Looking ahead to the new year, there is good news! There are plenty of reasons to be optimistic.
- Consumer debt is the lowest it has been since its peak in 2007
- The housing market continues to recover. Housing starts and existing home sales are up, and the number of vacant units is down
- Employment recovery has gained traction, and unemployment is the lowest it has been since 2009
- US manufacturers are more competitive in the world market
- Global economy still in flux, with Europe and China getting most of the attention
- Yields continue to be low, and liquidity is a focus
- Interest rates are expected to hold steady in 2013
- The stock market has made gains, with the S&P up 11.5% over last year
What’s it all mean to you, your business and your family?
- Safety of assets continues to be the number one concern for savings and retirement
- Yields on “traditional” safe-segment investments will continue to be very small
- Liquidity continues to be important
- Inflation in the US is unlikely in the coming year, and interest rates will stay where they are
- IUL continues to be the financial tool of choice for retirement and savings to deal with financial uncertainty
Why IUL? It’s a perfect fit for today’s financial conditions.
- Complete protection against loss of savings because of market volatility
- Ability to benefit from market increases and lock-in gains
- Tax-free access to your funds, without age or use restrictions
- Liquidity of assets
To learn more about how IUL can improve your retirement and savings strategy, give me a call or send me an email.
Is the threat of tax cuts expiring and spending cuts kicking in really a “fiscal cliff”? No, not really. I’m not saying that we don’t have some tough financial issues to be solved – we do. But we are not looking at a financial free-fall despite the dramatic coverage in the media.
The White House got a counter-proposal today from the GOP on a deficit-reduction plan, the real underlying issue that has prompted talk of The Cliff. The two sides (although I hate to think of it that way) are coming closer to a middle ground that will be palatable to both, but pleasing to neither. A compromise is in the offing, and the worst case scenario is a fiscal slide, not a cliff.
For my clients and I, the bigger issue is to decide what financial plans we need in place to deal with very real fiscal uncertainty, and to take advantage of the gains the market is showing now. Safety of savings is paramount and preserving opportunity is a close second. So many families that I work with are looking for answers on how to save for college and retirement at the same time without giving up tax benefits. It’s a lot to face, but there is a safe option that answers all of these concerns – indexed universal life.
As an estate planning and tax attorney, I’ve been recommending maximum funded IUL to my clients for over a decade. I’m such a believer in the strategy that I have five contracts for my family, and I recommend it to my clients with the confidence that it is a safe, flexible and tax-wise solution.
If you have questions about how to adjust your financial plans to deal with “The Cliff” and beyond, I invite you to get in touch with me for a conversation about your situation. I’ve got more information that I’m eager to share.
As the smoke from the election clears, President Obama addressed the nation today about “The Fiscal Cliff” that we’re facing at the end of the year.
The Fiscal Cliff refers to the scheduled end of the Budget Control Act of 2011. Laws set to change on December 31, 2012 are the end of last year’s temporary payroll tax cuts, the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would increase income taxes, and the end of the tax cuts instituted in 2001 to 2003. January 1 also marks the beginning of taxes related to President Obama’s health care law. At the same time there are spending cuts that will take effect as part of the debt ceiling deal made in 2011. According to Barron’s, over 1,000 government programs are slated for “deep, automatic cuts,” among them the defense budget and Medicare.
In the short term, this may encourage a post-election spirit of compromise between the two parties to find solutions that are palatable, if not ideal. In the long term, it means that it is almost certain that everyone’s taxes will increase. Income earners over $250,000 look to be a likely target for more government revenue.
What does it mean to you and me?
It is almost certain that, no matter what tax bracket you’re in, your taxes are going to go up. I expect we’ll see a phase-in period, but the issue of the national debt pretty much guarantees that along with budget cuts, the money is going to have to come from somewhere, and that will be the American public.
This is particularly worrisome for retirees and those about to retire. Most retirement plans like IRAs and 401ks were designed with the assumption that taxes would be lower in retirement, and that you would need less money in retirement than you did during your working years. With most taxes at a 50-year low, that assumption isn’t going to pan out. It is almost certain that income taxes in the future will be higher than they are now. A new strategy is required in retirement planning to deal with this reality. It’s one of the many reasons that I’m such a big believer in the wisdom of IUL.
Indexed Universal Life has become a favored tool of financial advisors and money managers because it blunts the uncertainty of future tax increases. Along with the safety and growth opportunity IUL provides, it can also provide tax-free retirement income. You pay tax on the money now, at record low rates, and when you want to access the money later you can do so with no tax burden. There isn’t a limit to how much money you can put in. There are no mandates requiring a penalty if you access the funds too soon, and no requirement to start taking distributions if you choose not to. It’s a win-win.
If this sounds like it could be a solution for your financial planning, there’s more information I’d love to share with you, and initial consultations are always complimentary. I urge you to explore your options before the end of the year and the edge of The Fiscal Cliff.
It’s less than two weeks until the election, and one thing seems certain no matter who our president will be: income tax rates are going to change, we just don’t know how much or for whom.
In all of the pre-election chatter it’s easy to lose sight of the fact that Americans are paying the smallest share of their income for taxes since 1958. That’s an entire generation of careers whose retirement plans are based on the assumption that income tax rates will be lower in retirement than during their working lives. That’s been turned on its head. The concept of contributing pre-tax dollars to build a secure future, and paying taxes later is out of date. More and more of my clients are adjusting to the change in times by re-thinking their retirement strategy.
When you run the numbers, it may make more sense to pay tax on your contributions to retirement now, at the lowest rates in a generation, than to gamble on future tax ratesand the amount of your taxable income in retirement. It probably doesn’t make economic sense to use traditional retirement strategies based on an outdated tax reality.
If this kind of thinking makes sense to you, and you’d like to learn more about how it applies to your situation, get in touch and I’ll explain the details. You need to have this information.
As I’ve been talking with people about IUL for retirement or for college savings, there are a few common questions I get. We’ve added a new page with these Frequently Asked Questions to this blog. Take a look and let me know if you have other questions.
Rob@RAFStrategies.com
858-625-0800
Summer is almost over, and with school back in session, many parents (and grandparents) are thinking about saving for college. Now is a good time to put plans in place, if you haven’t, while school is on your mind.
There’s an option you may not know about.
I’m an estate planning and tax attorney, and one of the most common issues I’m asked about is where to put your assets to keep them safe without settling for low returns. Isn’t there a better way?
There is a way to keep your capital safe and still have upside opportunity – Indexed Universal Life or IUL. When IUL is structured properly and funded correctly, I believe it is the wisest place for your money during turbulent financial times like we’ve seen since 2008. IUL gives you protection against any loss because of a downturn in the market, but let’s your principal grow when the market is up, and locks in the gains every year. You never go backwards.
The two most certain things . . . .
With a presidential election coming, uncertainty about taxes is also a big concern. Regardless of your political beliefs or affiliations, we are all living with worries about changes in the tax rates in the coming years. One of the things that I like so much about IUL is that you are able to put away money now without worrying about paying taxes when you want to use the money. You can take the money out tax-free at any time, for any purpose, with no penalties. If you want to retire when you’re 55, your retirement savings in IUL are available immediately.
It’s an unpleasant subject, but we all have to face it – how to transfer assets to the next generation with the least tax possible. The proceeds from IUL are not taxable to your heirs, and your contributions to IUL are virtually unlimited. This is why IUL has become so popular with high-net-worth individuals.
If this sounds like something that might benefit you and your family, I encourage you to get in touch with me to see. Let’s take a look at what IUL can do for you.
