Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.
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MAY 6-12, 2015 UCW 19 WWW.UPANDCOMINGWEEKLY.COM Why are you investing for your retirement? Typical answers to this question are wide and varied. They include retirement security, returns, growth, free- dom and fun. Although each of these answers makes sense, the one that matters most is income. The biggest thing that people need to understand is that it makes no difference how much money you have in retirement. What matters is how much money you have after taxes have been paid. Everyone needs income that they can count on. This means a unique consistent cash flow shows up in your account every month so you never have to worry about how to pay the bills or if the money is going to run out. It is great to have a large investment portfolio but what happens if the stock market suffers a dramatic decline like it did in 2008? In a few days your assets could be slashed by up to 50 percent. If this happened today would you be able to live comfortably on happy retire- ment savings for the rest of your life? Dr. Jeffrey Brown, a retired expert and adviser to the White House, said it best in this recent Forbes article: "Income is the outcome that matters most for retirement security." Being asset rich and cash poor often leads to stress and even bankruptcy. This can be avoided by focusing on reliable and consistent income. In research articles from newspapers and magazines on retirement income, all the financial advisers seem to say the same thing. Max out your 401(k) contribution. Save more money. Reduce your lifestyle. Strategize your Social Security claiming plan. While this is all good, consider the following. If you max out your 401(k) con- tribution and you are in a higher tax bracket than when you started you are going to be paying higher taxes on that money. Do you think taxes are going to be higher or lower in the future? Personally, I think that they will be higher because the national debt is more than $18 trillion and Social Security and Medicare take the majority of taxes to fund these programs because the Baby Boomers are retiring at a rate of 10,000 people per day. There's nothing else the government can do. Many financial articles suggest putting money in tax- able and tax-deferred accounts. Nothing ever seems to be said about putting money in a tax-free vehicle. What is a tax-free vehicle? It is permanent life insurance. Money in this type of vehicle grows tax-deferred, you get your money out tax-free, according to IRS code 7702 and 70 E. It also does not affect taxation of Social Security, which can be huge in retirement. There are many other benefits to permanent life insurance. In general, people are uneducated about the value of a reverse mortgage. Many people in retirement are house rich but cash poor. Homeowners get money out of reverse mortgages in three different ways, a lump sum, a monthly payment or a line of credit. All of this money is tax-free. People in retirement do not have the luxury of waiting on the ups and downs of the stock market. How would you like to have a financial vehicle that can have market- like returns but never lose money due to a market downturn. I know of only two financial vehicles that can guarantee you this by contract and they are fixed indexed annuities and permanent life insurance. If you are 59 ½ or older and approaching retirement start thinking about how you will avoid the greatest risk of living too long — running out of money! Some content contributed by Steve Burton of Equity 1. This article is submitted for educational purposes. Why Are You Investing for Retirement? by ALAN PORTER Many seniors run the risk of outliving their retire- ment funds. There are things that you can do to make sure that doesn't happen. COURTNEY BAUGHARD, FTCC Program Coordinator, Community Services, Contributing Writer. COMMENTS? Editor@ upandcomingweekly.com. 910.484.6200 ALAN PORTER, Financial Advisor at Strategic Wealth http://www.iflretirement. com/Alan-Porter COMMENTS? Editor@ upandcomingweekly.com. 910.484.6200