Are you aware of your risks?
You’ve worked hard to build your nest egg. Maybe you have worked more than a few decades to achieve a certain financial level of security. The question is, have you thought about Market Risk? In 2008, the stock market crashed and real estate values plummeted. Millions of people who were looking to retire in the next 5-10 years found themselves distraught due to the fact that almost ½ of their retirement income disappeared in 2008 as the S&P 500 dropped over 38%. Even those in conservative, low risk funds saw their nest egg dwindle significantly. With the Coronavirus outbreak, we are seeing similar trends in the stock market today. People are losing tens of thousands.
If the majority of your funds are invested in a 401K, 403B, or another IRA plan, these funds are subject to Market Risk. The closer you get to retirement age, the higher your Market Risk is due to the fact that you have fewer working years left to make up for any market losses. Our philosophy is that it’s better to have at least a portion of your money in products with zero market risk, than to be subject to big losses when there is a market correction. We specialize in financial growth products that have market like returns, zero fees, and zero downside risk. That’s right, if the market goes down, you can’t lose any money. Our goal for our clients is to keep your money safe and secure, while growing it at the same time. In the long run, this is always a better philosophy than chasing high returns.
The biggest risk we all have when it comes to our finances is TAX RISK. Consider these questions.
Do you think the Federal Deficit has any chance of decreasing between now and when you retire?
Do you want to retire and live on less than your current income?
If your answer to the above 2 questions is no, then consider this 3rd question.
Do you think taxes will be higher now or 10, 20, 30 years from now?
The odds of taxes being higher when we retire are very high. This means that we will pay MORE in taxes when we retire, than we currently pay now. I don’t think anyone wants to live on less than what they currently make and I know that we would all like to pay less money to Uncle Sam. At Brandywine Financial LLC, we have strategies that can help lower your tax risk so that you keep as much of your hard earned money as possible. If you like what you’re hearing, be sure to take our RISK ANALYSIS SURVEY.
Downfalls to traditional IRA’s (401K’s, 403B’s, 457B’s)
IRA’s can be a great vehicle for growth of funds. However, if you are under 59 ½ and you pull money from a traditional 401K or IRA the government will not only tax you on that money, they will also assess a 10% penalty on top of that tax. Basically, whenever you pull money out before this age you are giving 35-45% of what you take out to the Internal Revenue Service. That’s almost 1/2! Talk about putting a dent in your retirement funds!
Also in traditional and Roth IRA’s, you are capped on the amount of money you can contribute to the plan in a calendar year. You are only allowed to contribute $6,000 into the plan if you are under age 50. Individuals over age 50 are capped at $7,000. For 401K’s the annual contribution limit is $19,500 for individuals under age 50. Individuals over age 50 are capped at $26,000. Depending on your financial situation, it may benefit you to have a financial growth product that has no contribution limits. Also, it may make sense to move your money from a taxable bucket to a non-taxable bucket. Our goal is to have you keep as much of your money as possible. Why? Because it’s YOUR MONEY, not Uncle Sam’s!
FEES FEES AND MORE FEES!
What are the fees in your current IRA plans? Typically, IRA plans have management fees of 1.5%-3.5%. On top of that, some plans also have fees associated with trading that occurs monthly. Basically anytime your money is moved, these fees can be charged to your account. Mutual funds can also have hidden fees and load charges that can eat away at your retirement. It’s important to know the fees in your current plan. We can help with that. Moreover, we can put together strategies that can reduce your fees.
Have you thought about how your health can affect your finances? Consider these statistics.
- 1 in 3 Americans will contract some form of Cancer.
- There are nearly 800,000 stroke victims per year.
- Every 40 seconds someone in the U.S. has a heart attack.
- Approximately 70% of people over age 65 will require long-term assistance during their lifetime and over 35% will need care in a nursing home.
American Cancer Society, Cancer Statistics, 2019.
American Heart Association/American Stroke Association, Heart Disease and Stroke Statistics 2017.
Longtermcare.gov, December 2017.
Here are a few more…
- The average cost of a home health aide in the United States in 2018 was $4,195.00 a month.
- The average cost of nursing home care in the United States in 2018 was $8,365.00 a month for a private room and $7,441.00 a month for a semi-private room.
- Genworth Cost of Care Survey 2018, conducted by CareScout®, June 2018
“A new study from academic researchers found that 66.5% of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found.”
“Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.”
“A recent study from personal finance website Bankrate found that only 40% of Americans have enough saved to cover a $1,000 emergency expense.”
1,2, and 3 Taken from This is the real reason most Americans file for bankruptcy. Published MON, FEB 11 2019 • 11:32 AM EST Updated MON, FEB 11 2019 • 2:20 PM EST https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html
Here are some key questions to consider
What do you have set aside to offset the cost of your mortgage or rent if you had a critical, chronic, or terminal illness?
If you were too sick to work, what sacrifices would you have to make to pay your bills? If you are under age 59 ½ and you had to take more from your retirement funds to pay bills, are you willing to give almost 40% of what you take out of your IRA to the IRS?
How long could you stay in your home if you didn’t have money from working? If you had to move, where would you go? Would your kids have to change schools?
At Brandywine Financial LLC, minimizing your health risk is an important part of strategic asset protection. We have insurance products that include critical, chronic, and terminal illness riders at no cost. These living benefit riders allow you to accelerate the death benefit on your life insurance policy (up to 95% of the death benefit) so that you don’t have to use any of your assets to pay for treatment of these illnesses or to replace the money that you are losing from not working. They allow us to take the risk off of you, and put it on the insurance carrier. Using these products, your assets remain safe and secure during a time of critical, chronic, or terminal illness. Be sure to take our Asset & Mortgage Protection Survey by clicking on the link below.
Do you have questions?