The Sandwich Generation

This week’s CBTV show is entitled, “Back to School – The Sandwich Generation is in a Jam.”

Almost 10 million working Americans are stuck in the middle of financially supporting both their children and their parents, making them part of the “sandwich” generation.  Of those parents who have childcare responsibilities, more than a quarter of them also provided elder care in the last five years.  And nearly half of those who are raising their own children, expect to care for a parent within the next 5 years, according to the Council on Contemporary Families.  The U.S. Census Bureau estimates the number of Americans 65 and older, will more than double between 2010 and 2050, which means the sandwich generation will continue to get squeezed!

Caregivers have also lost a significant amount of income and benefits by caring for their parents, according to a recent MetLife study of more than 1,100 adults, living with at least one parent.  The study estimates that the nation’s 9.7 million caregivers have lost a collective $3 trillion dollars in wages, pension benefits, Social Security contributions, and retirement savings over their lifetime, as they had to cut their hours or quit their jobs altogether, to take care of their aging parents. MetLife reported that the number of adult children over the age of 50 caring for their parents, has more than tripled since 1994.

According to the U.S. Administration on Aging, 22% of caregivers are helping two family members, and more than a third of those are currently caring for three or more.  While these caregivers are giving a great gift to the older generation, they could potentially be shorting themselves of financial freedom in retirement. There are no scholarships for retirement, so if you don’t care for yourself, as well as your children and parents, who will care for you when you retire?

If you’re part of the sandwich generation, no matter how difficult supporting your parents may be, if at all possible, don’t quit your job while caring for them.  If you do, you will lose important income and benefits, that you will never be able to recover in the future. To help ease the financial burden of caring for elderly parents - look into the following 4 benefits: 

1)     Public Benefits: There are many community services available that may be able to help you pay for some of the costs of caring for your parents.  The website www.BenefitsCheckup.org has already helped nearly 3 million people, find more than $10 billion dollars worth of annual benefits.

2)     Employer Benefits:  Check with your employer to find out what benefits are available to you, that will keep you in the workforce, but also allow you to help your family in their time of need.  Rather than quitting your job for a medical emergency, check with your employer about their flextime policy, and the “Family and Medical Leave Act,” so you can stay in the workforce while caring for your relative. 

3)     Medicaid and Medicare:  Medicare does not cover everything, and can be costly when it comes to premiums and deductibles.  However, find out if your parents qualify for Medicaid, which can provide additional assistance to help pay for their out-of-pocket health and long-term care expenses.

4)     Compare Costs: Calculate what it would cost to keep your loved one at home, rather than having them in an assisted living facility or nursing home.  There are many resources today that enable an older person to stay in their home.  Services such as meals-on-wheels, adult day care and in-home modifications, may be enough to keep them living semi-independently.

Again, I’d like to hear from you on this important topic. Are you a part of the sandwich generation? My wife and I are one of the 10 million who find themselves caring for grandchildren and a mother who needed our constant help. How are you coping?

And finally, remember that only you can control your financial future – you can succeed… you just need confidence and determination. Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!.

-Matt

http://www.ChecksandBalances.TV

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Financial Seasons of Life

This week’s CBTV show is entitled, “The Changing Financial Seasons of Your Life – Be Sure Your Investments Change with Your Age and Goals.”

To start the show off, I mentioned the following recent economic news:

The S&P 500 dropped nearly 6% in the month of August, making this the 4^th straight month in a row that this popular index has declined.  And if the stock market volatility in August wasn’t bad enough, major concerns about the economy in the U. S. and abroad, carried over into September, with the S&P suffering its worst-ever, three-day start to the month.  A key demographic in this massive sell-off has been baby boomers.  According to a recent report from the Federal Reserve Bank of San Francisco, boomers have started pulling their money out of stocks, and placing their savings into more conservative investments.

So, to be prepared for whatever the stock market may do, one’s financial life should be divided into 4 seasons – first, there is the “accumulation” season, where you work hard, save and invest to grow your nest egg. The next is the “preservation” season, where you work hard to protect your life savings.  The following season is the “distribution” phase, where you structure your life savings to provide an income to last throughout your retirement years.  The fourth and final financial season is the “succession” phase, where your remaining life savings is passed on to your loved ones, in the most tax efficient manner.  Be sure you stay true to the 4 seasons of your financial life.

Here are some key financial planning tips, to guide you through the 4 seasons of your financial life:

1)     Accumulation – ages 20 to 55: Accumulating wealth sets the foundation for your entire life, including every season that follows. Setting goals, saving and investing consistently, developing tax-saving strategies and structuring your retirement plan as early as possible, will allow you to keep more of your hard-earned savings throughout the following seasons.

2)     Preservation – ages 55 to 65: In order to successfully preserve your assets during this season, you should reduce or eliminate most investment risks, but still look to earn better than average returns. You also want to work to reduce unnecessary expenses, fees and taxes from your portfolio as well.

3)     Distribution – ages 65+: Sufficient income planning is the most important consideration of this season, as you determine how to make the most of your financial savings.  Your goal here should be to maximize your income, while reducing your tax liability.

4)     Succession – after your death: Again, taxes need to be considered here as well, as you plan how to pass on your remaining nest egg and savings to your loved ones. You worked your whole life to get to this point, and your legacy will depend on how well you planned your finances in each of the previous seasons, and what estate planning you have prepared in advance.

So, as you can see, each financial season of life builds on the one before it, with a successful retirement hopefully waiting for you in the end.  And planning each season carefully, in advance, will help you get the most out of your financial life.

I would like to hear your opinion about the four financial reasons of one’s life. Does it make sense to you and will you follow it? Do you think it is a prudent map to follow or do you have other ideas for your financial future? Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!

-Matt

http://www.ChecksandBalances.TV

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Hitting the Retirement Jackpot!

This week’s CBTV show is entitled, “Is Winning the Lottery Your ONLY Hope of a Financially Secure Retirement?”

Our struggling economy has fueled the growth of state lotteries across the U. S., producing record sales in many of the 43 states that allow lotteries in fiscal year 2011, which ended on June 30th.  The Illinois Lottery enjoyed its ninth consecutive record-breaking year, generating nearly $2.3 billion dollars in sales, and increased its revenue by 3% over 2010, and more than 11% since 2007.  Several other states such as Arizona, California, Colorado, Maryland, Missouri, Pennsylvania, Texas and Virginia also saw lottery sales increase in 2011 over 2010, revealing that Americans may in fact see the lottery as their only real shot at financial security during these extra tough economic times.

State Lotteries were created as another means to generate revenue, in addition to taxes, with the winnings going to an individual or group who had a ticket that matched the numbers generated from the states random drawing.  And with most states hurting financially, the lottery has proved to be a “welcome source” of additional revenue for participating states, with much of that money funding education.  In Arizona’s case, the lottery has sold $8.5 billion dollars in tickets since 1981, with $2.7 billion going back to the state.  The financial impact of the Illinois Lottery has been a boost to communities throughout the state, with almost 1/3 of that revenue going to “good” causes.  Of the $2.3 billion dollars in 2011 sales, $690 million dollars has gone to organizations such as: the Common School Fund, the Capital Projects Fund, Illinois veteran groups, and other non-profit organizations benefitting those individuals dealing with breast cancer, AIDS and Multiple Sclerosis.

However, those citizens who are counting on winning the lottery to improve their financial future, are facing tough odds. In the typical state lottery where an individual must match all six numbers correctly, the odds of winning the grand prize are nearly 1 in 14 million.  In other games like the multi-state Powerball, the odds of winning are even higher, at more than 1 in 195 million.  In other words, if you’re counting on the lottery to fund your financially secure retirement, your chances of winning are almost non-existent. “Scratcher tickets” are another popular form of a lottery game, but the actual “winning” odds can be deceptive.  For example, the Arizona Lottery has a $5 scratcher ticket with overall odds listed as 1 in 3.65, but after reading the “fine print,” you will discover that most of the “winners” are simply getting their money back! 

We have all heard the lotteries slogan many times before, “Someone’s gotta win, why not you?”, and “You gotta play to win.” But let’s be realistic and face the truth here, they’re appealing to our fear and greed about our financial hopes and dreams for the future. What we all really need to do, is look ourselves in the mirror and repeat these words: “If we don’t build it, it won’t come!” 

We’ve also heard the old saying, “If it’s to be, it’s up to me!” So, depend on no one else but yourself for the financial security you desire. You can build it!

Again, I’d like to hear from you on this topic. Do you feel confident about building your own financial future? Are you waiting for a miracle to drop out of the sky? Or do you have a plan you’re following that will lead you to financial independence? Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!

-Matt

http://www.ChecksandBalances.TV

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All About Life Insurance

This week’s CBTV show is entitled, “A New Life for Life Insurance (And more benefits too!).”

Most American’s would rather not talk about buying life insurance or the need for it. Unfortunately, most advisors fail to bring it up and discuss it with their clients as well, as you’ll read in the following paragraph.

Less than half of all Americans, who have a financial advisor, have discussed life insurance as part of their overall financial plan, according to a recent online survey conducted by Harris Interactive. Of those individuals who have discussed life insurance with their advisors, 15% said the conversation took place more than 10 years ago, while only 40% have talked about it within the past year.  Less than 25% of those who participated in the survey were advised to include life insurance as part of their overall financial plan.  With the recent natural disasters, which have affected so many, this study serves as an important reminder that life insurance is a critical element of a good financial plan, one that is often overlooked by many financial advisors and their clients.

Of course, the main benefit of life insurance is to protect the insured’s family financially, providing them with an “income tax-free” death benefit. Peace of mind and financial security are still the main reasons people buy life insurance.  However, life insurance policies today have a much broader use than just a death benefit, and are widely used as an investment vehicle as well. While some are happy to use life insurance in its simplest form, others are starting to use it as a tool to accomplish their financial goals. Knowing all the advantages and uses available today is the key to maximizing your benefits.

For just pennies on the dollar, life insurance is one of the best investments a person can make. Life insurance is now used for a variety of reasons, such as: creating wealth, replacing lost dollars in the stock market, an alternative to low-interest CDs, paying the taxes for Roth IRA conversions, to help pay for long-term care expenses, create an income stream in retirement, and much, much more. And some retirees are opting to tap into their “retirement savings” now and using a portion of that money to purchase life insurance to accomplish their “legacy” objectives for their children and grandchildren. And through life insurance riders, they can also receive assistance with long-term care or critical illness expenses, disability income, and accelerated death benefits if they become seriously ill. The “new life” of life insurance appears to have many additional benefits worth looking into!

There is obviously no way to anticipate the unpredictable, so it’s never too early to buy life insurance to protect your family.  Life insurance has taken many forms in this day and age, and can be utilized in a number of different ways.  It’s very important that you make sure that life insurance is a “key part” of your financial plan today.  You can’t afford to wait to buy life insurance later, because for some, later will never come.  Also, if your financial advisor has not discussed life insurance with you, bring it up yourself and find out what options are available for you and your family.  If your advisor still fails to pick up the ball and run with it, find yourself a new advisor.  There are far too many benefits associated with life insurance today to ignore it anymore.

 

I would like to hear from you on this week’s topic. Do you currently have life insurance? If not, will you now take action and meet with a life insurance agent and discover your options? Were you aware of the fact that certain types of life insurance policies can benefit the insured, such as providing tax-free withdrawals? Let me know, I’d love to hear from you. Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!

 - Matt

http://www.ChecksandBalances.TV

http://www.twitter.com/matthewjrettick

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Put Your Dollars To Work

This week’s CBTV show is entitled, “Labor Day: You Worked Hard for your Money, Make Sure it’s Working Hard for You.”

In this week’s Financial Tip, Tool, or Technique segment of the show, I gave four ideas to consider as alternatives to the low interest rates banks are currently paying, and the high volatility of the stock market.

Here is what I recommended and covered:

With yields on CDs and U.S. Treasury notes at or near record lows, retirees are searching for other “safe” investment alternatives that can help them earn more interest income during their golden years.

So, here are my 4 keys to earning better than average returns with little or no risk:

1)      Fixed Indexed Annuities - FIAs are a popular choice as they offer investors a “no-market-risk” opportunity to participate when the market goes up, but lose no principal when the market goes down.  Annual gains, by the way, are “locked in” on your anniversary date.  FIAs generally offer higher interest earnings than CDs and have either no fees, or very low annual fees compared to mutual funds and bond funds.

2)     Index Certificates of Deposit – These types of CDs are FDIC insured, with your principal returned to you upon reaching the maturity date, typically between 3-10 years.  Most use a “term end point” crediting structure, in which gains are not credited until the end of the multi-year period. Your total interest is a percentage of the equity or commodity index gain.  Liquidity can be an issue though, as you may not have access to your principal until maturity. 

3)     Index-Linked Notes – Some index-linked notes are fixed, but most are floating, while a few are a combination of the two.  They offer a percentage of the index gain over a period of years, or computed more often with a cap.  The index link could be the S&P 500, the Dow Jones, the price of gold or inflation.  Some notes pay the principal amount upon maturity, while others give you the market value.  Like Index CDs, liquidity is not guaranteed, and these notes are not FDIC insured.

4)     Gold – This precious metal has never been more valuable than it is today!  As long as the markets remain volatile worldwide, the price of gold will continue to go up.  There is a “safe-haven” demand for gold, like no other investment right now. However, if you don’t currently own gold, the price of entry is a little steep.

Hopefully, one or more of these options will work for you.  However, these investments are not for everyone, so always consult a good financial advisor to learn about “safe” investment opportunities that may benefit you.  By doing so, you can ensure that your money will continue to work hard for you, even during these turbulent times.

I would like to hear any comments or questions you have about these investment options, and what your thoughts are on the current state of the economy. Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!

 - Matt

http://www.ChecksandBalances.TV

http://www.twitter.com/matthewjrettick

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