these accounts which, in turn, are used to pay for qualified medical expenses that are not covered under the client’s health insurance plan. Because many clients are anticipating higher out-of-pocket health expenses in 2016, FSAs are likely to become more popular than ever because they provide a tax-preferred method of paying for higher co-pays and other health expenses that may be considered “non-essential” under the new law.

Despite this, many clients — especially younger and healthier clients — may have been wary of committing funds to a health FSA in the past because of the so-called “use-it-or-lose-it” rule that required clients to exhaust FSA balances each year to avoid forfeiting those funds. While employers are permitted to include a two and a half month grace period if a client fails to incur enough medical expenses to drain his FSA account during the year, all remaining funds are still forfeited at the end of that period.

Despite this, many clients — especially younger and healthier clients — may have been wary of committing funds to a health FSA in the past because of the so-called “use-it-or-lose-it” rule that required clients to exhaust FSA balances each year to avoid forfeiting those funds. While employers are permitted to include a two and a half month grace period if a client fails to incur enough medical expenses to drain his FSA account during the year, all remaining funds are still forfeited at the end of that period.

In order to encourage their use, the IRS has issued rules designed to make FSAs more flexible by allowing employers to provide that up to $500 of a remaining FSA balance may be carried over into the next tax year. However, it should be noted that employers are not required to offer the $500 rollover option, and they are prohibited from offering both the two and a half month grace period and the rollover option in the same year.

Further, the $500 rollover option is not available for dependent care FSAs, which are similar to health FSAs but instead offer a tax-preferred method to reimburse clients for qualified dependent care expenses.

Tax implications

While contributing to an FSA reduces the client’s taxable income, it is important to note that, unlike 401(k) or IRA contributions, funds contributed to the FSA are never taxed if they are used to pay for qualified medical expenses (a term that is broad enough to include items such as eyeglasses, hearing aids, and dental expenses).

Because tax rates on income, along with those applicable to capital gains and other investment-type income, have been increased for the foreseeable future, permanently removing funds from a client’s taxable income has become a priority for many clients.

As a refresher, clients whose income exceeds $406,750 in 2014 ($457,600 for joint returns) are subject to the new top tax rate of 39.6 percent, as well as the new 20 percent tax on capital gains. The value of itemized deductions and the personal exemption begins to phase out for single taxpayers with income in excess of $254,200 ($305,050 for joint returns). Also, the additional 3.8 percent tax on investment income applies once a client’s income reaches a certain threshold level.

Conclusion

Reducing taxable income may always be a priority for clients, but forces have combined in 2016 to make planning for increased health-related costs equally important for many. Therefore, employer-sponsored accounts such as health FSAs are likely to attract more attention this year, as clients seek to permanently reduce taxable income while simultaneously paying for health care costs on a tax-free basis.

For previous coverage of using tax-preferred accounts to plan for ACA-related changes in Advisor’s Journal, see The Affordable Care Act Raises the Stakes for HSAs.

For in-depth analysis of planning with tax-preferred health FSAs, see Advisor’s Main Library: HRAs and Cafeteria Plans.

via IRS gives double tax benefits of health FSAs a boost.

Posted in dallas, texas, Insurance | Tagged , , , | Leave a comment

2 Social Security changes and their effect on retirement income

Posted on March 6, 2016 by robertjrussellcompanies

For example: taxpayers who will reach their full retirement age of 66 on or before April 29, 2016 should evaluate their options, before these become more limited.The Bipartisan Budget Act of 2015 was signed into law on November 2, 2015. The act first and foremost raised the federal debt limit, preventing a default on our National Debt. However, there are many other items of note in the act, including a provision that avoids a huge increase in Medicare Part B premiums for those not protected under the Social Security Hold Harmless rule.

One of the most surprising provisions of the law dramatically changes the landscape of Social Security Planning. Section 831 of the legislation titled, “Closure of Unintended Loopholes,” eliminates a powerful strategy called “restricted application” for many taxpayers. It also deflates another powerful strategy called “file and suspend.”

Changes to “restricted application”

The legislation expands Social Security’s Deemed Application rule. The Deemed Application rule provides that, when you are eligible for both a benefit from your own work history, and a benefit from your spouse’s work history, you are deemed to have filed for both.

Prior to the passing of the legislation, the deemed application rule applied only to those who filed for benefits prior to full retirement age. After the passing of the legislation, it applies to all (except those noted below), including those who file for benefits at or after their full retirement age.

What does this mean?

The legislation strips away the powerful strategy of filing a “restricted application” at full retirement age for just spousal benefits, while deferring your personal benefits, allowing them to earn eight percent delayed retirement credits each year up to your age 70.

This strategy can increase your monthly benefits by up to 32 percent. Under the new law, you can still defer benefits, but you would not be able to collect spousal benefits at the same time.

Who does the change affect?

The new rule applies to anyone who attains age 62 after 2015. Thus, the ability to leverage “restricted application” is alive and well for anyone who attains age 62 prior to 2016.

Changes to “file and suspend”

The new legislation takes much of the air out of another strategy called “file and suspend.” The legislation stipulates that if you voluntarily suspend your benefits no one can receive benefits based upon your suspended record.

What does this mean?

Traditionally, the “file and suspend” claiming strategy permitted you to file for your own benefits at full retirement age or later, and then suspend the checks in order to receive the 8 percent delayed retirement credits.

At the same time, since you have filed, it permitted your spouse and/or children to claim benefits from your record. Under the new law, you can still suspend your benefits at full retirement age or later, but your spouse and/or children would be prohibited from receiving benefits from your suspended record.

Who does the change affect?

This new law applies to requests for benefit suspensions submitted after a 180 day grace period from the effective date of the legislation. Thus, the full benefits of “file and suspend” are alive and well only for a short period of time.

You have until April 29, 2016 to take advantage of this strategy. After this date, the opportunity will cease to exist. This creates urgency to take advantage of this strategy before it becomes unavailable.

Taxpayers who will reach their full retirement age of 66 on or before April 29, 2016 should evaluate their options, before their options become more limited. Unfortunately, those who reach their full retirement age after April 29 are out of luck.

Breaking it down:

1. Younger than 62:

These changes reduce the overall value proposition of Social Security for the younger generation. Those who will be under the age of 62 on December 31, 2015 will neither have the ability to utilize “restricted application,” nor the ability to take full advantage of “file and suspend” as Social Security maximization strategies.

They should realize that Social Security will likely be a smaller portion of their income in retirement, and should plan accordingly.

2. 62 years old, but not 66 by April 30, 2016:

Those who will attain age 62 prior to 2016 will have “restricted application” available to them, but if they do not turn 66 before April 30, 2016, they will lose the ability to leverage the full power of “file and suspend.” A comprehensive evaluation should be done for those in this age group to determine if “restricted application” can bolster income in retirement.

3. 66 years old by April 30, 2016:

It is only those who turn 66 before April 30, 2016 that have the power to leverage the full benefits of both “file and suspend” and “restricted application.” However, if they do not take advantage of “file and suspend” before this date, they will lose an opportunity forever.

A comprehensive evaluation should be done for this group to determine if one or a combination of these strategies can increase income in retirement.

At the end of the day, Social Security has proven to be a linchpin of most Americans’ retirement income plans. The new law obviously dampens the expectations of what we can expect from Social Security.

However, with the demise of the defined benefit plan, Social Security remains one of the only sources of inflation-adjusted retirement income that we can count on to last as long as we live.

The combination of lower expectations from Social Security coupled with the demise of the defined benefit plan places a heavier burden on us to leverage our personal assets to create income in retirement that will last as long as we do.

It is crucial that a thorough evaluation of Social Security claiming strategies be done as part of any comprehensive retirement income plan in order to provide the best results in retirement. The difference between a poor strategy, and a well thought-out strategy can be hundreds of thousands of dollars in retirement income.

Posted in Seniors | Tagged , , | Leave a comment

Home of the Future or the Present?

Posted on March 5, 2016 by robertjrussellcompanies
The home of the future doesn’t just live in science fiction anymore. You can own it today. Better yet, it doesn’t require thousands of dollars or long construction times. Home automation is available and affordable thanks ipad smarthometo wireless Internet and smartphones. If you want to make your home smarter and work for you, look at these easy fixes to some of the house’s longest-standing issues.

Beyond Health & Wellness

One of the biggest downfalls to completing your health and fitness goals is not a lack of motivation or discipline, but rather a lack of consistency. Stepping on the scale every morning, eating the right meals at the right time and remembering all your workouts in the gym can be tedious and overwhelming.

But when you win the morning, you win the day. So the first thing you should do when you wake up is step on the scale. The FitBit Aria Wi-Fi Scale takes your weight and body fat and sends it directly to your FitBit account online. Smartwatches like the Samsung Gear S2 can measure your sleep the night before and your steps during the day, so you don’t have to give a second thought to crunching the numbers.

Beyond Lights

With the exception of incandescent to LED, lights haven’t really changed in the last 100 years. They’re more efficient and last longer, but you still have to remember to flip them off every time you leave the room (that’s harder for some people than others). If you’re looking for something better and more innovative, Philips has the answer.

The Philips Hue is an energy-efficient, long-lasting LED bulb with wireless connectivity, so you can control whether it’s on or off, and how bright it is with more than just a switch. Want a light to shut off when you leave the room? Hue recognizes when your phone is away and shuts down accordingly. As an added bonus, the Hue can change colors, so you can adjust the mood in your home.

Beyond Temperature

Do you know about vampire energy? That’s when the electronics and other devices you have plugged in are still consuming electricity, even when they’re turned off. Computers and televisions are notorious for this, but your home’s heating and cooling follows the same principle. When you are away at work for eight hours each day, your home continues to consume energy to maintain a temperature as if you were sitting in the living room.

Nest is a sleek, smart thermostat that learns your daily habits so it can raise or lower the temperature while you’re gone to help you save money. It also connects wirelessly to your smartphone, so you can adjust the heating and cooling when you’re away.

Beyond Security

You may already have a home security system, but it comes with a monthly fee. For example, ADT charges roughly $37 per month for its home-monitoring services, and that’s just the starting price.

The Canary is a simple, all-in-one system that monitors your home’s activity by watching (with its built-in camera) and listening to its surroundings while you’re away. It connects to your Wi-Fi, so it sends you regular updates or emergency notifications if it detects a disturbance. It even measures the quality of air in your home to make sure everything is comfortable and normal. It can’t contact the police or sound an alarm if there’s a break in, but you are paying a one-time price instead of a monthly fee.

Posted in real estate | Tagged , , , | Leave a comment

Changes to Medicare

Posted on March 4, 2016 by robertjrussellcompanies
 Are you aware of these changes?
Although Medicare Supplement policies will cease covering the Medicare Part B deductible for those enrolling in Medicare on or after January 1, 2020, state insurance departments are reporting that some Agents have begun telling policyholders they will be losing their plans now. To correct this misconception, several states have issued Bulletins or Consumer Alerts (see Florida Consumer Alert below).
To help with any confusion surrounding the Congressional changes to Medicare Supplement that will be implemented in January 2020, here are the facts:

  • Effective January 1, 2020, Medicare Supplement plans that include the Part B Deductible will no longer be available.
  • Effective January 1, 2020, Agents will be prohibited from selling Medicare Supplement plans that cover the Part B Deductible.
  • The prohibition will apply only to those who become enrolled in Medicare on or after January 1, 2020.
  • Current policyholders, and those enrolling in Medicare prior to January 1, 2020, will not be affected by this change, and do not need to replace their policy to retain their benefits.
Posted in Insurance | Tagged , , | Leave a comment

Wrongfully committing someone to mental health facility

Posted on March 4, 2016 by robertjrussellcompanies

Committing someone to a mental health facility against their will is never an easy thing to do. But if they’re truly ill, then they need to get help. If it turns out that they weren’t ill, then you can have faith that the doctors will eventually figure it out and release them…right?

Well, if the results of this 1973 experiment are to be believed, I wouldn’t count on it.

In 1973, Stanford professor Dr. David Rosenhan began to wonder about the validity of psychiatric diagnosis. After some contemplation, he conducted an experiment to test his theory.

In 1973, Stanford professor Dr. David Rosenhan began to wonder about the validity of psychiatric diagnosis. After some contemplation, he conducted an experiment to test his theory.

For the first part of his study, Rosenhan assembled a small team of “pseudopatients.”

The team was made up of three women and five men (including Rosenhan himself). They each attempted to gain entry to different psychiatric hospitals in five separate states by pretending to hear voices. All of them were admitted.

However, once inside the facility, they acted completely normal and continually told the doctors that they felt fine.

However, once inside the facility, they acted completely normal and continually told the doctors that they felt fine.

Despite evidence of having sane people in front of them, each member of the team was forced to admit to having a mental illness. They then had to agree to take anti-psychotic drugs as a condition of their release. Nearly all of them were “diagnosed” with schizophrenia. The average time from admittance to release for each of the pseudopatients was 19 days.

After the results of this study became public, a disgruntled hospital administrator maintained that these sorts of mistakes could never happen at his hospital and challenged Rosenhan to test him.

After the results of this study became public, a disgruntled hospital administrator maintained that these sorts of mistakes could never happen at his hospital and challenged Rosenhan to test him.

So he did.

So he did.

He and his team chose a well-known hospital whose staff was familiar with the results of his last experiment. Rosenhan told the staff that over the next three months, one or more pseudopatients would attempt to gain admittance to the hospital. Over the course of the experiment, the staff only identified 41 of the 191 individuals who were supposedly pseudopatients. But here’s the twist. Rosenhan never actually sent them any.

Naturally, Rosenhan’s findings stirred up quite a bit of controversy. When he published the piece, he called for reforms to be put in place, but not many of them actually made it all the way to implementation.

Posted in Conspiracy | Tagged , | Leave a comment

What time does your client’s termination-option period end?

Posted on March 3, 2016 by robertjrussellcompanies

QUESTION:  I know my buyer’s termination option ends on Thursday, but at what time?

ANSWER: The termination option ends at 5 p.m. local time to where the property is located. The Texas Real Estate Commission revised its contracts effective January 1, 2016, to implement this time deadline.

Posted in real estate | Tagged , , | Leave a comment

Do you value your time enough?

Posted on March 2, 2016 by robertjrussellcompanies

Insurance agents and owners never have enough time.

Never, in all of my years of speaking with insurance agents have I heard the phrase, “I have way too much extra time right now, what should I do?”

There is a good chance you are stressed, overworked, and under constant time pressure. There is one vital question you must ask every day: What is my time worth every hour?

Seriously. That’s it. Have you ever actually calculated the number?

To do this you must have first set some sales and income goals. I know some insurance agents are struggling to make a profit and this exercise may show why. For example, ask yourself:

    1. What do you want make this year?
    2. What would be a great year for your business?

Determine that number. You got it? Good, now we can move forward.

Take this income figure and divide it by 12 to get your monthly income goal. Now, take the number of hours you desire to work each week. Yes, I know this may seem like a pipe dream to those of you pulling 100 hour work weeks, but how many hours could you work and still enjoy a high quality of life.

Let me give a quick example for illustration purposes: If I want to make $120,000 this year that would be $10,000 monthly (I like easy math.) If I want to work 50 hours per week that would mean that my hourly rate is $50/hour. Want to make $60,000/year at 50 hours/week that would be $25/hour. You get the point.

So what now?

Once you determine your hourly goal wage, you will be forced to start prioritizing, delegating or automating some of the activities you do each day.

Your current situation will determine which route you need to take, but the point is that you need to value what you are worth each hour.

Are you spending multiple hours doing a $10/hour task when you should be working on the $50/hour task? Could you automate or delegate some of the lower income producing activities?

    • Make a list of the routine tasks and activities you do each week.
    • Determine the value to your business of each one.
    • Prioritize the tasks by hourly worth and figure out a way you can slowly delegate or automate the others.

To determine this, ask yourself:

    1. What are your principle activities that are priorities for your business?
    2. What can you do that no one else can do?
    3. What can you delegate to someone else or could you set up technology systems to complete these lower level tasks?

Insurance agents are indeed extremely busy, but busy does not mean productive.

How can you gain traction in your small business? Prioritize and implement activities that bring the most value to your business and your customers. Delegate or automate the rest.

You may be thinking, “But I can’t afford to delegate or automate some of these activities?” I would argue that you probably can’t afford not to.

Posted in Business | Tagged , , , | Leave a comment

The Exciting World of #Insurance

Posted on February 29, 2016 by robertjrussellcompanies

The Exciting World of Insurance.

Check this out – might be worth reading!

Posted in Business | Tagged , , | Leave a comment

Words that will KILL your resume!

Posted on February 28, 2016 by robertjrussellcompanies

1) Tie words to actual results. Link your skills to specific results that demonstrate your competence. Figure out how all these buzzwords describe you and give the detail through which a reader will come to the conclusion you want. For example, rather than simply asserting she’s a solid communicator, a nurse might offer a bullet point that reads: “Enhanced communication between physicians and families by educating parents on their child’s condition, support and care.” This level of detail enables the reader to imagine that nurse sitting with parents somewhere in a hospital, engaging in active dialogue.

2) Use active language. So often people define themselves by their responsibilities and leave it at that. It’s not just about what you were responsible for, but rather how you exercised your authority to fulfill your responsibilities and what results you attained that separate you from everyone else. Rather than saying, “Responsible for marketing XYZ product,” share a mini-story with a bullet point like this: “Managed launch of XYZ product including: overseeing messaging development, creating print and online marketing advertisements, obtaining 2 key product endorsements and allocating advertising budget of $1 million among all media.”

3) Let others vouch for you. It’s one thing to claim something about yourself, while it is much more forceful if others say it in your stead. Seek out endorsements and recommendations from other reputable sources who can verify your talent and skills.

Posted in Business | Tagged , , , , , | Leave a comment