You are invited: Enrollment for Medicare begins October 15. Are you ready?

Join us for our fall series of complimentary workshops and seminars geared towards thinking long term and making for a successful future. Our monthly programs are designed to fit into your work day, offering lunch and learning opportunities to help educate and update our clients and friends on important topics.

Our September seminar is focused around changes in Medicare for 2018

If you are looking to sign up for Medicare this year or make changes to your existing plan, October 15th kicks off the open enrollment period for Medicare. Every year there are changes to cost, coverage, and what providers and pharmacies are in their networks.

Learn what changes are coming? Understand the value of Medigap insurance and whether you need it? What is the ‘guaranteed-issue’ period? And much more.

Seating is limited and tends to sell out. Please click here to RSVP for you and a guest.


Life insurance riders can pay for long-term care

Life insurance has many uses, including income replacement, business continuation, and estate preservation. Long-term care insurance provides financial protection against the potentially high cost of long-term care. If you find yourself in need of both types of insurance, a life insurance policy that combines a death benefit with a long-term care benefit may appeal to you.

Here’s how it works

Some life insurance issuers offer life insurance with a long-term care rider available for an additional charge. If you buy this type of policy, you can pay the premium in a single lump sum or by making periodic payments. In any case, the policy provides you with a death benefit that you can also use to pay for longterm care related expenses, should you incur them.

The amount of death benefit and long-term care allowance is based on your age, gender, and health at the time you buy the policy. The appeal of this combination policy lies in the fact that either you’ll use the policy to pay for long-term care expenses or your beneficiaries will receive the insurance proceeds at your death. In either case, someone will benefit from the premiums you pay.

The appeal of this combination policy lies in the fact that either you’ll use the policy to pay for long-term care expenses or your beneficiaries will receive the insurance proceeds at your death.

Long-term care riders

The long-term care benefit is added to the life insurance policy by either an accelerated benefits rider or an extension of benefits rider.

Accelerated benefits rider–An accelerated benefits rider makes it possible for you to access your death benefit to pay for expenses related to long-term care. The death benefit is reduced by the amount you use for long-term care expenses, plus a service charge. If you need long-term care for a lengthy period of time, the death benefit will eventually be depleted. This same rider also can be used if you have a terminal illness that may require payment of large medical bills. Because accelerating the death benefit can have unfavorable tax consequences, you may want to consult your tax professional before exercising this option.

Example: You pay a single premium of $50,000 for a universal life insurance policy with a long-term care accelerated benefits rider. The policy immediately provides approximately $87,000 in long-term care benefits or $87,000 as a death benefit. If you incur long-term care expenses, the accelerated benefits rider allows you to access a portion, such as 3% ($2,610), of the death benefit amount ($87,000) each month to reimburse you for some or all of your long-term care expenses. Long-term care payments are available until the total death benefit amount ($87,000) is exhausted (about 33.3 months). Whatever you don’t use for long-term care will be left to your heirs as a death benefit.

(The hypothetical example is for illustration purposes only and does not reflect actual insurance products or performance. Guarantees are subject to the claims-paying ability of the issuer.)

Extension of benefits rider– An extension of benefits rider increases your long-term care coverage beyond your death benefit. This rider differs from company to company as to its specific application.

Life-insurance-riders-can-pay-for-long-term-careDepending on the issuer, the extension of benefits rider either increases the total amount available for long-term care (the death benefit remains the same) or extends the number of months over which long-term care benefits can be paid. In either case, long-term care payments will reduce the available death benefit of the policy. However, some companies still pay a minimum death benefit even if the total of all long-term care payments exceeds the policy’s death benefit amount.

Continuing from the previous example, if the policy’s extension of benefits rider increases the long-term care benefit (the death benefit–$87,000–remains the same) to three times the death benefit ($261,000), the monthly amount available for long-term care increases to $7,830. On the other hand, if the extension of benefits rider extends the length of time the monthly long-term care benefit is available, then the monthly payments ($2,610) are extended for an additional 24 to 36 months beyond the initial number of months (33.3) available.

Other provisions

Typically, qualifying for payments under a long-term care rider is similar to the requirements for most stand-alone long-term care policies. You must be unable to perform some of the activities of daily living (bathing, dressing, eating, getting in or out of a bed or chair, toilet use, or maintaining continence) or suffer from a severe cognitive impairment.

An elimination period may also apply: you pay for the initial cost of long-term care out-of-pocket for a specific number of days (usually 30 to 90) before you can apply for payments under the policy. As with all life and long-term care insurance, the insurance company will require you to answer some health-related questions and submit to a physical examination before issuing a combination policy to you.

Here’s a tip:
If you need long-term care insurance, you may be able to get it by exchanging an existing life insurance policy with accumulated cash value for a new policy with a long-term care rider. You can do this through a tax-free exchange, but you must also qualify for the new insurance policy as well. You might not get as much death benefit as you had under the original policy, but you’ll pick up the option of being able to use it for long-term care expenses.

Is a combination policy right for you?

Deciding whether a combination policy is right for you depends on a number of factors. Do you need life insurance and long-term care insurance? How much life and long-term care insurance will you need? How long will you need it? Will the long-term care part of a combination policy provide sufficient coverage?

Life-insurance-riders-can-pay-for-long-term-care-2A long-term care rider may not provide as many features as a stand-alone long-term care policy. For example, the combination policy may not cover assisted living or home health aides. It also may not provide an inflation adjustment, an important feature considering the rising cost of long-term care. The tax benefits offered by a qualified long-term care policy may not apply to the long-term care portion of combination policies, which could result in taxation of longterm care benefits received from the policy.

What if your life insurance needs change as you get older and you find that you no longer want life insurance protection? It’s not uncommon for people to drop their life insurance in their later years if there’s no compelling need for it, but if you surrender the combination policy, you’re also forfeiting the long-term care benefit it provides, usually at a time when you are most likely to need it.

And keep in mind that as you use your long-term care benefits, you’re depleting the death benefit–a death benefit you presumably wanted to pass on to your heirs or perhaps use to pay for estate taxes.

Finally, compare costs of combination policies to other forms of life insurance, such as term insurance, and stand-alone longterm care policies. Depending on your age and health, the cost for the combination life policy may actually be higher than the total premiums paid for separate life insurance and long-term care policies, especially if your life insurance need is temporary (such as income replacement during your working years) rather than permanent.


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This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results. Raymond James Financial Services, Inc.does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional.

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New baby on the way

Your parents might have mentioned at least a couple of times while you were growing up how wonderful and expensive you were. The bottom line? Bringing a child up is a tremendous financial responsibility, and it’s better to plan in advance than deal with a surprise down the line.

The U.S. Department of Agriculture compiles an annual survey on what it costs to raise a child from birth through age 17. In 2007, in the lowest income group, expenses ranged from a total of $7,830 to $8,830 for a two-child, husband-wife household to between $15,980 to $17,500 for families in the highest income group. Once again, those are the latest annual figures – so if you held spending unrealistically static for the next 17 years, the cost of raising a child in the lowest income group would range from $133,110 to $150,110 adjusted for inflation. In the highest income group, that range would be between $271,660 to $297,500.

Note that we haven’t begun to discuss college yet. Across the United States, the average tuition and fees at four-year private institutions in 2007-2008 was $23,712, representing a 6.3 percent increase of more than $1,400 over 2006-2007, according to College Board’s 2007-2008 Annual Survey of Colleges. At public four-year colleges, the average in-state tuition and fees averaged $6,185, a 6.6 percent increase.

All parenthood comes at a price. But with the help of a financial planner you can create a strategy to afford kids from birth through college. Here are some key points in that process:

Create or review your financial plan: A financial plan is a written set of goals, strategies and a timeline for accomplishing those goals. For many individuals, it may be the first time they seriously examine their financial future in such black-and-white terms. But it starts with the basics – determining how much you really have in savings, debt, insurance and investments. Your financial planner can also help you understand how much the additional costs of raising a child, including the startup costs of birth or adoption will affect all those numbers. A financial plan should be reviewed with every major change in life, and having kids is certainly one of those landmark events.

Get rid of your high-interest debt: A major decision like having a child is a good reason to take a “clean slate” approach to debt. Before you can build a reserve fund, it’s wisest to pay off your credit cards first.

Make sure you have a will: If you die without a will, you won’t have a clear path of guardianship for your child, nor will your assets be properly directed to support that child. Any good adoption attorney will insist that you develop and file a will as part of the adoption process.

Check your insurance options: In today’s health insurance environment, the addition of a child to a policy can bring tremendous additional cost – sometimes without the guarantee of the best coverage. Check with your employer or your independent insurance provider to make sure you have the best coverage for what you can afford. Also look into medical savings accounts with your financial planner if you decide to take a high-deductible policy to keep premiums low.

Know your tax advantages: If you’re adopting, you can get some tax relief. In tax year 2008, parents will be entitled to a one-time tax credit of $11,650 per eligible child. There are income limits – the credit disappears for individuals with modified adjusted gross income of between $174,730 for individuals and $214,730 for couples.

Ask what your employer can do for you: If you’re working at a family friendly company, it’s often considerably easier to apply for leaves of absence or work schedules that make more sense when you’ve got a young child at home. Some companies may offer to reimburse some portion of their workers’ adoption expenses.

Build your reserve fund: When a baby, toddler or older child comes into the house, money flies out the door at a velocity most childless people have never seen. Children always cost money and sometimes unpredictably so, but it pays to build your savings before they arrive so you won’t overuse your credit cards. Also, it’s possible that a birth mother’s health may take a turn during the pregnancy, so that’s an expense that needs to be anticipated.

A Retirement Savings Exit Strategy

A Retirement Savings Exit Strategy

Create a plan to withdraw your minimum distributions on your terms, while complying with Uncle Sam’s

Every day, an estimated 10,000 people reach the IRS trigger age when they must begin withdrawing money from their retirement plans. If you’re among them, it’s wise to develop a strategy.

Once you hit 70½, IRS rules call for required minimum distributions (RMDs) every year on all of your traditional, simplified employee pension (SEP) and SIMPLE IRAs, as well as employer-sponsored plans. Roth IRAs are exempt.

Since you definitely want to comply (the IRS will levy a 50% penalty on any amount you are supposed to withdraw but don’t), talk to your advisor about how to be smart with RMDs, perhaps even automating them. Here are some strategies.

Scenario: You want to take advantage of a low tax year or down market

Strategy: Convert traditional IRAs to Roth IRAs

If your income declines, you may want to convert a traditional IRA into a Roth IRA. You’ll owe taxes on the amount you convert in the year of the conversion, but unlike traditional IRAs the balance in your new Roth IRA is not subject to RMDs – and any withdrawals you choose to make are not taxable.* You want to pay taxes at the lowest rate possible, so if you are in the 15% tax bracket now but believe you will be in the 25% or higher bracket later, you may be able to save by paying taxes now.

Scenario: You don’t need the money and want to minimize your taxes

Strategy: Make a charitable contribution from your IRA

You may also make a qualified charitable distribution (QCD), which allows you to donate up to $100,000 directly from your IRA to a qualified charity. This removes money from your IRA tax-free, which in turn reduces the amount on which your RMD for that year is calculated, and also provides you with a potential tax deduction. You must be 70½ or older to be eligible.

Scenario: You need the money to live on and want to minimize taxes

Strategy: Consider purchasing an annuity within your IRA

Another idea is to purchase what’s called a “qualified longevity annuity contract” (QLAC) in your IRA. With a QLAC, you pay a specified premium now in return for guaranteed income later. You don’t have to take an RMD from the portion of your IRA used for that premium until age 85, which may cut your tax liability. The IRS exempts longevity annuity premiums of up to $125,000 or 25% of your IRA account, whichever is less. Annuities can be complicated, so discuss it with your advisor.

Guarantees are subject to the claims-paying ability of the issuing insurance company.

Plan wisely, live well

These are just a few of the options available with RMDs; a professional can help you create a specific plan that addresses your individual situation. Remember, your goal is to comply in a tax-efficient manner that takes into account other income streams, your estate plans and the fact that you worked hard for that money and it’s time to enjoy it

Next steps:

Get professional help about:

  • Tax planning
  • Making the most of charitable gifts
  • Other RMD strategies

*Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount is subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

As federal and state tax rules are subject to frequent changes, you should consult with a qualified tax advisor prior to making any investment decision