The past decade has unquestionably altered the way in which we must view and approach retirement. Rocked by the events of 9/11 and then the recession, the stock market showed little net gain during the past 10 years, and many people saving for retirement have suffered lossed in both investments and home values. Couple that with the fact the government has been running a $1.3 trillion deficit, putting in question how we will continue to fund social security and medicare benefits. This creates much uneasiness regarding what tax burdens may look like during the distribution phase of retirement funds!
At the same time, the baby boomer generation, the largest in our country's history, is now moving into their retirement years, with many projected to live well into their 90's. More uncertainty arises from the fear that a retirement portfolio that would have been adequate or even comfortable 10 years ago will be unable to sustain a long retirement in today's economic and tax environment.
However, many Americans are proving to be adaptable and resourceful. They are willing to not only become more disciplined with their finances, but are looking hard at potential course-corrections that can get them back on the right track. They are understanding that now, more than ever, they need to seek professional guidance to create a path toward a successful, secure retirement! Don't try to navigate the waters by yourself. There are excellent options available if you look to the right sources! Be proactive in planning your retirement and don't assume that your company 401k is the best or only option!
The 2 main obstacles that I have witnessed in people's efforts (or lack thereof) in planning for retirement are lack of information (or misinformation) and procrastination. I believe that many avoid dealing with this issue because they view their retirement as very uncertain and possibly shaky.
However, the good news is there are some excellent options available to most people, including those with very limited expendable income. Most people are afraid to speak with an advisor for fear of being told that they need to come up with an additional sum of money that they simply cannot produce, or curtailing the lifestyle that they are comfortable living. However, a good advisor can look at the larger picture of a client's money pie and assist in reducing tax burdens and other unnecessary expenses. It is just a matter of taking the time to sit down with the right kind of advisor, one with your best interest in mind!
Finally, the best time to act is now. Timing is extremely important in retirement planning. Obviously, the younger you are, the longer your money can grow before retirement. However, if you are no longer in the spring chicken category, there still may be some great options for you unless you keep on waiting! As the saying goes, the best time to plant a tree was 10 years ago, the second best time is today!
Most people worry that if you use a Broker or an Agent you are going to pay more.
There is no surcharge in using a broker or an agent. You will pay exactly the same price if you went directly through a company.
So, what is the difference between an Agent and a Broker?
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- Agent: An Agent is the representative of one company. A good agent will focus on helping you understand the insurance products of the company that he/she represents. He/she also will build a personal relationship with you. Something a big company cannot do due to the volume of business. He/she will be available to help you within the limits of the company that he/she is representing.
- Broker: A Broker represents YOU and not a specific company. Like Agents, Brokers also focus on helping you understand the insurance products available but are not limited to the company they represent. He/she will build a personal relationship with you and will be available to help you without being limited to any one company. He/She can best assess your needs and find the products best to fit those needs because he/she is not tied down to one company.
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One of the signature signs of a good advisor is the ability to rely on him or her for timely callbacks. This clearly demonstrates a few characteristics that you should demand in any advisor, especially if they are handling your money and/or family's security. By calling you back in a timely manner, they show you that you are a priority not to be put on the back burner. It also shows that they are doing something to get you an answer to your question, even if they may not have the answer immediately.
Especially in today's technological environment with the ability to communicate easily and quickly through text messages and emails, there is absolutely no excuse for advisors to leave clients hanging without any response for long periods of time, unless they do not care about losing that client!
Here are a few criteria in choosing an advisor or deciding if it might be time to FIRE your advisor or at least seek a second opinion:
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1) Your advisor should be in touch with you to offer a consultation and check up with you at least once a year. If this is not the case, rest assured that you are pretty low on his or her priority list. Do not assume that you are simply being left alone because your policies and accounts are in great shape and no improvements are available. A good advisor at the very least should touch base just to give you peace of mind and answer any questions you might have. So whether your advisor is helping you with insurance policies, financial planning, or both, you DESERVE to be contacted at least once a year. Things change so fast in the insurance and financial industries that you need to be updated consistently on what is going on.
2) Make sure that your advisor is a true broker and has access to the many different options that are available for you. It is his job to keep up with the product changes and best products on the market. Most insurance companies are strong with 1 or 2 products and not very competitive with the rest of their portfolio. And many companies that are great at recruiting agents and heavily penetrating the marketplace are not competitive with ANY of their products. If your advisor only works with 1 or 2 outfits it is a safe bet that there are MUCH better options available for you through a true broker. And beware, many of these agents that are limited to one outfit will POSE as brokers, telling their clientele that they have access to all options!
3) Nothing is more frustrating than needing an answer from an advisor and being unable to get a hold of them. If you can't get your advisor to call you back or it takes them a week to call you back, GET RID OF THEM! Either they are not very good at what they do or you are not a priority for them! In either scenario they do not deserve to be making commission from you and you deserve to be a priority!
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My first thought in sharing your personal information was DON’T!!!! We are taught this from a young age and rightfully so. There are so many scams and criminals seeking your personal information for their own gain in the world today that it is hard to know who to trust.
In most instances, people know whom they can trust. Usually it is those people that they choose to be guardians for their minors, or someone they choose to take care of medical decisions that may arise in your life. Whoever it is, make sure they know at least where to find your personal information in an emergency.
Ed has a client who told us a story about his father. I will call this client, Tom. Tom’s father passed away in 2001 from old age, leaving his widow at the ripe young age of 85 to the care of their 5 children including Tom. The 5 children spent the next 7 years caring for their mother. They each took turns paying for all her expenses. This was not an easy task for the 5 children, because money was tight for them without their mother’s expenses. Sadly in 2008 Tom’s mother passed away. The family decided to sell the family home and recover some of the money spent of caring for their mother. As they cleaned out a shed in the backyard Tom came across an old coffee can. In the coffee can was a significant life insurance policy his father had taken out on himself several years before. This life insurance policy would have covered all the expenses the family had covered and more for those 7 years following the death of their father. The father knew the life insurance policy would be safe in the barn, but he failed to realize that if no one knew the life insurance policy was there… no one was going to find it.
The moral of this story is… Tell those people that you trust with your information where to find it if they need it! Especially when you make an effort to protect you and your family with an estate plan, trusts, life insurance, final arrangements and so on, as you will do with the 52 Weeks to Prosperous Living program. What good is getting all of this information in order if no one knows where to find it if you die? Now, we are all going to die someday. This is inevitable. Make sure that when you die someone knows where your information is.
I just wanted to take a moment this morning and point out why it’s so essential to let someone know where important documents and files are located. Here are two instances:
1-Life insurance-I regularly talk to people that have experienced the death of loved ones and found old life insurance policies years later out in coffee cans in the tack barn or in a safe deposit box nobody knew about. Just this last April 7,525 individuals in New York found out they were owed money from old life policies. That ended up being over $95 million in payouts. These policies would have helped out the families significantly in their time of need. Financial problems after the death of a loved one can not only cause financial hardship, but also severed relationships between family members that are totally unnecessary. All of these problems would be avoided if the policies and documents were located in a safe place where a few trusted individuals knew where to find them.
2-Financial planning/investments-Very often, only one person in a household will completely handle these matters and the other is left in the dark. That’s the same thing we do in business. It’s called “division of labor”. It is a great principal but we need to be aware of the inherit weakness therein. Even if the person in charge is extremely organized, it will be disastrous if something were to happen to this person. I have spoken with numerous families that have dealt with this very issue as well. After the death of their family member, it took them weeks, months, or even years to figure out where all the investments were, as well as which bills to pay and when to pay them. So it is not only important to have all of this information in ONE secure place, but also to make sure that your loved ones know what that information is and how to access it!
Here are some reasons why it is important to have an annual consultation with your financial and insurance advisor(s):
1-The landscape of what is available in the insurance and financial industries is constantly changing and evolving. It is important that you are aware of the cutting edge products in the industry that could be a significant upgrade from what you have and save you in premium dollars. You may have an older product that is underperforming severely compared to other potential options, but you leave it simply because you are unaware of other options! It is your advisors responsibility to make you aware of the best options for you on a continual basis!
2-A consultation goes a long way in keeping you informed and educated in your knowledge of how your policies work and why they are important now and in the future. This gives you great peace of mind in understanding how you are protected and what your retirement will look like!
3-You need to know that your advisor is still heavily involved in the business and therefore up to speed with all the current best products in the industry