Mac’s Blog

As a Retirement Planning Specialist, there are certain documents I often find missing from my clients files and/or records that are absolutely necessary whether a single individual or couple.  The need for these documents is not age directed and should be included and available to your chosen representative(s).

Will or Wills:                                                 

Time and time again we are told the importance of having a Will.  Many individuals feel they do not have enough assets to warrant a Will.  But if you own anything or have children you have two choices; 1, you select, who will get your “stuff” or take care of your children or 2, let the State decide.  Maybe you really don’t care right now what happens but someone will have to clean up your mess if you don’t.  Very often, in fact most often, once you go this route you never get around to creating a Will or other documents needed to preserve your assets or protect your family.  The lack of a Will or finial planning always creates significant difficulty handling transfer of assets (property) in the even of death.  Its lack will cause heart ach, bad feelings, serious expense, difficulties for your spouse and/or children as well as destruction of the family.  It is not uncommon to find children disinherited because of no Will or lack of an updated Will.  Who can make a better determination for distribution of your property or insure your children are provided for than you, the State?   If you have a few dollars or a lot how much do you want to give to your family, the State or someone else?

 It’s truly amazing considering those who knew better but did not take care of this little matter and what it cost.  Abraham Lincoln, Howard Hughes and Martin Luther King are just a few who failed to have a Will or a legal Will and Michael Jackson’s estate is still tied up because although several so called Wills have been found no legal Will has. 

In Texas when you die without a Will the Court will give you a Will and appoint your personal representative; the first choice is the surviving spouse if capable, 2^nd is the principal beneficiary of the estate, 3^rd any beneficiary of the estate and 4^th next of kin as determined by Texas Laws of Descent and Distribution.  But do you really want to count on this meeting your desires?

Own a home in Texas; the Small Estate Affidavit is not an option when there is a Probate Estate in excess of $50,000.

Can you avoid having a Will and keeping everything out of probate, actually you can but in cases I have seen where this path was taken, the process often failed because it was not reviewed and updated over the years between doing the planning and death.  Just to be safe it is never wrong to have a will.

If you have a safety deposit box and just must, place a copy in your safety deposit box but have an original centrally located with your other documents protected from fire and other disasters.  Make sure that someone knows about other than you; if you were smart enough to use an attorney leave an original with him.  Your personal representative should know where to find your Will as well as other important documents

Trusts:                                                           

Trusts are a way of maintaining some control over your estate after death and if designed correctly may preserve assets from the clutches of estate and other tax.  You should know, in Texas a child receives his part of the estate at age 18 if you have not take steps to protect the child from himself.  Generally, an attorney can provide information concerning structure of a trust which will maintain assets for proper use and protect assets from creditors, legal judgments, family and so much more.  Is it expensive there are ways to mitigate the expense for some, but for others the question is do you pay a little now or does your estate and heirs pay a lot later.  

Estate Plan:

Depending on size of your estate you may or may not need a formal estate plan.  If you are not concerned with Taxes or Probate it is possible to have your estate handled by your will and a few trusts within your will.  But we have all been told an ounce of prevention is a lot better than a pound of cure.  Having someone consult with you is well worth the effort and can actually be without cost.  Many individuals in my profession make no charge for this type review, many life insurance professionals are very able to help and your attorney may be able to advise you in this area as he works with you on your will and/or trusts.

Before we go on there is one area that often escapes review and will cause problems, heart ach, disaster for your spouse and may destroy your family.  This item is the beneficiaries you listed on your Life Insurance, IRAs, 401Ks and other such property.  Case in point, I had a client who still had his former wife of his first marriage 20 years ago beneficiary of his $1,000,000 life insurance policy.  But he had no insurance for his current wife and mother of his two children.  He said he thought he had made the change.   If he had died there would have been a good chance his wife and family would have never known about the coverage and if they had it would have become a court case. 

Many assets and property are handled by direct beneficiary and it is a good idea to have a list of all these assets with beneficiaries listed.  This list should be kept in a safe organized file along with your other papers, records, life insurance, other insurances and all of the above.  A safety deposit box is not a good place to keep these files.  Ask your bank what happens to your safety deposit box when you die or become incapacitated, even if it is a joint box.     

Durable Powers of Attorney:                                   

This legal instrument is essential in the event of several situations, such as old age and incapacitation.  A Durable Power is more than a standard power of attorney and should always be discussed with an attorney.  It would take more word than I care to write as to why some form of this legal instrument is so necessary, in most instances a copy is not acceptable and in certain cases your signature must be certified.

Medical Powers of Attorney:                                   

There is some question concerning the ability of Durable Powers of Attorney effectiveness in handling control of your medical care in the event you are unable to do so.  A trusted representative provided with this document could become very important to your care and desires.

Living Will:                                                    

Directive to Physicians and Family or Surrogate; at the minimum express your wishes about whether you do (or do not) want life support systems to be used in the event you are dying and there is no hope for recovery.

 Estate (Care) Plan:                                       

If you become incapacitated you cannot make legal decisions concerning your property. Someone must have this authority to speak for you and it is better and cheaper to not have to seek a court order. 

HIPP Release Forms:                                   

Due to the Privacy Act the completion of these forms on those important to you is very important.  Many of my clients have Children in college at some distant from home.  If they are over 18 and under a doctors’ care or in hospital you cannot obtain information from these providers without this release form.  Even if you were there they cannot legally provide this information.  They do not have a choice in this regard; it’s the law which carries significant penalties, even jail time.  This also goes for your mother and/or father who may be well into their years.  If they now are considered or become unable to make decisions for themselves you may and probably are in a catch 22 position.  The form that would have cost nothing will now require a court order, along with attorney fees and the time and expense it takes to prove your position as well as theirs.

 Hubert W. McMinn Jr.

 Hubert McMinn is a retirement planning specialist working within Texas, USA and located in the Houston area. To discuss any point in this post or any other post, obtain information on your need for Retirement or Estate planning contact him by email at: hmcminn@plannedassets.com or visit: www.plannedassets.com.

 March of 2010 I wrote; “Should We Refrain from Equity Investments” my answer was I think not.  My comments were directed to those in or entering into the retirement zone, their proclivity for equity investment and maintaining a significant of asset position in The Market.  At the time the DJIA had just clawed its way back to 10,550 today July 8, 2010, the DJIA has clawed its way back to 10,070 with hope for future growth, albeit slower and not 14,000 any time soon.  

Bill Gross, CEO of PIMCO, one of the world’s largest bond fund managers, has said “history was made in October 2007 when the stock market fell, because we may never again in our lifetimes see a DOW of 14,000 points.”  Many advisors who know or think they know have continued to point out we now live in a period of seemingly tremendous Market flux.  They also tell us during the next 10 to 20 years we will see market growth followed by significant drops in market value. 

Karlan Tucker, CEO of Tucker Advisor Group in an article for Producers Web.com (an industry publication) points out (6.28.2010) “When bubbles burst like the teal estate market and stock markets did in 200d, they don’t re-inflate to their previous levels for a long period of time-typically twenty years or longer.”  He also goes on to mention many other bubbles yet to pop that will affect the Market as radically as those of 2007. 

However, our economy today is still reeling with jobs, government debt and BP oil issues as yet to have full impact on The Market.  Then there is the election issue of November 2010 as well as 2012, not to mention the various new laws passed or being passed which take effect over coming years with full impact in 2013. 

As Mr. Tucker and others point out the biggest factor in getting to DJIA of 14,000 was the baby boomer generation of 77-million on a spending spree.  Today there is no similar generation or one with available discretionary assets as that generation. 

The question remains: Should those of us in or entering the retirement zone refrain from Equity Investments?  I think not.  However, development of a retirement income plan balancing guaranteed income indexed for inflation with Equity Investments and Cash Equivalents is paramount.  The next several years may see Market loss equivalent to those we have witnessed.  What effect will such a loss have on retired or retiring individual’s equity investment heavy and plans for retirement or quality of life in retirement?  Will that individual be able to wait out the loss, have courage or time to do so? 

Qualified retirement specialist’s can help developing a suitable retirement income plan with guaranteed lifetime income indexed for inflation, but based on known or historical factors.  Financial Planners and Retirement Specialist recommend adjustment and rebalance of income portfolios with less dependence on risk as you move toward or into retirement but not elimination of equity type investments.  Proper selection of a limited portfolio of equity investments can provide a hedge against negative changes in the economy and availability of cash equivalents to meet unexpected needs guards against having to raid assets used to generate guaranteed income or equity investments at the wrong time.  Proper retirement income planning must be based on limited flexibility combining guaranteed lifetime income indexed for inflation with equity type investment and cash equivalents.  Balancing these factors must be based on risk tolerance, time, and ability to withstand loss in and of investments.  Primary consideration must be given to quality of life with available or known assets then improving or growing assets may be considered.

Hubert McMinn is a retirement planning specialist working within Texas, USA and located in the Houston area. To better understand how to develop a better retirement foundation, contact Hubert McMinn by email at  hmcminn@plannedassets.com  or  for retirement planning ideas and concepts, visit him at: www.plannedassets.com.

In my last post, I ask the question; Should We Refrain from Equity Investments, my answer was and is I think not.

Why should we remain in the Equity Investment market; no other investment will match equity growth if we pick the right investments.  And this is the rub; can anyone guarantee he or she will pick the right investment time after time?  With all the research supposedly being done by various member of the stock and bond industry, very few have matched the S&P 500 or DJIA indexed average over any period of time.  Question, is there any where good advice on investing in the market is available?  According to Edward Winslow’s book; “Blind Faith”*, research is now little more than a marketing tool built on less than complete knowledge, paid for by issuing company and marketed by sales people marketing themselves as consultants working for your best interest.   And if we are doing our own research, is enough information truly available to make an informed decision or are we just gambling?  Consider; market price is currently based on demand plus available shares.  How much real value do your shares have if several thousand or hundred thousand shares have been awarded as options 20 or 30% below current value?  Of the four entities involved, the issuing company, the broker, the holder of the options or you, who is going to make the least profit.

The first supposition to understand is the market is not there to actually benefit us and we are handicap by basing decisions on limited or less than forthright information.  Can the individual investor sort out better non-bias information and glean it down to make an objective decision?  However, actual investment is the end, not the start of the investment process.  Equity investing has risk and risk must be considered individually.  There are no circumstances were you put at risk assets you cannot afford to lose.  When these assets are protected any assets left over can be put at risk but even then the best yard stick is subtracting age from 100 and having no more than the remainder at risk.

Currently we are in March 2010, DJIA has moved from 6,547 to 10,550 since March of 2009 but are we in a Bull market as some would suggest and does it really matter?  We have only recovered 53% of the previous DJIA loss is the worse over, which way will we go tomorrow?  Conventional wisdom recommends holding, if you don’t sell you haven’t lost except the time value of money.  How much can you afford to lose if you do hold on?  At this point there are too many questions and time line to long for anyone close to retirement to maintain a large portion of retirement assets in the market unprotected from loss.  The definition of market means stocks, bonds, mutual funds, variable annuities, even a diversified portfolio or money in the hands of a “hedge fund maestro”.  Given we have had two meltdowns since the start of this century, does or should unprotected market risk fit into your retirement plans?

If then we need to maintain assets in the equity market, with risk high, time line short and loss unacceptable is there an answer. Again, yes.  There are a number of ways to protect any portfolio from market melt down.  Starting with the complex to the very simple, but all have a cost.  Investing unprotected means you get 100% of the winnings but also 100% of the loss.  How much are you willing to give up to not worrying about the possibility of loss?  Using the complex method you will give up 10 to 30% but it takes hours of study, a good broker, strong constitution  and a learning curve you may not be able to afford or time you don’t have.

The simple solution has been with us for centuries but evolution to its present form guaranteed to provide life long income if we life to long and an inheritance to our families or loved ones if we live to short and can even provide protection during bad health.  Fixed annuities have been around forever; though they are not sexy their consistent tax free growth has helped many retirees meet the future.  But the advent of the Tax Deferred Index Annuity has changed the game, now we can be in the market but not at risk to lose principal or past investment gains.  Safety, fair return, flexibility and a degree of liquidity is the hall mark of today’s annuities.  Its unfortunate the financial press is so caught up with what annuities may have been not what they now are, life long security with design or optional riders to facilitate any individual need or desire.

Riding the market to regain savings has and is poor planning.  But you can make it work by redirecting a portion of your portfolio each time it rises or hits a plateau and over time lower your risk factor, bringing down or eliminating your total risk. 

If you have not looked at Annuities in today’s market you should meet with a competent financial advisor for a professional look.  Be objective, disregard current financial press misrepresentations and form your opinions.  The roller coaster ride you may now be on is stressful, and stress is unhealthy.  Do you want to know your required retirement objectives will be met or do you hope they will be met?  Investing unprotected may be exciting, you may win, but you could lose—can you afford it?

Most retirement planners are or should be more interested in you than their commission and few annuity, insurance companies or banks provide significant rewards to sell their product.  Within 30 minutes but not longer than 60 you can tell who he or she works for, you are the companies they work with.  Good retirement specialist may help keep you in the market but protected and then help you develop more profitable relationships with current advisors and/or fill out your team to obtain other services you may need and keep you on track with periodic review and updates. Working with most retirement advisors is cost free to you but the help, design and structure they provide could be the difference in having a successful retirement. 

 Hubert McMinn Jr.

 * BIND FAITH by Edward Winslow is no longer in print but can be obtained through most book sellers at very reasonable cost. 

If you invest in no other investment book this year, get BLIND FAITH!

Hubert McMinn is a retirement planning specialist working within Texas, USA and located in the Houston area. To better understand how to develop a better retirement foundation, contact Hubert McMinn by email at  hmcminn@plannedassets.com  or  for retirement planning ideas and concepts, visit him at: www.plannedassets.com.

3/01/2010

Americans have outlived or forgot lessons taught prior to the baby boom explosion. From 1900 to 1945 there were eight recognized stock market crashes.  The greatest of which is actually two; 1929 ran from 9/3/29 through 11/13/29 when the DJIA dropped 47.9%, followed 4/17/30 through 7/8/32 with DJIA dropping another 41.22%. Actually the greatest single crash was 1937-1938 followed by 1906-1907.  However, the crash of 1929 plus 1930-1932 combined with total loss of confidence world wide gave us the Great Depression.

Today as in this by gone era, we have placed our faith, hope, trust and dreams of winning this great lottery.  When unprotected from loss, significant or otherwise, investing in stocks or mutual funds is no different than investing $10,000 to play in the World Porker Tour, it is gambling.

Some gamblers do win as do some investors in the market and some of these keep on winning either by skill or luck.  These successful individual become known as professionals who then become teachers or establish facilities to help other individuals play the game.  The point, has anyone successfully picked winning stocks without suffering significant loss at some point?  As I have written in the past; theoretically, over time the market has returned close to 9.5% from 1900 through 2009 and over the last 20 years it has returned 9.4%.  But again, based on who you read the individuals average rate of return has been less than 2% before tax.

Given this history, should we refrain from Equity Investments?   I think not; regardless of risk, equity investments still have ability to provide superior returns relative to other investment options.  The key is, are you gambling or investing for the long term.  If gambling is investing or playing with assets unprotected from loss, can you invest with assets protected?  The answer to this is yes, if you take greed and/or excitement of chance out of investing.

 Consider, which is better over a 7 year period (period between crash of 2000-2002 and 2009); $100,000 at 10% and the crash of 09 or $100,000 at 3% compounded but protected or 8% compounded but protected?  At 10% you would have ended in 09 with $74,576 remaining, at 3% you would have had $120,626 and at 8% $159,000.  And yes, a protected 8% was available for your retiree investment. 

 If you remain holding you investments without change and you had the right investments you might have rode with the DJIA back to the 10,000 level, but in 2002 DJIA was 14,164.  Recovery from the crash of 30-32 took 22 years.  Even if you have 20% growth it will still take almost 5 years to recover back to where you were. To be continued….

 Hubert W. McMinn Jr.

Hubert McMinn is a retirement planning specialist working within Texas, USA and located in the Houston area. To better understand your need for Long Term Care as well as structuring it to best meet your needs contact Hubert McMinn by email at hmcminn@plannedassets.com.   Web site at: www.plannedassets.com.

 Theoretically, over time the market has returned close to 9.5% from 1900 through 2009, including dividends and the last 20 years it has returned 9.4%.  But how many individuals have actually achieved these results?  If diversified similar to the S&P 500, Dow/DJIA or NASDAQ these returns are possible but not always.  In the last 10 years these same indexes have shown less than 1.5% returns. 

The truth is, indexes report have very little to do with the individual investor and return on his investments.  Depending on who you read over the last 20 years investors have earned an average rate of return on stocks, bonds or mutual funds of less than 2% before tax.  This may be a creditable report but it is about averages, some made more and some less.  The point is will the money be there when its required? 

The Obama administration and even Congress are now acknowledging the power of annuities.  Americans are not known for their savings ability even with the varied qualified and non-qualified plans available.  With the retirement crisis we now face, the economic situation, loss and inconsistent results in the equities market government, big and small business and knowledgeable retirees are turning to Annuities.

With the hits retirement funds took during the resent recession ($3.6 trillion between 2007 and the middle of 2009.  Private pension plans lost $700 billion; public employee pensions lost $800 billion, Deferred Compensation plans lost $900 billion and IRAs lost $1 trillion.) Congress is starting to realize that something must be done.  This past June hopefully a start was made with House Bill H.R. 2748: Retirement Security Needs Lifetime Pay act of 2009 was introduced June 9, 2009 and Senate Bill S. 1297: Retirement Security for Life Act 2009 introduced June 18, 2009 “Amends the Internal Revenue Code to allow an exclusion from gross income for 50 percent of the amount otherwise includible in gross income as guaranteed payments from certain annuity or life insurance contracts”.  Both bills go on to proscribe taxation on up to $20,000 per taxable year on money from certain annuity or life insurance contracts starting 2011.  Will this happen, it could!

Of course this attention is not without its detractors and the financial world has brought their knives out claiming foul.  The Investment Company Institute’s recent survey depicting a majority of Americans do not want to be required to convert qualified money to annuities at retirement is just an opening shot.  If these actions are pursued there will be a fight.  But only on financial product weathered the resent storm and continues to do what it was designed to do and it is not stocks, bonds, CD or mutual funds.

Annuities have been providing security to individuals for centuries and have proved their value time and time again by providing income in times of economic trouble as well as in robust periods.  We have seen them keep there value through depressions, recessions and stock market crashes.  Until the late 90’s Annuities were considered some what stodgy but they still did what they were suppose to do.  Protect invested assets; provide a guaranteed return with moderate growth in a tax efficient manner. 

Annuities were not and are not designed to compete with equities, although they have done a fair job through out our history by providing a fair return on investment and protected payout when needed.  Significant swings, slumps and crashes of the market have put at risk even wiped out the little money Americans have saved in their qualified plans, 401ks and IRAs.  These problems are particularly onerous if they occur at or even after retirement.  On the other hand annuities have always out preformed CD’s because of their tax free growth and longer growth periods. 

The financial press and brokerage industry has always sought to misrepresent, cast dispersion or malign annuities.  Why is the brokerage industry biased?   Perhaps for two reasons;

The financial press and brokerage industry has always sought to misrepresent, cast dispersion or malign annuities.  Why is the brokerage industry biased?   Perhaps for two reasons;

1. Because they offer investments that compete and in the process capture clients into a system that pays better and more often.
2. Because they lack the knowledge to understand how annuities work and how annuities can work with equities to provide security with growth to their clients.

Unfortunately, in their minds an “annuity purchased” is a “brokerage commission lost”

Our friends across the water in the United Kingdom have long recognized the value of annuities.  The U.K. pension plan law requires retirees to annuitize at least 75% of their accrued benefits from pension plans, by age 75.    

Since the 90’s Annuities have grown to provide more than just income security by “annuitizing” the annuity.  Newer product may participate in the market without fear of loss, provide Guaranteed Income Riders that provide income for life but if the annuitant dies to soon the remainder is passed on.  And annuities may include other riders such as benefits for Long Term Care.  The point is, retirees must look at the benefit and impact an annuity or annuities can make in their retirement plans.

Before being concerned about adding to retirement assets, the retiree must insure retirement foundation is secure and basic income is guaranteed.  There is only one product that can provide this guarantee, Annuities.

 Hubert W. McMinn Jr.

 To better understand how to develop a profitable base with your nest egg contact Hubert McMinn by email at hmcminn@plannedassets.com or visit  www.plannedassets.com. 

WSJ 12/19-20/2009 took a look at how to “save” the retirement of several individuals written by Kelly Greene.  Actually, the article was not really about saving but how to develop enough assets to meet the individual’s plans for retirement.  As with most information like this in the Wall Street Journal or other financial publications, this information concerns only asset development and structure of an investment at risk.  In my opinion, this advice is critically flawed when it does not first consider a solid asset foundation.

As a retirement specialist, the first objective with any client is to insure retirement is structured on a solid foundation.  But skipping all the really important basic stuff and delving into asset development, why does the financial press totally concentrate on investments of risk?  In this article concern is asset investment for individual or couples of varying ages from 50 to 61 with total disregard for insuring basic needs. 

I believe retired and pre-retired should have assets at risk in equity investments but first build a base to work from.  If I am not retired, my first concern is my employment or my business and the income from these endeavors which allow me to fund my plans for retirement.  At this age, this is my base but after retirement my base is my nest egg.  As long as I am employed, I have some security that my minimum requirements for income will be met and I can work with some of the money above my minimum requirement to fund my future retirement.  When I am retired and not employed, my base is my nest egg meeting my minimum requirements for income.  My concern is first and always is securing basic assets to meet future minimum needs.  

 From 1987 through 2007 we had inflation for the general public of 3% but for seniors it increased to around 3.3%, in 2008 it was higher and 2009 around -.04% or disinflation.  Inflation plus tax is an insipient force significantly affecting retirement planning as life expectancy grows.  But should the basic nest egg be at risk?  The financial press trout’s the so called average return on investment of the market be it stocks and bonds or mutual funds or other investments, but what is the real average for the average investor over the past 20 to 30 years?  How many investors would now accept a guaranteed compounded return of 3 to 6% or higher, with no loss in principal and free of tax until money is removed from the investment? This investment type is not sexy and not often mentioned in the financial press because it does not generate commission or fees investments at risk generate.  But placing you nest egg in assets generating tax deferred savings that stay with or exceed inflation is the base you require to allow the latitude to invest other assets at risk without the risk of being reduced to penury if you take a beating.

When we invest and invest at risk, regardless of how you look at it we are gambling and with any gamble there is the element of loss.  The higher the potential reward the higher the risk.  Professional gamblers know you don’t gamble with what you cannot afford to lose.

 Guaranteeing your nest egg and then gambling with table stakes reduces stress and actually allows you to more effectively manage your money.

 Hubert W. McMinn Jr.

To better understand how to develop a profitable base with your nest egg contact Hubert McMinn by email at hmcminn@plannedassets.com or visit www.plannedassets.com. 

The problem lies with what our parents told us, what their parents told them and so on back to the depression era of 1929 & 30.  During this time period there were many reasons not to carry a mortgage if you could afford to pay it down or not to have one to start with and the number one reason was loans of the era were callable and were called.  As a result many lost their homes and it was more of a factor than what we have recently seen or experienced.  This callable factor is not a factor of today.  Today, we are seeing or have seen many lose their home but not for the same reason as in 29 & 30.  Many who have lost their homes or are currently losing their home should not have been provided the loan in the first place and the mortgage industry has no one to blame except them selves.

On the other hand, many are losing their homes just because they did pay the mortgage down using up all of readily available money.  These home owners are in the worst possible situation.  They have lost their job or had their income reduced and are now unable to continue making mortgage payments not to mention keeping food on the table or maintaining tax and upkeep of their home.  They have built up equity in their home by prepaying mortgage cost and home value inflation.  But now through no fault of their own, home values have decreased rapidly and due to their own situations home equity loans are not available. 

Maintaining a mortgage is similar to the argument for buying Term Life Insurance, other than the fact you get more bang for your buck in the short term in both cases.  If I buy term and invest the difference, consistently, I will be better off in the long run financially.  In both cases, which you choose is a matter of self discipline. 

Consider: average home value is $250,000 to $300,000, average mortgage balance is $150,000 to $225,000 and most of those with the ability to obtain a home without a mortgage or a very low one don’t.  Additionally, most of those having the ability to pay their home off more quickly do not.  Instead, most of these qualified buyers take the longest mortgage they can obtain and maintain a mortgage by continuing to siphon out as much equity as they can, why?  The answer goes back to self discipline. 

 Most who whish not to maintain a mortgage state the reason: “what if I lose my job, how will I be able to keep my home”.  It is always better to have money readily available than to be equity rich.  There are several points to be understood as to the plus side of this statement and a nagging question that has more smoke than fire.  However, remember my arguments are based on the assumption you have effective self discipline and at least a little knowledge concerning investment risk tolerance.

 If you have no self discipline in regard to money and absolutely no discipline or knowledge when it comes to investing, perhaps you are better suited to rent or buy Universal or Whole Life Insurance.

First the universal question; why pay more than the total cost of the home in interest over the 30 years of a 30 year loan.  Answer; Current home loans are at a low of and at times lower than 4.75% with an APR of 5.026%.  If you are in a 25% tax bracket your actual APR is 3.77% or given a 15% tax bracket actual APR is 4.272% except from mid 2008 through the first half of this year it has not been too difficult to obtain a net higher interest than these rates.  Even now you can obtain 20 & 30 year tax free bonds which at worse match up to your net interest payments and in better times your rate of net rate of return half again as high as the interest you are paying and you still have the cash.  Then consider effect of inflation on your loan and cost of your loan.  20/30 years ago home cost was lower in dollar cost than now.  Over time your relevant cost has actually reduced even though you are still paying the same amount of dollars.

If you lose your ability to earn, where will you turn to obtain money to pay your mortgage or to meet more pressing needs if all of your money is tied up in equity, other than to sell-if you can?  When unemployed how difficult is it to obtain an equity loan from a bank?  Is there any advantage to having a high equity house without money to meet other pressing needs, feed your family, maintain maintenance or pay tax?  Having money readily available allows you the ability to ride cash flow problems out while maintaining mortgage payments or taking care of more pressing need.  And just how difficult is it to adjust and seek other opportunites when worred about keeping your home.

By over paying or paying your mortgage off is there a significant advantage concerning the value of your home?  Regardless of the level of mortgage your home will increase or decrease with the market.  Using the worst case principal what if your home is in California or Chicago where values have dropped through the floor, would you be better off having the money readily available or tied up in home equity?

As a retirement specialist would I rather have my clients money tied up in equity of their home or in a secure investment earning a net 2 or 3% per year?  The operative words here are secure; this money, as is the money covering basic income and living needs, is not available for spending on just anything and is not money you can afford to lose or is put at any significant risk.

Secure inflation meeting growth investments are still available.  Investments providing tax deferred compounded growth until the money is actually taken out.  Additional investments are now available allowing for tax deferred growth and tax free distribution with the additional advantage of not increasing tax on United States Social Security Income Benefits.  These investments may be designed in multiple ways to meet a host of needs within guaranteed structures providing security the money will be there when required.

 Discussion is welcomed!

 Hubert McMinn

 Hubert McMinn may be contacted at www.hmcminn@plannedassets.com or by calling 888 270 9870.

Hubert McMinn is a retirement planning specialist working within Texas, USA and located in the Houston area.  For other retirement planning information contact him by email at hmcminn@plannedassets.com or visits www.plannedassets.com.

Often I have clients that do not understand just what they should be doing when they reach the magic age of 65 and have to sort out their options between their individual or group health insurance and Medicare.  Information is not provided by insurance companies or Medicare concerning this issue and when time for change comes about many unwittingly make mistakes which may be very damaging, especially if you have an ongoing issue.

Medicare part A; basically inpatient hospital coverage and free starting at age 65, “if you have worked for at least 10 years”.

Medicare part B; helps cover doctor visits and other outpatient treatment.  Monthly cost is $110.50* a month, up from $96.40, for new enrollees in 2010 and could be more for individual with income above $85,000 and $170,000 for married couples filing joint tax returns.

Alternatively, Medicare Advantage plans may cost $0 up while providing coverage covers similar to parts A, B & D.  Advantage plans may reduce the need for a supplement plan.

 Medicare part D; adds Medicare prescription coverage.

Should you sign up for Medicare Parts B and D when you have retiree coverage through a former employer?

1. Yes, because work place coverage may become secondary to Medicare for retirees at age 65.
2. Yes, if employed but employer has less than 20 employees, Medicare becomes the primary coverage at age 65.
3. No, if the employer has more than 20 employees.*  That policy remains primary and you do not need to enroll in part B until after coverage ends. Insure that employer is listed with insurance company as having 20 or more employees.

* It is not unusual to find employers making the mistake of not adding employees to their group health insurance.  This does cause problems for senior employees and the business owner.  If the business has more than 20 employees but they are not covered a senior employee can make a tragic mistake by not enrolling with Medicare.

For the employer; even though your employee is not on your health insurance he is still covered, but guess who is responsible for paying the bill.  In addition you could run into problems with the IRS if you are audited.

 If you maintain your own coverage, individual coverage ends or becomes secondary at age 65.

If still employed by employer with less than 20 employees you have 8 months to sign up with part B without penalty. Understand that moving to COBRA does not extend the option or the ability to sign up for part B.  If you miss the 8 month window you must wait until January and then coverage does not start until July.

Word of warning: in no case will COBRA protect your ability to sign up with Medicare.  Once you are no longer employed you have only 8 months, do not miss this

 From: WSJ December 30, 2009

 *Most Medicare beneficiaries will continue to pay the same $96.40 Part B Premium in 2010.  Beneficiaries who currently have the Social Security Administration (SSA) withhold their Part B premium and have incomes of $85,000 or less ($170,000 or less for joint filers) will not have an increase in premium for 201

 v      New Part B beneficiaries will pay $110.50

• Beneficiaries who do not currently have the Part B premium withheld from their Social Security benefit will pay $110.50.

v      Higher-income beneficiaries pay $110.50 plus an additional amount, based on the income-related monthly adjustment amount (IRMAA)

 Those of us who selected not to take Social Security prior to this increase or who selected not to have the SSA pay the part B premium are being penalized, without question!

For additional information go to:http://questions.medicare.gov/cgi-bin/medicare.cfg/php/enduser/std_adp.php?p_faqid=2262 or just enter Medicare premium increase rules (in search)

Good luck get prepared, as with taxes and Social Security there is no replacement for knowledge dealing with Medicare is not difficult and a little knowledge goes a long way.

Hubert W. McMinn Jr.

For questions or discussion please contact me by email at hmcminn@plannedassets.com

 Next year about 10,000 baby boomers will hit retirement age and Medicare per day.  Prior to anyone planning to retire there are many thing that should be considered and aspects of the future that must be known if there is any hope of having a successful retirement.  Following are a few I think warrants consideration:

1. Do you have a complete, written Estate Plan?  An estate plan is not just to pass on your estate tax efficiently.  A proper Estate Plan provides care for your property (assets) during your life time and cares for your person as well.  Then the Estate Plan provides the guidance to effectively pass on your assets to your heir’s tax efficiently.
2. Do you have a written Retirement Plan?  You are going to live a long time and your money must last through Health and Sickness.  If you are married you must make sure your retirement plan provides the asset development and protection for your spouse you desire.  The Retirement Plan must work with in the Estate Plan to effectively meet your goals and objectives.
3. You may live to be 100 or at least you have to plan to live to 100.  Current median age is 84 but statistics say that if in good health at 65, the average male will live to 85 and female to 87.  This of course is average and a high percentage will live into their 90’s and beyond.  The fastest growing sector of the population is those over 100.  You should plan on living as many years retired as you spent working or more. 
4. You have to know how much money you will need in retirement.  With inflation as low as 2.5 the cost of living would double in 29 years and 4.1%, the average for the last 50 years, cost doubles in 17.5 years.  Even at 3.4%, inflation over the last 5 years, cost of living takes a hit that may not be affordable if not planned for. Successful planning happens when you start by keeping the end in mind. 
5. You must know and have a source of income to meet your basic needs regardless of the economy.  Only then can you plan an investment package to meet inflation. 
6. At best you may withdraw only about 3.5 to 4% per year of your portfolio annually if you want your money to last and this is only if the economy remains stable.  By having a guaranteed source of income to start with to meet basic needs makes this planning somewhat easier.
7. The new form of annuities and guaranteed income riders may be the best protection for meeting your basic requirements.  But to beat inflation you will have to invest in equities or the equivalent of equities, such as indexed annuities which provide significant investment protection, precious metals, bonds or other investments that may keep pace with inflation.
8. What is your investment risk tolerance and what is the level of risk your portfolio is in?  I am constantly shocked when potential clients want to discuss their retirement picture without knowing or understanding the level of risk of their investments.  History shows equity investments will recover over time.  The question is what is the time factor and at what point in you retirement plan did you hit the low or loss point.  Understanding that equities will correct in the future does not pay current bills.
9. Certain kinds of protection have always been essential to personal and financial well being.  Retirement planning will require exposure to some risk, if you are prepared for problems you sleep better at night and live longer.
10. All effective planning is written and your planning will be more accurate and comprehensive if you work with an advisory team.  As with any team it is important to have quarterback capable of providing structure and direction.  No advisor can do it all or know it all.  Having one advisor able to provide direction and concepts outside his immediate area of competence is crucial to any effective plan.
11. Your planning team is based on need reference your financial situation.  Most generally it should include an Accountant, Attorney and Financial, Retirement or Estate Planner with the Financial, Retirement or Estate Planner providing general guidance.   Your Account or Attorney may be able to provide the general guidance, but taking this route may wind up short changing you in the long run.  Your Accountant and Attorney will always work for a fee but your planner may or may not.  As with your investment broker, most planners derive their income from products they provide.  If the Planner, Accountant, Attorney or other member are more concerned about you than there fees or commissions they will make or save you more than their cost.

 Hubert McMinn is a Retirement Specialist with experience of 29 years residing in the Houston area of the State of Texas, USA.  For additional information, questions or comment he may be reached by email at hmcminn@plannedassets.com  or visit  www.plannedassets.com.

Wall Street Journal 12.30.10 front page provided an article by Anne Tergesen concerning information all individual considering working past 65 and possibly maintaining current health insurance coverage rather than obtaining Part B of Medicare should have.  In case you do not know, you must apply for Part B of Medicare Coverage as opposed to part A which is automatic if you qualify.  You may apply 3 months before or 3 month after turning 65 and once you apply you’re covered the first of the following month.  A fact I did not know is Medicare is effective the 1^st of the month you turn 65, if you apply the month before.  Another fact I was unaware of is my Health Insurance changed when I became covered or qualified for coverage and only paid what Medicare part A & B did not pay.  Even more disturbing, if I did not apply my insurance did not cover me at all until I had effective coverage.  In my case I applied on my birthday the 14^th of December and then found out I had had no coverage as of the 1^st of December and would not until the 1^st of January.  Do not make this mistake, it can be expensive!

 I digress from interest in the article from Ms. Tergesen.  Ms. Tergesen points out, if you’re already collecting Social Security enrollment is automatic (part A) but if you are working beyond this age and staying with your employer’s plan your options become quite limited concerning part B.  The point is you cannot sign up for Medicare just anytime there are strict enrollment deadlines and if you miss them you will not have the coverage you think you have and you may have to pay a fine for life.

 Missing dead lines means you cannot sign up until the next open enrollment period, January and Medicare coverage does not become effective until the following July.  In addition to not obtaining effective coverage you also face a penalty of 10% additional cost’s for the rest of your life.  A real benefit of the article is a Medicare Enrollment Deadlines chart.

 Ms. Tergesen, explains based on the type coverage you have and number of employees covered by the health insurance provided, you may or may not be able to keep your current coverage even though it still may be available.  In a nut shell, the rules are these:

1. Initial enrollment period; A period spans seven months, three before the month of your birth and three month after.
2. Special enrollment period; within eight months after you stop working!  (Pay Attention)  This means after you stop working if you go on COBRA and wait until COBRA runs out 18 months to 3 years you have fail to comply with an enrollment rule and you will wait until January to enroll, you will wait until July for coverage to start and you will pay at least 10% penalty for the rest of your life.
3. General enrollment period; January to March 31 for those who have not enrolled at the proper time or those wanting to change their plan, such as enrolling in an Advantage Plan or changing from an Advantage Plan.
4. Annual election period; November 15 to December 31 if you did not enroll in a Medicare plan with drug coverage during your initial enrollment period.
5. Medicare Advantage open enrollment period; January to March 31^st for those who want to join, drop or change a Medicare Advantage plan.

If you do not comply with these rules and you have significant reason as to why you did not, you may apply for “equitable relief”, a legal protection that allows for immediate enrollment without penalty.  However, this process is not easy, is not cheap and is not quick.

The bottom line is you should enroll for Medicare Part B and perhaps part D (Pharmacy Benefit) when you continue to work and have coverage through a current or former employer;

1, because work place coverage becomes secondary to Medicare for retires at age 65.

2, if the employer has less than 20 employees.

3, you are currently covered by COBRA

4, you have personal health insurance.

You are not required to convert if your employer has more than 20 employees on the plan.  If this is the type plan you have, the policy remains primary and you do not need to convert.  The key here is 20 employees on the policy or a total of 20 with those included that could be insured but wavered out.

Cost of Part B, 2010 is $110.50 per month, which is an increase of $14.10 per month over premium of 2096.  This is a base premium and can and will be increased at incomes above $85,000 for individuals and $170,000 for married couples filing joint tax returns.

For additional information, questions or comments call 888 270 9870 or email hmcminn@plannedassets.com.  Additional and significant retirement information is available at www.plannedassets.retirerx.com

Huber McMinn Jr. (CLU/ChFC) is a Retirement and Estate Specialist in practice for over 29 years in New York City and now the Houston, TX area USA.