Nearly half of the people that are retired today are at risk for not having enough money to last throughout their retirement years. One solution that some people are turning to in order to supplement their retirement income is their whole life insurance cash value.

Extra money to get you through tough financial times is one of the reasons that a whole life insurance policy is one of the best investments that you can make for your retirement. Of course you also get the benefit of knowing that your family will be taken care of after you die, but due to the fact that a whole life insurance policy will grow in cash value, in both good and bad economic times, it is also a smart investment too.

Until recently most people only bought life insurance policies so that their loved ones would receive cash benefits when they died, but today more and more people are beginning to see the investment advantages of purchasing these types of insurance policies. Whole life insurance policies are helpful to retirees because they are flexible enough to help you take care of any number of financial problems if the need arises after retirement. The cash value of your whole life insurance policy can also be helpful in the years before you retire.

Advantages of Whole Life During Retirement

One of the biggest advantages to having cash value in your whole life insurance policy is that it can be extremely helpful in financing a long-term need. One example of how the cash value of this type of insurance policy can help would be if you want to pay for a grandchild’s college education. It is also very useful in helping you pay medical expenses later in life, or for long-term care.

The whole life insurance policy is a policy of guarantees, which is great because there are few guarantees in life today. With this type of policy your family is guaranteed a payout if you should die, your monthly premiums will never increase, plus you are guaranteed that the cash value of your policy will increase. When you add a whole life insurance policy to your retirement plan, it will be one investment that you won’t have to worry about.

For retirees, one of the biggest advantages to the whole life insurance policy is that it is there in case of emergencies. If your investments are suffering from a down market, it is far better to tap into the cash value of a life insurance policy than it is to sell your stock and lose money. In most cases, the value of stock will recover, but in the meantime you can live off of the cash reserves of your life insurance policy.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Today, people that are nearing the age of retirement are a part of the Baby Boomer Generation; they grew up understanding that they would work all of their lives and when they retired, they would no longer have any financial cares. This is the picture that most Baby Boomers saw with their parents’ retirements, but this pretty picture is no longer the reality of retirement.

These days you can no longer count on a pension plan from your employer; in fact, few employers even offer these any more. If you do have a pension plan, you cannot really count on that being there through retirement, as most companies are dropping these in any way that they can. Yesterday’s pension plans have been replaced with the 401k, and there are still many employers that don’t even offer this.

Funding Retirement Is On Your Shoulders

No matter how long you work for a company, you will still be responsible for funding your own retirement. For most people it is unrealistic to think that they will get enough through Social Security to actually retire on, so the reality is you have to find other ways to pay for retirement.

With no pension and inadequate Social Security payments, the only option for most people is to turn to investment and savings. Fortunately, there are the employer 401k, as well as IRA accounts. These are the most common means of funding retirement in the new retirement reality.

The Importance of a Retirement Plan

Due to the fact that funding your retirement is such an essential element of retiring in comfort and not poverty, it is important to create a solid retirement plan long before you expect to retire. A retirement plan is like a roadmap to help you get from where you are now, to where you want to be when you are ready to retire.

A good retirement plan will include:

• A retirement portfolio that consists of investment, savings, and social security.
• A realistic budget that you can stick with; as part of this budget you will have a withdraw rate from your retirement funds that will ensure that you live comfortably, but that your money will last for the rest of your life.
• A plan for what you intend to do while in retirement, such as travel, start a new business, or attend school, etc.

It is a reality that the retirees of the future won’t be handed the golden egg when they hang up their work boots, but you can still live through retirement comfortably if you plan early and wisely.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

There are some similarities between annuities and CDs; both types of investments are considered secure, and both offer guaranteed returns that are based on interest rates. Annuities are offered through insurance companies, while CDs are available from banks.

If you are thinking of planning for retirement and are interested in safe investments, you can’t go wrong with CDs or annuities, though you should weigh the benefits of each before deciding which investment best suites your needs.

Rate of Return

Although on the surface CDs appear to offers many of the same advantages of annuities, the truth is that annuities do offer some major advantages, such as tax deferrals and higher returns. It is true that CDs offer you protection against bank failure because they are federally insured, but the insurance companies that offer annuities are also mandated to have safety measures in place to protect investors.

Even though both annuities and CDs are both based on interest rates, with CDs your returns will be low when the interest rates are low. On the other hand annuities have a minimum guaranteed rate of return. What this means is you will never get less of a return than the guaranteed minimum, even if interest rates are low.

Taxes On Your Return

When you invest in CDs you will not have the ability to withdraw any of your returns until the investment period is over, but you will still have to pay taxes on the money your CDs are earning. With annuities you also have to wait a specific amount of time before you can withdraw money, but the earnings on annuities are tax deferred so you will not pay any taxes until you withdraw money.

Another advantage to the annuity is that you can often withdraw about 10% on an annual basis, or you can even invest in annuities that allow monthly withdraws. Taking money from a CD isn’t an option.

If you are looking for safe investments both CDs and annuities are a sure thing, but it is clear that annuities can offer the same risk fee investments, along with several additional benefits.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

A 401K is an employment based retirement plan that allows you to contribute money from your paycheck directly into a retirement account. In order to have a 401K, you must either a) be self-employed or b) work for an employer who offers this benefit.

Because a 401K is provided by your employer, it can be easy to set up. In addition to completing the basic paperwork, you must also choose what percentage of your paycheck you would like to contribute to your plan. This amount is deducted from your paycheck on a pre-tax basis and you can contribute up to the IRS maximum allowed limit. As of 2010, that limit is $16,500 per year.

There are many benefits to a tax deferred 401K. First, tax deferred means you do not pay taxes on the money right away. In fact you do not pay any taxes on your retirement savings until you begin making withdrawals. This makes your taxable income lower while you’re contributing because your contributions are not calculated as part of your taxable income.

Many employers also offer matching programs, meaning that they will match your contributions up to a certain percentage. Typically, these contributions are structured on a vesting scale, so you won’t actually take full ownership of the extra money until you’ve been employed for several years. But if you’re planning to stay with your employer for a while, this is a fantastic way to quickly grow your retirement savings.

This also makes a 401k a great option for low income employees who may be restricted from other retirement plans based on earnings.

So how do you use your 401K to enhance your retirement? If you wish to see growth in your 401K plan, you must invest it. Younger employees often focus on long-term stock investments while employees who are closer to retirement age may prefer investment options such as bonds.

When you have reached retirement age, you can begin to make withdraws from your 401K. If you wish to withdraw early you must pay early distribution penalties. After you reach 70 1/2 years, regular withdraws become mandatory. The IRS determines your minimum withdrawal amount. This amount will be based upon your age and your life expectancy.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Savings is an important part of your future. Fortunately, there are a number of ways to stash some cash.

Savings Accounts

Do you have a savings account already? Most people do. In fact, many banks now offer savings accounts linked to checking accounts. With a savings account, you can easily move funds from your checking account into your savings. When needed, savings funds are easily withdrawn at an ATM or via online transfer.

Savings accounts are great for short term savings such as for a family vacation, but they often provide little or no earnings. The interest rate on most savings accounts is very low, often 1 to 4%. If you have a low interest rate your money may actually be losing value if the rate of inflation is greater than the rate of interest earnings.

Money Market

If you are looking for a savings option that earns more interest than a savings account while still affording you some accessibility, consider a money market account. Higher money market interest rates allow you more earnings.

There are, however, limitations on money market accounts. Your minimum balance requirement is usually higher than a savings account. You may also be limited to a specific number of withdrawals each month. You can open a money market account at the same bank where you have your checking and savings, or you can go through an investment company.

Certificates of Deposit

A CD, or certificate of deposit is another savings option. This type of account is time sensitive. You must leave the money in the account for the specified amount of time. This time limit may be anywhere from a few months to a few years. Longer time periods mean more interest earnings.

One downside to a CD is that funds are not easily accessible. You will have to pay a penalty for early withdraw. This may negate your interest earnings.

Savings Bonds

Savings bond are issued and guaranteed by the federal government. Like a CD, they have a time limit. This allows your bond to mature for 20-30 years to its full earnings potential. You can, however, withdraw some money early if you don’t mind losing some interest earnings.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

When you reach retirement age, money can be a sacred thing, so you must spend it wisely. Savings of any kind are always welcomed, especially when it comes in the form of tax breaks. Here are some tax deductions to help make your retirement a bit richer:

Medical Costs. Did you know that almost all out-of-pocket medical expenses are tax deductible? Notate all of your health insurance premiums, nursing home costs, at-home long-term care, and even prescription drugs. You can deduct these items up to a certain amount when you file your taxes.

House Sales. Do you plan to sell your home and move into a condominium or a smaller house? Many retirees make this choice when their children have married and moved away. If you have owned your home for years or even decades, there is a good chance it is worth much more than you paid for it. As long you remain in your home for two years out of the five years before you sell it, and if your profit is less than 250,000, 500,000 for married couples, you may not have to pay taxes on your house profit.

Investment Expense. Investing is an important part of every strong retirement plan. But did you know that you can write off most investment expenses? These expenses include investment planning advice from your financial planner, equipment such as your home computer if used for investing, fees paid to any individual or institution in order to collect investment monies ,and fees for attorneys or accounting firms that assist you with investment legal or financial advice.

Business Expenses. Many retirees decide to open their own business. Business expenses are deductible as long as they are reasonable. You can deduct your equipment costs, travel costs, and cost of your business location, whether a home office or a storefront.

Donations. Giving is a great way to save money. You can give up to 50% of your yearly income and receive a tax deduction on it. You can also receive deductions for property you donate as well. This great deduction option allows many retirees to give back to their community or a beloved c charity, while still keeping their retirement savings intact.

Standard deductions. If you choose not to itemize your deductions, when you reach the age of 65, you will be eligible for a standard deduction higher than before. For single individuals over 65, the current standard deduction provides an additional 1,250. For married couples it is 2,000 total. A married couple can collect the extra amount for both spouses even if only one is over 65.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

One of the documents you’ll likely sign while putting together your estate plan is a Durable Power of Attorney. This is the document with which you’ll appoint an Attorney In Fact to handle your finances in the event that you’re unable to do it yourself.

While an Attorney In Fact can be a godsend, managing your finances, paying your bills, signing legal document for you and helping you avoid the need for a guardian or conservator, you’ll want to be careful who you appoint.

The person you choose will have a great deal of power over your legal and financial affairs. Poor decision making or dishonesty on the part of your Attorney In Fact can result in a financial nightmare for you. So, what qualities should you look for?

• Age. While, legally, a person only has to have reached the age of majority to serve in this position, it’s a good idea to choose someone who has demonstrated that they’re financially responsible.
• Financial Acumen. While your Attorney In Fact doesn’t need to be a CPA, it’s a good idea to choose someone who has handled his or her own finances responsibly – and who has demonstrated the ability to handle financial affairs at least as complicated as yours.
• Organizational Skills. You want someone who will be able to keep track of all of your bills and paperwork, and know what’s going on with your financial and legal affairs at any given moment.
• Diligence. Choose someone who will take the time necessary to make the right decisions on your behalf, whether this means doing a little fact-finding or consulting with an expert.
• Trustworthiness. Most importantly, you want someone you can trust implicitly. The purpose of appointing an Attorney In Fact is to have someone there to watch out for you when you can’t do it yourself. Choose carefully and trust your instincts.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Did you know that, generally speaking, the law views pets as personal property? This means that if you pass away, your pets are distributed to your heirs just like the rest of your possessions. If your family members are animal lovers and are prepared to care for your pets long-term, this may not be a problem. But for some pets, the death of an owner means life in a shelter or on the street.

Fortunately, there’s a way to provide for your pet’s needs in the event that you die or become disabled. You can establish a pet trust. Here’s how it works: You set up the trust by naming a trustee and a caregiver, and fund the trust with enough money to care for your pet. You’ll give the trustee instructions on how to distribute the funds. You’ll give the caregiver instructions on what kind of care your pet needs. If you die or become disabled, the trustee will give your pet to the caregiver, and distribute the funds to the caregiver so that he or she can take care of your pet. The trustee will also make sure that the caregiver is caring for your pet pursuant to your instructions. When your pet dies, the trustee will distribute the money or property remaining in the trust to the remainder beneficiary, the person or organization you name in the trust to receive the property upon the death of your pet.

It’s a good idea to check with both the trustee and the caregiver before you appoint them, just to make sure they’re willing to take on the responsibility. It’s also a good idea to name at least one alternate trustee and caregiver, in case your initial choices are unwilling or unable to serve for any reason.

There are numerous considerations that factor into establishing a pet trust, from how much to fund, to what types of instructions to leave for your trustee and caregiver. These decisions are highly individual and depend things like the size of your estate, the type of pet you own, and your pet’s habits and preferences. If you’re considering establishing a pet trust, an estate planning attorney can help through these essential decisions.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Sounds a little morbid, doesn’t it? It’s not something that’s pleasant to think about, but planning your own funeral can be a great service to your loved ones. Think about how much grief they’ll experience when you pass away, and then think about how much energy, stress, and anxiety you could save them if you made some of the decisions concerning your funeral ahead of time. They wouldn’t have the guess-work of trying to decide what you would have wanted; they would just have to put your plan into motion.

How do you do it? Here are a few ideas:

• Decide what kind of service you’d like: should it be traditional funeral service, a memorial service, or even a casual party celebrating your life instead of mourning your passing?
• Decide on the size of the gathering and whether there are specific people you’d like to attend.
• Choose where the service should be held. It’s a good idea to choose several alternate locations.
• What would you like to have happen at the service? If there’s a song you’d like to have sung, let your loved ones know. On the other hand, if there’s anything you don’t want done, let them know that, too.
• Do you want to be buried or cremated? Choose a cemetery, if that’s your wish. Let your loved ones know where you’d like your ashes scattered, if that’s your preference.
• A great service to your loved ones is figuring out how to pay for your funeral. Avoid pre-paid funeral arrangements. Instead, check to see if you have death benefits available to you. If not, or if you don’t think they’ll be sufficient, consider putting money aside in a special fund.

Most importantly, after you’ve made your plan, make sure you communicate it to your loved ones. It’s a good idea to put it in writing and to let them know where they’ll be able to find it. While it may not be pleasant to think about, making a funeral plan can go a great way toward easing the burden on your family and friends in their time of grief.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Regardless of the type of life insurance policy you may have, you have the right to choose who you want to benefit from the policy’s proceeds. Known as the beneficiaries, you also have the right to change this designation at any time, but to do so, you’ll need to make the change on the policy itself – amendments to your Will or trust can’t alter the policy document.

Common reasons for updating life insurance beneficiaries include:

• A birth or adoption
• A death in the family
• Divorce
• Marriage
• Name changes
• Address and telephone number changes

Changing basic information, such as your name or address is fairly simple.Simply contact your agent or life insurance company and ask for the appropriate forms to make the change. Some companies may even allow you request this type of change online.

If you need to update the beneficiaries, you’ll need all the pertinent information, including the beneficiary’s name, address, contact number, social security number and your relationship with him/her.

The form will need to be signed and witnessed – in most cases, this will have to be done in front of a notary.

Be sure to keep a copy for yourself and file it along with the original policy. Also be sure to follow up with the insurance company to be sure that the form was received and the changes are made. You should receive an amended policy once the changes are completed.

If your original beneficiaries were aware they were named on your policy, you’ll need to notify them of any changes to avoid family disputes later on.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.