Mac’s Blog

Titling of a CD may affect how much of the CD is actually insured.  Titling these supposed simple investments can be misunderstood when selecting owner and beneficiary.

Investment in Certificates of Deposits remains one of the most popular forms of investment among retirees because of supposed safety.  However, based on how the CD is titled can and in a lot of cases will affect basic FDIC insurance coverage.  The point; not all CDs will have expected full FDIC insurance coverage because of titling.

When adequate attention and consideration is given to what a CD really is and does, it becomes apparent CDs are misrepresented and not suitable as true investments.  The major value of CDs is to position or park assets safely, while maintaining cost effective liquidity. 

Titling of a CD should be based on the individual’s retirement plan and requires coordination with the plan.  Retirees often make the mistake of titling CDs opposite of what they have worked so hard to eliminate in retirement planning.  If you register your CD in your name there is no real problem as long as you are receiving principal and interest at maturity.  However in the event of death, titling the CD in this manner moves the CD into probated assets before your heirs can reach it.  This could result in a delay of months and will make the transaction public.

Advice often given to avoid probate is registering the CD as Joint Tenants with the heirs.  However, CDs titled as such become exposed to claims of the heir’s creditors even if you are still alive. 

For example, consider the heir is responsible for an auto accident and is sued for damages above limits of his insurance coverage.  Given this situation, all available assets including your CD may be attached!  Proving the CD was your money will incur legal expense and can result in full loss of the CD.

 Two possible better ways of titling CDs and coordinating with the retirement plan is “pay-on-death or the use of a living trust.  Pay-on-death makes the CD immediately available to those named upon death of the CD holder.  While using Living Trust designation and ownership avoids probate and allows you to place restrictions on distribution.

Even if you’re just parking assets in a CD until you can move them at the right time it is important to be sure they are titled to coordinate with your retirement plan. 

Hubert McMinn Jr.

Information concerning titling as well as other CD concerns is available by emailing hmcminn@plannedassets.com.

Recently the first comprehensive study of individual annuitant mortality since 1983 indicated a projected mortality improvement for both males and females.  Data indicates that longevity improved during the five years of the current study and there is no reason to expect improvement to stop with average life expectancy at approximately 85 for males and 87 for females.  This is great news for all of us and as it is an average there is no reason not to expect to live well past these ages.

Retirement Concern Surveys place the number one concern of individuals age 55 and up as “Outliving our Money”.  The problem is most retirement planning only addresses income needs through average life expectancy.  This is planning pretending there is no longevity risk, while there is a significant and growing probability of living to age 90, 95 or even 100 or more.

Entering or currently living within the retirement zone, the question is how will my income hold up for the future?  We all know Social Security has its problems and building a retirement plan depending on receiving SS full or even partial benefits in the future may be risky at best.  Even if full SS benefits are received, is it enough to maintain the life style desired.  Social Security was not designed and is not adequate to meet most life style income requirements.  SS for most of us will be, should be or is a supplement to other retirement income assets and should best not be considered for basic retirement income needs.  Regardless of how you project the possible receipt of SS benefits the point is other assets will have to be available for any number of reasons.  Can you or your retirement planner actually guarantee your investment program to provide the basic income you need to structure a successful retirement program regardless of how long?

In my years as a Retirement Planner, my number one goal has been and is to guarantee the level of basic income and insure it will remain available regardless of economic or market conditions.  Understand this is basic income, which in the past has been fixed. Now with some of the newer products currently becoming available it may be possible to factor in guaranteed cost of living increases.  But even without use of these new products, with guaranteed basic planning in place market declines, bad economy or reduction or loss of SS benefits may be painful but not the destruction of the total plan.

Once the guaranteed basic plan is in place, the full retirement plan must incorporate other assets even SS benefits to fill out the plan.  These supplements could be other guaranteed income assets, flexible assets or even SS benefits.  The point is retirement planning is not a fixed program but basic retirement income is.  Total planning for retirement income must be flexible, consistently reviewed and changed in relation to economic opportunities or market situations.

Have you truly look at your plan and do you have a written Retirement Plan, incorporating guaranteed basic income lasting for as long as you live regardless of market or economic conditions?

Hubert McMinn Jr.

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.

Shelby J. Smith, Ph.D. in his June Newsletter wrote: “Most of us measure our retirement money by how “tall” it is rather than how “long” it is. It’s not how much money you’ve got that’s important, but how long it will last. Because of uncertainties like inflation, taxes, investment losses, emergencies and more, retirees don’t know how long they might live; thus, it is hard to determine how long the “tall money” will last. This is why retirees’ greatest fear is outliving their money, referred to as “longevity risk”. If the “tall money” is laid down over the retirement years it becomes “long money” and longevity risk can be managed.”

Right now we are seeing significant growth and revitalization of the stock market, tall money growth.  If you went through the crash of early 2000 you have been here before, as I have.  My old money never reached the high of 1999 before 2007 but my new money did very well until 2007.  Now in late 2009 it appears that we have the start of a new Bull Market but there is doubt at its ability to prevail long term.  10% and higher unemployment, fear by the employed that their job may be at risk, high government spending and forecast of higher if not much higher taxes/and or a value add tax as well as many others lends credence to doubt that this Bull Market can last. 

If you are in the Retirement Zone for planning or even retired, now is not the time to take risk with money you cannot afford to lose.  Should you have money in stocks, bonds, mutual funds, T Bills or other high risk ventures?  I think you should, but not your basic money you cannot afford to lose.  If you consider, an investment of $100,000 growing at 8% compounded each year for 5 years and then a loss of 30%, it requires 51/2 years at 8% annual compounded to recover to the former 5 year point.  While conservative products, such as an Indexed Annuity, with consistent guaranteed 6% *compounded growth could provide an income asset** with $32,000 higher accumulation and Guaranteed Income for Life without the worry.

* 6% is lower than most Guaranteed Income riders are currently providing.

** Rider providing Guaranteed Income for Life

Hubert W. McMinn Jr.

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.

November 2, 2009 the Wall Street Journal (WSJ) in the Money & Investing section reports “Dow Seesaws To an Advance of 76 Points.”  “Stocks finished higher, fueled by upbeat economic data, but trading was volatile amid uncertainty about the strength of the recovery.” 

The majority of Americans have money invested in “the Market” directly or through their 401(k), 403(b), IRA or other qualified account.  Of course “the Market” is the term used to identify investments in Stocks, Bonds, Mutual Funds and other securities.  With what has happen, is happening with the economy and “the Market” the question is should anyone have money in the market?  Answer, yes but it depends.  

Back 40 years ago when I was a lot younger I played poker and in one game, the last, lost $1,500.  The fact I had won $1,600 already was of little solace.  As with gambling, the immutable law of investing is: Risk and Reward always travel together.  The wise gamblers bet no more than they can afford to lose; if this is true in gambling shouldn’t it be true in investing?  Monday, Warren Buffett bought a railroad and commented he was “All In”.  Does anyone believe he is playing without a safety net? 

At any age having some money at risk is recommended but as we reach and enter the “Retirement Zone” our ability to recover from significant loss decreases.  Investing as with gambling, if there is difference, without a safety net is only for the young and foolish.   We all know “you don’t put all your eggs in one basket” and having all or a significant part of retirement funds at risk is counter to this word of wisdom.  If you cannot afford to lose it, it should not be at risk.  What is your safety net? 

WSJ November 3, Dow Jones Industrial Average (DIJA) reached 9789.44 which is an increase of 789 since July 09, but has been a very bumpy ride [WSJ 11.3.09 page C4 graph] with no assurance the market will get back to the high of October 2007.  If you feel you are now locked in “until”, “as soon as” or “when” the market comes back you may be no different than those before us.   Our great grandparents or grandparents may have said the same thing in 1929 but did not have a chance on average of breaking even until late 1954.   From 1969 to 1982 the DJIA remained about the same.  2000 the DJAI reached 11, 723 and then the bottom dropped out hitting the bottom in late 2002.  October 2007 the DIAJ reached another high of over 14,000 but by September 2008 it was at 11,500 and on the way down.  October 31, 2009 the DJIA clawed its way back to 9712 after falling 249 that week and as the WSJ announced “For October, Blue-Chip Stocks were virtually unchanged….”  Even so, some will make significant gains over the next several years in the market but most of these gains will be in new money.  As very well pointed out by the WSJ (11.03.09 page R1; The Cruel Math of Big Losses) recouping investment losses require big gains “a fall of one-third requires a rebound of 50%.  And if by half, you need double,” or a 100% return.”  

As we move toward, enter or have entered the “The Retirement Zone”, we must have a safety net absolutely guaranteeing income for basic necessities at the very least.   At this point in our life, common sense as well as practical and emotional health requires a safety net to guarantee our peace of mind and an absolutely secure retirement plan.  This does not mean not having money at work, just a more prudent investment strategy and a written plan to chart the course.

The question becomes; how do I resolve my investment loss without remaining in the market, riding it out and hoping, is there an answer?  Actually, with proper planning recovery, development of a guaranteed safety net and successful secure retirement is possible for most regardless of age.  David Reindel in his book, “Don’t Die Broke” writes that when you realize;” One, you need to avoid risk altogether to ensure funds for the necessities of a lifetime in retirement.  Two, when evaluating financial instruments associated with the marketplace, do the math and you will always seem to arrive at the same fundamental equation.  Trust me. It is always the same: risk-free necessities + care free retirement = annuities.”  

Regardless of what is often written in the financial press, today’s annuities are not the same as 10, 5 or even 3 years ago.  Is there another product that will help you recover assets, guarantee income you cannot out live, allow you to participate in the market without risk, provide long tem care benefits and provide benefit to your heirs?  If you and your financial advisor have not and are not considering annuities and their life time guaranteed income riders, WHY?

Hubert W. McMinn Jr.

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 as well as a guaranteed plan of life time income, contact Hubert McMinn by email at  hmcminn@plannedassets.com  or  for retirement planning ideas and concepts, visit him at: www.plannedassets.com.

Just a bit of change from the serious information I try to put out.

Speed Limit: 

Sitting on the side of the highway waiting to catch speeding drivers, a State Police Officer sees a car puttering along at 22 MPH. He thinks to himself, “This driver is just as dangerous as a speeder!” So he turns on his lights and pulls the driver over. Approaching the car, he notices that there are five old ladies-two in the front seat and three in the back-wide eyed and white as ghosts. The driver, obviously confused, says to him, “Officer, I don’t understand, I was doing exactly the speed limit! What seems to be the problem?” “Ma’am,” the officer replies, “you weren’t speeding, but you should know that driving slower than the speed limit can also be a danger to other drivers.” “Slower than the speed limit? No sir, I was doing the speed limit exactly …Twenty- two miles an hour!” the old woman says a bit proudly.

The State Police officer, trying to contain a chuckle explains to her that “22″ was the route number, not the speed limit. A bit embarrassed, the woman grinned and thanked the officer for pointing out her error. “But before I let you go, Ma’am, I have to ask… Is everyone in this car OK? These women seem awfully shaken and they haven’t muttered a single peep this whole time,” the officer asks with concern.

“Oh, they’ll be all right in a minute officer. We just got off Route 119.”