January 2017

Did you know that the month of January was named after the Roman God Janus as the personification of a new year? Janus had two faces—one to look forward, and one to look back.

When we make our New Year’s resolutions, we typically are doing just that. What didn’t we do, or didn’t we do the way we wanted, that we can change. What did we do that was successful that we’d like to continue in 2017. What new task would we like to accomplish during the year?

As always, we cannot predict the future. What we can do is make a plan, follow it, and tweak it as needed, keeping in mind the reason for the plan.

It’s a good time to consider how you’re handling your money and what you can do more efficiently without taking any additional risk.

Below are our wise money management tips.

Happy New Year!


1. How long can you afford to go without a paycheck? The numbers tell the truth. One in four 20-year-olds will become disabled before reaching age 67. 12% (over 37 million) of American are considered disabled. 50% of disabled American are in their working years between ages 18 and 64. Take a look at paycheck protection or disability insurance. It is a great way to protect your income.

Source: US Census Bureau, American Community Study 2011


2. 2. Knowledge is not power—applied knowledge is the real power.It is important for your advisor to take the knowledge he has accumulated and apply it to your specific situation. Many advisors are trained by the financial institutions they represent, and it could be their only source of education. If your income is uncommon, then it is important to use uncommon strategies that meet your needs. Product selection only comes into play after strategies are discussed.

3. Are you aware of the biggest retirement mistakes? Many people are unaware of the actual cost of their after tax lifestyle expenses. We have been conditioned to believe that our lifestyle needs will decrease in our golden years. That might be true when you reach your 80’s but it may not hold water in your early retirement years. We have attached a budget sheet to this newsletter that should help in calculating after tax lifestyle expenses. This is a good place to start in determining the real cost of your retirement spending.



4. Do your grown children need some help financially? If you do not want to make it a gift, you should consider using your cash value inside your permanent life insurance policy. Why? There are several reasons. You won’t lose the compounding of the cash value. You borrow the money from the insurance company using the cash value as collateral. It remains uninterrupted if the loan is repaid in full with interest. You can structure the loan to fit your situation. There is no time frame for repayment. No one will be calling you or your kids from if a repayment is missed. Your children can make the payment directly to the insurance company on your behalf. No application is required and no approval process is necessary. The loan request is handled by a phone call or a one-page application.

5. Open enrollment on the marketplace ends January 31st for individual major medical insurance.
Many insurance carriers require applications submitted on or before January 15th for coverage effective February 1st. Don’t miss this deadline if you are seeking coverage. There are exceptions under this rule, and they fall into the category “special open enrollment periods.” You can click-on this link and to learn if you qualify for any of these exceptions.

6. Are you thinking about making a major capital purchase in the future? Don’t forget to look at the backside of the coin. Many Americans only consider the negative feature of paying interest and elect to pay cash for the purchase. What is often overlooked is the important fact that you finance everything you buy. If you pay cash, you lose the ability to earn interest and access to money. A wealth creator is one who utilizes the most efficient strategy and is willing to look at both sides of the coin.


7. Longevity is the biggest threat to our money. People are simply living longer. More planning is required to insure that your money lasts as long you do. Listed are six statements that should help with your planning:

  • There is no silver bullet or single ideal investment.
  • Success requires a toolbox of strategies and a solid plan.
  • Uncommon thinking is required, especially if your income is uncommon.
  • Conventional rules of thumb and advice should be approached with caution.
  • Planning is a process and a journey, and may require making changes as conditions develop.
  • Making your money more efficient does not involve market risk and can have a huge impact on money available during retirement.

8. Do you think taxes will go down in retirement? Congress claims they don’t want to raise taxes. So what happens? Stealth taxes are created. The tax on Social Security benefits is just one of many examples. Prior to 1993 there were no taxes on Social Security. If a couple’s income is greater than $44,000 up to 85% of the benefits are taxed. The $44,000 threshold is not tied to inflation. The amount is the same today as it was in 1993 which is 23 years ago. Simply put, more and more people are hit with this tax each year.

9. It is important to check your credit at least once a month. Very seldom a week doesn’t pass that someone doesn’t call us at home or on our cell telling us they are the IRS (IRS doesn’t call taxpayers) or your computer needs repairs. The con games are never ending. A free source to make sure someone is not attacking your credit is Credit Karma. The site continues to improve, and it is a quick way to determine your overall credit score and any problems. Need a way to remember to check your credit score? If you have a dog that needs a monthly dose of preventative heartworm drug, do both at the same time.

10. What is the real amount in your year-end statements on your IRAs, or other qualified retirement accounts? Remember, when you review your statement it does not reflect the actual amount needed for taxes. If your statement reads that you have a million dollars in the account, your portion is after the portion Uncle Sam takes. You won’t know the final amount until you start taking withdrawals. Tax brackets and tax rates continue to change. You are taxed on 100% of the withdrawals including the gains. Keep in mind taxes are one of the largest expenses we have during the distribution phase of our lives.

Comments are closed.