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The Best Tool for Retirement Readiness

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If you're like most Americans, you're dreaming of the day of retirement.  When you can set your own schedule and do all the things you couldn't do when you were working.  But will you be financially ready when  the time comes?

A recent study (July, 2011) by Brightwork Partners concluded that individuals who receive professional advice are much more likely to be prepared for retirement, no matter what their income level might be.  The survey polled 3,290 workers aged 18 to 65 and assigned a “lifetime income score” projecting the percentage of current income each person could expect in retirement , including investments, Social Security and other sources.  Those using advisors, not surprisingly, scored higher than those who didn’t.   The gap between the two, however, was significant: the median lifetime income score for those using an advisor was 82%, versus 61% for those who did not have a paid advisor, with the gap being most significant at higher income levels.   A major conclusion from the study is that retirement readiness is mostly about a person’s set of practices (behaviors), use of available tools (knowledge and skills), and partnerships (professional relationships). 

October is Financial Planning Month -- now is the time to take action to plan for your retirement readiness.  If you don't currently work with a planner, go to the Financial Planning Assocation website (www.fpanet.org) to use their free planner search tool to find a Certified Financial Planner™ in your area.

The Gift of Education

Convincing a child to go to college might seem about as easy as giving a goldfish a good, close shave. But in reality, you have some leverage you might not know about. It's called an Education Policy Statement and it gives your student some guidelines to follow. In an Education Policy Statement you can:

  • Make the most of your educational gift
  • Let the student know what you, the donor, expects
  • Lay out donor & student responsibilities 

Giving the gift of education can be a productive, beneficial, life-changing experience. A good education can help your student achieve their life dreams and goals. That's why, over the years, many parents and grandparents have asked for help in making sure they clearly spell out their vision of college.  An Education Policy Statement document might not be the silver bullet, but with the right incentives in place to motivate the student along --- well, it's a good start.

 

In a future blog … How much can you expect to pay for college? We'll give you the tools you need to add it up.

What Happens if I Die Without a Will?

A common question raised by new parents, usually right before their first vacation without children, is “what happens if I die without a will?”  Many are surprised to learn that in effect everyone has a will – either one that you have personally crafted or a set of default rules developed by the State that acts as a will.  Michigan has adopted default rules called Michigan Intestate Succession Laws. 

Essentially, without a will you are leaving it up to the State to determine who is best suited to raise your minor children and who should receive your assets.  Fortunately, these State default rules are probably consistent with what many parents would intend to happen anyway.  However, the rules are designed to assist the State in running an organized society – not to meet your individual desires.

For example, in Michigan, any part of one’s estate not disposed by a will (or joint property with rights of survivorship) will normally be distributed in the following manner: 

  • The surviving spouse is entitled to the first $150,000. 
  • Any remaining assets are split ½ to the spouse and ½ to the couple’s children.

If one parent passes away, the surviving parent remains the legal guardian.  However, if both parents pass without a valid will, the State will determine guardianship through the court system.  While the court may entertain the fact that you told your sister you wanted her to care for your children (instead of the dreaded in-laws) if something were to happen to you, it is for the court to determine what is in the best interest of the minor child(ren).  Having a will can ensure that your wishes for the care of your children are carried out.

As you get ready to plan your next vacation, make it a point to add one more item to the “to do” list – prepare a will.  Although the State default rules may be adequate in many circumstances, a will provides the peace of mind that your children and assets will be cared for as you desire.

Please discuss legal matters with the appropriate professional.

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Don’t Let Your Beneficiary Designations Surprise You

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For many people, retirement accounts such as an IRAs, 401ks, or 403(b)s are their largest assets.  And while many spend considerable time thinking about wills and trusts in determining where their hard earned assets will go, many, unfortunately, are too cavalier in addressing their IRA, 401k or 403(b) beneficiary designations.    

A beneficiary form is called a “will substitute” because a will does not speak to your qualified retirement assets. This means that the beneficiary form determines who will receive your assets in these plans.  It is important to coordinate beneficiary forms with your overall estate and income tax planning to ensure that those you want to benefit from those assets receive them.  

In working with a new client recently, let’s call them Mike and Carol, we discovered (much to their surprise) that their beneficiary forms were inconsistent with their living trusts.  Mike and Carol had recently amended their Trusts to provide half to each other and half to their children from previous marriages at their deaths.  Upon review of their IRA beneficiary forms, we discovered that their forms still listed each other as primary beneficiary and, therefore, their desire to split the assets would not occur.  Fortunately, Mike and Carol were able to update their beneficiary forms and now their planning is consistent with their goals.   

Beneficiary designation forms are free to complete or change, and they are just as important as your wills or trusts. 

Review your beneficiary designations today, and leave any surprises for your next birthday!

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Lost Life Insurance Policies -- How Do You Find Them?

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As I watched the many documentaries and tributes to those that perished during the 9/11/2001 attacks, I was reminded of how many spouses and children were left behind.   Families were left with voids in their lives, not only physically and emotionally, but financially as well.  It is likely that many of those that died during 9/11 left behind financial security by way of life insurance policies with their spouses and/or children as the beneficiaries.  What happened if the beneficiaries were not aware of the details of those policies?

Every day, life insurance policyholders fail to inform the beneficiaries of the policies they have in existence.  As a result, death benefits go unclaimed and families are left to struggle financially.  Where can you go to find insurance policies and benefits that you may be due?

  • Michigan’s Money Quest - The Michigan Department of Treasury’s site for unclaimed property.
  • NAUPA – The National Association of Unclaimed Property Administrators.
  • MissingMoney.com – A search engine for unclaimed property in the U.S.
  • NAIC – The National Association of Insurance Commissioners orphaned life insurance policy search.
  • MIB Solutions – Lost life insurance policy locator service.

If you think you may be the beneficiary on a lost insurance policy, start your search today.

In addition, if you are the owner of a life insurance policy, make sure that the important people in your financial life are aware of the policy (insurance company, policy number, beneficiaries).  Document your life insurance policies and additional important financial information using the Center’s free Personal Financial Record Keeping document.

Beach Volleyball Wisdom


Commitment to a process, adjusting to new circumstances, and effective communication are all actions that help keep financial plans on track.  Partner Matt Chope transfers the same skills to the volleyball court, for which he was recently honored.  

This winter Matt competed in an international tournament in Puerto Vallarta, Mexico.  The tournament brought together 80+ players and 5 pros from around the world for 6 days of intense competition.  With 11 beach courts used concurrently, the tournament format has each player compete in 30-40 games where teammates and opponents change every game.     

 Matt says, "What makes this an exciting event is not only the physical dexterity and conditioning required to last six days in the hot sand and elements, but also developing friendships with such a diverse group of people with unique strengths and abilities." 

Much to Matt's surprise and honor, he was chosen as one of three male Most Valuable Players by his peer players at the end of the tourney.  Besides performing well on the volleyball court, a positive attitude and good sportsmanship are keys to Matt's tournament success.

These qualities also make Matt a valued Center team member and effective financial planner.Congratulations, Matt!

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