As a result of various laws within the past 10 years or so, the exemption amount has steadily increased to $3,500,000 today. Many estate planners believe that this exemption amount may be made permanent. And, with a recession, even individuals who formerly were concerned about estate taxes, may no longer be because of a significantly reduced net worth. The problem, however, is that many people believe that if they don’t have a federal estate tax problem, they don’t need to review their wills or estate plan. Unfortunately, that inaction may result in a surviving spouse being disinherited.

Many estate plans for married couples are set up so that when the first spouse dies a certain amount of money and property is allocated to a family trust equal to the exemption amount.  The balance of the estate is usually left outright to the surviving spouse or to a marital trust for his or her benefit.  The purpose of this common estate plan design is for a married couple to shelter as much assets as possible from estate taxes. This was a great estate plan, and hence its popularity, when the exemption amount was $1,000,000 and the economy was growing. 

Now, in a recession, and with an exemption amount of $3,500,000, that estate plan could be disastrous. Let’s take a simple example.  Bill and Mary are married.  Bill has an estate of $3,500,000.  He dies in 2009.  His will was drafted prior to 2002 and directs his executor to fund a
family trust with property equal to the exemption equivalent.  When Bill drafted the will, the exemption amount was $1 million, so he believed his surviving spouse would receive a bequest of $2,500,000.  Upon Bill’s death, assuming that his estate is still worth $3,500,000,
the family trust will receive the entire estate because the exemption amount is now $3,500,000.

Bill probably did not intend to disinherit his surviving spouse.  Mary now only has the assets in her name, and probably an income interest from the assets held in Bill’s family trust.  It is probably safe to say that Mary is not at all happy with this result. To complicate matters, a surviving spouse may have the option of contesting a will or trust if he or she is not provided a certain amount of money. 
States that are considered “separate property” states (as opposed to “community property” states) usually have “right of election” laws that prevent  an individual from disinheriting a spouse – intentionally or unintentionally.   Even with this right of election, however, the result for the surviving spouse may not be what was intended.

Individuals like Bill should review their estate planning documents with their attorneys and financial professionals to determine the impact of the increasing exemption on their estate.  Indeed, estate planning is an evolving process.  In fact, all individuals should have their estate planning documents reviewed periodically and certainly whenever there are tax law changes or major life or economic events.  In this way, your attorney can have the documents updated  to reflect the changes in the tax laws, financial environment, or changes in intent.

Steven L White
Wealth Strategies Group

As a result of the recession and marked downturn of the stock market, many retirees saw their account balances for their IRAs and qualified retirement plans drop precipitously.  Reacting to public sentiment, The Worker, Retiree, and Employer Recovery Act of 2008 was enacted, in part, to try to provide some relief.
Prior to the Act, owners of individual retirement accounts and participants in employer sponsored qualified retirement plans (i.e., 401k, profit sharing, money purchase pension plans, and defined benefit plans) were subject to the “required minimum distribution” (RMD) rules under the Internal Revenue Code (IRC).  These rules generally provide that individuals who have attained age 70 ½ must start to take distributions from these retirement plans.  The RMD is determined based on the value of the IRA or interest in the qualified plan as of December 31st of the previous year, divided by their life expectancy as determined from Internal Revenue Service (IRS) tables.  The RMD is required to be taken by April 1st of the year following the calendar year during which the person attains age 70 ½.
There are penalties for failing to timely take the RMD.  In addition to ordinary income tax, there is a 50% excise tax on the RMD not taken.  These same rules also apply to designated beneficiaries of inherited IRAs, although spousal IRAs and IRAs with charitable beneficiaries are subject to a different special set of rules.  In addition, where there is no “designated beneficiary” eligible for inherited IRA distribution options, the IRA must be distributed no later than December 31st of the 5th year following the year of the IRA owner’s death (the “5-year rule”).
As a result of the economic downturn, it did not seem appropriate to force retirees to take distributions from their distressed retirement accounts or to assess penalties on financially strapped individuals.  Hence, the enactment of the RMD waiver provisions in the Act. 

The Act waives the requirement that an RMD be taken for 2009 from:
(1) defined contribution plans, as described in IRC Code Sections 401(a), 403(a), or 403(b);
(2) IRC Sec. 457(b) eligible deferred compensation plans, but only if the plan is maintained by a state, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; and
(3) individual retirement plans.

The provisions of the Act do not apply to defined benefit plans.
Here’s how the waiver applies:  If someone is age 70 ½ entering 2009 or attains age 70 ½ during 2009, the RMD rules are waived.  That person’s next RMD would be for calendar year 2010 to be paid by April 1, 2011.  If someone is already taking RMDs, there is no requirement to do so in 2009.  In the case of the application of the 5-year rule, 2009 will not count toward the 5 years, so if the 5 years encompasses 2009, the rule, in effect, becomes a 6-year rule.
Clearly, however, despite good intentions, the RMD waiver provision benefits primarily those retirees that have other income sources and do not need to rely on their RMDs for their lifestyle expenses.  These individuals will now have another year to see distressed investments recover, and wealthier but older clients need not take RMDs which would probably be quite large.  This provision may also have the effect of reducing taxable income for 2009.  That may help to avoid or mitigate the effects of various tax breaks based upon adjusted gross income.  Unfortunately, individuals that rely on their RMDs to maintain their lifestyles may have to take withdrawals from their accounts despite the loss in account values.
Institutional Reporting Financial institutions that sponsor IRAs are required by law to report certain contribution and account value information to account owners no later than January 31st following each calendar year on IRS Form 5498.  Since the Act does not waive RMDs for 2008, institutions still have the responsibility to report for 2008 by January 31, 2009.  However, the Act requires that all 5498 forms sent out should indicate that there are no RMDs required for 2009.
Many institutions indicated they could not change their processing programs in time to comply with this new requirement.  Accordingly, the IRS Issued Notice 2009-9, providing that issuers of Form 5498 should not put a check in Box 11, which normally would be checked to indicate that the IRA owner is required to receive an RMD in 2009.  If the box is checked because of the process programming issue, the IRS will not consider the form issued incorrectly, provided that the IRA owner is notified no later than March 31, 2009, that no RMD is required for 2009.
In addition, RMD information for 2009 need not be sent in 2010.  If a financial institution issues a Form 5498 for 2009 in 2010, it must show the RMD for 2009 as -0-.
Please consult with your Guardian Financial Representative if you have any questions concerning this document. The foregoing information regarding estate, charitable and/or business planning techniques is not intended to be tax, legal or investment advice and is provided for general educational purposes only.  Neither Guardian, nor its subsidiaries, agents or employees provide tax or legal advice. You should consult with your tax and legal advisor regarding your individual situation.

Steven L White
Wealth Strategies Group

Financial Representative  The Guardian Life Insurance Company of America (Guardian) New York, NY
Steven L. White is a Registered Representative and Financial Advisor of Park Avenue Securities.
Securities Products and services offered through Park Avenue Securities LLC (PAS),   PAS is an indirect, wholly owned subsidiary of Guardian.  Wealth Strategies Group is not an affiliate or subsidiary
of PAS or Guardian.

PAS is a member FINRA SIPC

Steven L. White Jr.,

 Wealth Strategies Group

 

False,  your money will need to catch up with much more than inflation.

Other wealth eroding factors to protect against are income taxes, capital gains taxes, estate taxes,  the real cost of living, wear and tear, planned Obsolescence, and unexpected life events. We are living much longer than we used to and the money you save and invest will need to go further. One might think that in order to realize greater amounts of money, greater risks must be taken. Not exactly. Current market conditions prove that taking greater risks does not necessarily mean greater returns. It amazes me to hear from friends, family and associates that their retired relatives well into their 60’s and 70’s take great risks with their money by remaining in risky asset allocation models that lose significant amounts of principal in today’s volatile market swings. These people may not have enough of a time horizon to recover.

 

Lesson learned-Be prudent in “diversifying” your diversification. Many of our clients are turning to increased savings and money market accounts, ROTHs, participating Whole Life insurance and adding annuities to their overall strategy and tactics. They have learned that a single strategy of putting it “all in” to 401(k) plans, IRAs and other retirement plans can be Risky and not always efficient. If you are a high income earner and do not qualify for a ROTH due to income limits you may find that a “participating” Whole Life insurance policy is a viable option. The bottom line is that Savings in aggregate need to out-run all cost-of-living pressures, which include far more than just inflation.

 

 Steven L. White, Jr.

 

Wealth Strategies Group

Neither Guardian, nor its subsidiaries, agents or employees provide tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.”

I , John Smith, presently residing in the State of New York, and part owner of Acme Widget Company, being of sound mind and memory, do hereby declare the following:
1. I hereby leave my interest in my company to my family to be divided among them as they see fit even though my spouse or children have no experience in operating and running a widget company. I have the utmost confidence that after my death, everyone will get along with each other, and that Jack Jones, my partner who owns a portion of the company, will have no problems working with my spouse or children.
2. I hereby leave the responsibility of operating the company to my surviving partner, Jack, whom I am sure, will not mind working twice as hard and sharing all of the profits of the business with my family.
3. In the event my family wants to sell my company to Jack, I hereby leave it up to them to work it out with Jack as to the price and terms of the sale.
4. In the event such a sale takes place and the sales price is paid out over a period of time, I have the utmost confidence that Jack or his estate shall pay my family the terms of the sales contract even if Jack dies or becomes disabled.
5. In the event my family wants to sell my share of the business to an outside party, I hereby direct that they negotiate any terms they want without consulting Jack, and request, but do not demand, that Jack get along with any other new owner of the company.
6. If I have a buy-out agreement with my company or Jack that has not been recently updated, I direct that my family sell my interest in the company at whatever price the old agreement says, even though it won’t reflect current fair market value.
7. In the event Jack or the company has no life insurance on my life, I really don’t care if Jack or the business becomes insolvent and cannot afford to pay my family the buy-out price.
8. I hereby direct the IRS to ascertain the value of my interest for estate tax purposes. I am sure the IRS, as a division of the government, will consider the needs of my family when determining any estate tax attributed to my business holdings.
9. I direct that all lines of credit that my business has at the time of my death be paid off at my death because I think the interests of my lenders are more important than those of my family and my business partner.
10. If I leave my business interest to my family and federal estate tax is due, I know my family will work twice as hard to pay the taxes due to the IRS and any state taxing authority.
11. If all or part of my business interest passes to my minor children upon my death, I direct my children’s guardian or trustee to sell the business as quickly as possible, regardless of price, because I do not want to burden my children’s guardian or trustee with the fiduciary responsibility of running a widget company.
IN WITNESS WHEREOF, I, John Smith, do hereby affirm this to be my wishes with respect to the business I spent
my lifetime building.   

The foregoing information regarding estate, charitable and/or business planning techniques is not intended to be tax, legal or investment
advice and is provided for general educational purposes only. Neither Guardian, nor its subsidiaries, agents or employees, provide tax
or legal advice. You should consult with your tax and legal advisor regarding your individual situation.

Steven L. White Jr.

Wealth Strategies Group

Steven L. White Jr.

Wealth Strategies Group

 

However, many plan participants are not prepared to make the decisions about distributions that are necessary, if they are to achieve personal retirement goals. They don’t understand the choices available, and they may not anticipate decisions and seek professional help before deadlines occur. While this article doesn’t attempt to provide all the knowledge required, it does identify important issues to consider if you are about to receive a distribution.

Six Trigger Events: A good place to start is with the concept of a “trigger event.” This is an event at which your plan money can be distributed to you under federal law. The six trigger events are: 1) separation from service (i.e., quitting, being fired, being offered early retirement); 2) reaching retirement age; 3) reaching age 59 ½ in a plan that allows distributions after that age; 4) death; 5) disability; and 6) termination of the plan.

At a trigger event, participants normally are entitled to receive their vested plan balances, less any plan loans outstanding. For many people, this is the “biggest paycheck” they may ever handle, representing years of personal savings, employer contributions and accumulated earnings. Perhaps the most important point to make about handling a distribution involves the need to anticipate and plan for trigger events. If your company is downsizing and laying off workers, don’t wait for “pink slip day” to seek information or advice. Many other pressures may be swirling around you when the trigger event takes place, and you need time to plan for handling your “biggest paycheck” wisely. One of the first steps in planning for a trigger event is to understand all your choices for handling this money, and then select the best one for your future.

You will probably have several of the following choices for handling this money:

• Leave money in the plan and let it compound. In most cases, you can’t be required to take a distribution, unless your balance is fairly small. However, leaving money in the plan means you will be limited to the plan’s investment choices. You probably won’t be allowed to put more of your own money into the plan after you leave work.

• Take an annuity income payout from the plan, if one is offered. This choice converts plan money into a fixed income guaranteed by an insurance company. However, once you accept this choice, you generally can’t change it. The annuity income may provide less purchasing power the longer you live, because of inflation.

• Pay tax on the distribution and invest or spend the after-tax amounts. This is usually not an attractive choice – especially if your biggest paycheck is large. The distribution will be added to your other income and could be taxed in the highest brackets. If you are under age 59 ½, the distribution also could be subject to a 10% federal tax penalty.

• Transfer the money to the plan of a new employer, if this option is offered. Tax law changes encourage transfers between companies and types of plans. To make this choice work, you generally need to have a new job lined up and take steps to make sure your money is transferred from one plan to another. In this case, you won’t owe current income tax, and all your plan money can continue to grow.

• You can transfer the money directly to a Traditional IRA in your own name, You must arrange this transfer between the company you are leaving and your choice of IRA provider. In this case, you do not actually receive money and there is no current income tax consequence.
 
• You can receive the distribution and then “roll it over” to a Traditional IRA in your own name. You must deposit money into the IRA within 60 days of receipt. The employer will withhold 20% of the distribution for federal income tax, so you will have to supply this amount yourself if you want to avoid tax on 100% of your money. It’s best to avoid the withholding issues of a rollover, if you can.

• You may transfer or roll over money to a Traditional IRA and then convert to a Roth IRA, if you qualify. Roth conversions currently are available to taxpayers with modified Adjusted Gross Income of $100,000 or less. Starting in 2010, the income limit on these conversions is scheduled to disappear. In a Roth conversion, you pay current income tax on the converted amount and then can qualify for tax-free distributions later on.

These choices can be complex to evaluate. With so much money at stake, you need to make sure your analysis is thorough and considers your long-term needs. That’s why it usually pays to sit down with a financial professional well before a trigger event. Many professionals are able to help you understand the tax and investment consequences by using retirement distribution software and customized illustrations. They also can explain other choices you may have. When you consider how long and hard you have worked to earn your biggest paycheck, you should then decide that it’s worthwhile to make the most of it with qualified financial professional help.

Steven L White

Wealth Strategies Group

To take advantage of this opportunity, individuals can prepare by consolidating all Traditional IRAs into one. Depending on the taxpayer’s Adjusted Gross Income, it also may be possible to begin making annual contributions to a Roth IRA prior to 2010. For reasons discussed in this article, such contributions can accelerate the tax benefits of assets that will be converted from a Traditional to a Roth IRA later.

 There are two main ways to participate in Roth IRAs – annual contributions or conversions. First, annual contributions – Taxpayers whose adjusted gross incomes (AGIs) do not exceed limits may make an annual contribution to a Roth IRA. Contributions are made with after-tax dollars and earnings compound tax-deferred. Withdrawals of Roth contributions may be taken tax-free at any time. Withdrawals of earnings are tax-free, provided the Roth has been in existence at least five years and withdrawals are taken after age 59 ½. Tax penalties apply on withdrawals of earnings prior to age 59 ½ unless an exception applies such as death, disability, medical expenses, first-time home purchase, or higher education expenses.

Secondly, conversions – Currently, any taxpayer (single or joint filer) with AGI under $100,000 may convert money from a Traditional IRA to a Roth IRA. The amount converted is added to taxable income in the year of the conversion and taxed as ordinary income. Since converted amounts then may qualify for tax-free withdrawals under the same terms as Roth contributions, conversions are a way of pre-paying income taxes in an IRA.

Starting in 2010, the $100,000 AGI limit for conversions will no longer apply, according to current law. For conversions made in 2010 only, half of the converted amount may be included in taxable income in each of 2011 and 2012.  
A Roth IRA conversion can help to accumulate tax-advantaged assets during retirement, simplify tax compliance, and pass on estates. In a Traditional IRA, contributions are not allowed after age 70 ½. However, a Roth owner may continue to make post-tax contributions at any age, and this benefit can increase the IRA account value in older ages. As there are no required minimum distributions from Roth IRAs during the owner’s lifetime, a conversion also avoids the annual calculation of the minimum distribution that is required in most Traditional IRAs after age 70 ½.
Finally, since no income tax is due on qualifying distributions from a Roth IRA during the owner’s life or after death, a Roth can make life easier for heirs by leaving them tax-free assets. Although heirs are subject to minimum distribution requirements from Roths (after the owner’s death), they have some flexibility to “stretch” these distributions over several years, thus continuing tax-deferred growth for some time.
.
Tax rates can make a difference! One of the more challenging questions to consider is this one: “Do you think that, on the whole, tax rates will increase or decline during your retirement?” Because Roth contributions and conversions effectively pre-pay income taxes, they may make sense for individuals who believe tax rates will increase during their retirements. Some people think it is a mistake to pre-pay taxes because they will lose the “time value of money” on the taxes paid. However, this is not the case, due to the following rule:

A pre-tax dollar in a tax-deferred investment will have exactly the same after-tax future value as a post-tax dollar in a tax-free investment, if you assume that tax rates stay constant.

For example, suppose you put $1 of pre-tax money into a Traditional IRA and over 10 years it compounds (@ 8% annual return) into $2.16. You then pay federal/state income tax at a hypothetical 30% rate, leaving $1.51 after taking a taxable withdrawal. In comparison, suppose that you put 70 cents of post-tax money ($1 less 30 cents tax) into a Roth and it compounds over ten years at the same 8% to produce $1.51. Since the full amount can be withdrawn tax-free, the amount available for retirement security is exactly the same as in the Traditional IRA.

It is impossible to know whether federal, state and local income tax rates will go up or down in the future. Due to this uncertainty, one strategy is to hedge against tax rate changes by dividing retirement money between Traditional and Roth IRAs.

Even for those who aren’t sure about the wisdom of Roth conversions, it can be useful to contribute or convert a small amount to a Roth now. People over age 59 ½ are allowed to take tax-free withdrawals from Roth IRAs starting five years after the account was opened. Even a small amount put into a Roth now starts the “five-year clock” ticking.

In summary Roth IRAs have become a viable planning tool that can help to increase tax-advantaged asset accumulation and increase simplicity during retirement. Recent changes in the tax law will make Roth conversions “universal” starting in 2010, and that makes this a good time to begin evaluating their pros and cons.

Steven L. White

Wealth Strategies Group

A good starting point for estimating longevity is a standard life expectancy table. According to these tables, women in the U.S. are outliving men by about 3-4 years on average. For example, a 60-year old woman currently has an average life expectancy of 23.1 years, to about age 83, while an average man of the same age can expect to live another 19.8 years, to about age 80. (This data is drawn from the Social Security Administration’s Period Life Table.)

Life expectancy tables are reliable guides for estimating the average longevity of large populations, but they have a flaw in personal planning. By definition, half of all people will outlive the average, and a small minority will live well beyond the average. For example, for every 100 U.S. women age 60, about 26 will reach age 90; for every 100 men, about 14 will survive to 90, according to Social Security.

Clearly, the retirement planning challenge changes when an individual’s “longevity horizon” shifts from age 80 to 90. If retirement assets and income must stretch a decade longer, the need to make good choices and smart decisions increases, as does the risk of mistakes.

Of course, longevity is determined by more than life expectancy tables and chance. Each person’s profile and lifestyle decisions also influence how long retirement may last. People who don’t smoke, have normal blood pressure, exercise regularly, and are of normal weight stand the best chance of living longer.

The Impact of Inflation on a Fixed Income-An important goal of retirement planning is to avoid depleting assets or running short of income in old age. If retirement planning decisions are based on an average life expectancy, individuals have a 50% chance of outliving their money. A more conservative approach is to plan for a retirement that will last several years beyond average life expectancy. Of course, the longer a retirement lasts, the greater impact inflation may have on the purchasing power of a fixed income. The table below shows the probability of living from age 60 to various ages and also the reduction in purchasing power for each dollar of fixed income that starts at age 60. It assumes that inflation averages a constant 3.5% in retirement, using $100 in this examply.
 
  Male      Female 
70 82.6%   88.6%    $70.89
75 68.8%   78.6%    $59.69
80 51.5%   64.9%   $50.26
85 32.1%   46.8%   $42.31
90 14.5%   26.3%   $35.63
95 3.9%      9.7%     $30.00
100 0.5%    1.9%    $25.26
Source: Social Security Period Life Table updated 6/27/06. Social Security Administration.
 
Income Sources That Can Last a Lifetime-Fortunately, it is possible to build retirement security on a base of income sources that can last a lifetime. These sources can form a foundation of longevity planning, especially for individuals who believe they may live well beyond an average life expectancy:

• Social Security – Under current law, Social Security retirement benefits will be paid for life to covered workers and their spouses. But changes in the Social Security system are probable in the years ahead, and it is not yet clear how retired people will be affected. Until changes are resolved, it may not be prudent not to count on Social Security for most of lifetime financial security.

• Pensions – In the past, many employers have paid lifetime pensions to workers and their spouses. But pensions have lost favor in recent years as more companies have shifted to personally-funded retirement plans, such as 401(k)s.

• Guaranteed Income Annuities – Life insurance companies offer guaranteed income streams payable for life, and the income can include annual increases that help to offset inflation. Because income annuity decisions may be irrevocable, it’s wise to compare the choices carefully with professional help.

In summary, it is possible to factor personal heredity and healthy living habits into your retirement outlook, along with a desire to plan for a period of time somewhat greater than average life expectancy. In this process, a qualified financial professional with experience in retirement issues and exit planning  can be a valuable resource.

Steven L White

Wealth Strategies Group

Reason #1 – The Power of Tax-Deferred Compounding
If you are 25 years old, you might not think it matters much whether you start saving now or next year. But by the time you reach retirement age, the cost of procrastination can be huge. For example, a 25-year-old person who sets aside $2,000 per year in an IRA and earns a 7% return will hypothetically build a nest egg of $427,219 by age 65. But if this person delays starting the program by just one year, it will be worth about $30,000 less. According to the Bureau of Statistics’ current data, today’s average person who reaches retirement age can expect to live to age 86, and life expectancies keep increasing for each generation. So, by procrastinating now, you possibly risk reducing your standard of living for the last 25-30 years of your life. In a retirement plan, money can compound on a tax-deferred basis without any current income tax consequences. That’s an attractive tax situation for socking money away long-term.

Reason #2 – It Doesn’t Cost a Dollar to Save a Dollar
Do you worry that you can’t afford to save $100 per month in a retirement plan, because you need to spend the money on something else? The truth is  – it won’t cost you as much out-of-pocket as you save, because you may qualify to receive a current tax break for money contributed to a Traditional IRA or 401(k). For example, suppose you pay federal and state income tax at a combined rate of 30%. If you put $1,000 into a Traditional IRA and qualify for a tax adjustment, you will be allowed to reduce your taxable income by the same amount, resulting in $300 less tax paid.

Reason #3 – Matching Is Powerful
Some employers will match a portion of the money their workers defer into their own plans. For example, suppose that your company will match some of the money you defer into your 401(k) on a 50% basis. If you put in $100, your employer matches with another $50. Although it may take several years for employer matching money to “vest” so that it becomes yours, this is like getting a quick 50% return on your savings. Also, you begin to build compound earnings on the whole amount – your $100 plus your employer’s $50. If your company offers matching, this is a powerful reason to start saving now.

Reason #4 – “Government Matching”
It’s not just your employer that may match your own plan money. The federal government may “match” a portion of your plan contributions with a tax credit. Depending on your income, the credit can be as high as 50% of the first $2,000 you put into a Traditional or Roth IRA, 401(k), 403(b), SIMPLE or other type of plan. The largest credit (50%) is available to single filers up to $15,000 of Adjusted Gross Income and joint filers up to $30,000. Lesser credits are available to single filers up to $25,000 and joint filers to $50,000. Suppose that you participate in a plan where your contributions are matched 50% by your employer, and you also qualify for a 20% “government matching” credit through 2006. That means – every dollar of your own money that goes into the plan is matched by an immediate return of 70 cents. Where else can your money work that hard?

Reason #5 – Social Security Is Iffy
For any person in the U.S. who is age 40 or less, the outlook for Social Security retirement benefits is not rosy. For starters, you won’t reach Normal Retirement Age and qualify for full benefits until age 67 under current law, and that could go higher. Then, consider the burden millions of aging Baby Boomers will place on the system as they start to retire. According to the Social Security Administration, today there are about 3.4 active workers for every retired Social Security beneficiary. By the middle of this century, Social Security estimates that ratio will drop to about 2 workers per beneficiary. Recently, the Social Security Trustees reported that the outgo for Social Security retirement benefits will start to exceed income in 2017 and the trust fund will be exhausted by 2041 unless major changes are made. If you don’t start planning for your own retirement now, you may be left out in the cold later.

Reason #6 – Habits Are Hard to Break
At first, it can be tough to live on less current income every month, because you are taking care of your retirement plan first. But after a few months, you won’t even miss the money. Putting money into your retirement plan steadily regularly is one of the best financial habits any person can start at a young age. Don’t be afraid to talk to a financial professional about the best way to set up your retirement plan savings program and its investment strategy. You can start your savings habit without having to make the investment decisions alone.

Note: My figures quoted are for illustrative purposes only and are not indicative of a specific result that may be obtained on any particular investment. They do not include consideration of the time value of money, inflation, and fluctuation in principal or in many instances, taxes.

Steven L. White Jr

Wealth Strategies Group