She Came out of Nowhere

“If you’d hit her in the passenger door, you probably would have killed her,” the officer told me as I looked over the crumpled front of my mini-van. I was a bit shaken, but relieved. It could have been so much worse, especially for ‘Marge’. That February day began like any other day for ‘Marge’, an elderly lady who was just driving a few blocks from her home to the local mall. She probably had her mind on the things she wanted to purchase and didn’t realize she had turned across traffic in front of me without looking. I had just enough time to swerve slightly. Thankfully, I crashed into her front quarter-panel, instead of T-boning into passenger side door.

Fortunately ‘Marge’ only received only a fractured sternum from the collision, but in her fragile state it would take weeks for her to heal. Even though the accident was her fault, and I had only suffered a few sore muscles and inconvenience as a result, it still left me shaken.

The whole incident had taken only seconds to occur. One moment I was running a lunch-time errand, the next moment my air bag was exploding and tires were screeching. What if ‘Marge’ had been travelling faster or I hadn’t swerved? What if she had hit me head-on? The results could have been devastating for both us and for our families.

I’m the husband of a wonderful woman and proud father of four young children. My mind flashed to what life would be like for them should something happen to me. I was comforted knowing that even though such an event would be very difficult for them, it wouldn’t have to be financially devastating. We’d already put an estate plan in place, including life insurance to adequately provide for my family in my absence. That February day was a personal and stark reminder of the extreme importance of such planning.

As a Certified Financial Planner, I’ve seen the effects that failing to plan has had on those left behind. I’ve seen a wife and her children, after 30 years of marriage, be forced to move in with her parents and rely on them financially because her husband died unexpectedly in his sleep. They always thought they had plenty of time to plan.

I’ve talked with children who have had their careers and family life put on hold while they had to settle the estate of a parent who put off taking care of business. I’ve seen families torn apart, fighting over the inheritance, because their parents never made sure their wishes were known and would be carried out.

There have been family farms and businesses unnecessarily lost because of onerous estate taxes. Thousands and thousands of dollars that Dad thought would go to the kids went to Uncle Sam instead. And why? Because Dad didn’t want to spend the one or two thousand dollars it would take to put the right estate plan in place. He was penny-wise and pound-foolish.

Did you know that 70% of Americans fail to do any estate planning? Are you one of them? If so, why? Unless you have discovered the Fountain of Youth, there is simply no excuse for not planning for the settlement of your estate. Do you want to leave your loved ones in a mess? Do you want your wife to struggle through a complicated and emotional probate process? Do you want your kids fighting tooth and nail over what you leave behind?

Getting your affairs in order doesn’t have to be difficult. And you don’t have to ‘get everything together’ in order to do it. Certified Financial Planners like myself can walk you through the process and come up with a plan that will be simple, cost-effective and ensure that your wishes are carried out. An attorney can then draft the necessary documents.

The point is, there is simply no excuse for not putting your affairs in order. Even if you have documents in place, make sure they are current. Don’t put if off any longer. Like ‘Marge’ found out, you never know when your future will take an unexpected turn.

If you have questions about this or any other financial topic, I want to hear from you. You can reach me online at www.guardingyourwealth.com or toll-free at 1-877-827-1463.

Mr. Voudrie is a Certified Financial Planner and President of Legacy Planning Group, Inc., a Private Wealth Management Firm in Johnson City, TN.

A Retirement Paycheck You Can Depend On

Financial retirement was very different for our parents. They worked for the same company for most of their careers. When they retired, they started receiving monthly checks from their company pensions. Nowadays, financing retirement is much more complicated. But it doesn’t have to be. Read on to find out how. There are two issues that must be dealt with so you can have the freedom in retirement to focus on living instead of constantly worrying about your investments. The first issue is how much money you can receive on a monthly basis. The second issue is how long you will live.

These issues are inter-related. Very few people have an endless supply of money. Most have a nest egg that they’ve accumulated over time. The nest egg includes money from a 401(k), the lump-sum from the company pension and other monies that have been set aside.

Wouldn’t it be nice to know that you will receive a ‘paycheck’ each month in your retirement and that the amount of your ‘pay’ can increase each year? Better yet, what if that could be done in such a way that your nest egg continues to grow in value?

I believe that we need to re-think the way we invest during retirement. Let’s face it: the size of a retiree’s nest egg isn’t what it needs to be if you can only get paid 4%. I regularly talk to retirees that need to withdraw 6-7% a year. Traditionally, doing that would result in depleting the nest egg by age 80-85 or sooner. That won’t cut it.

Life expectancy continues to increase so you need to be able to depend on your money lasting far beyond age 85. If you retire at age 60, it’s becoming much more likely that you will live 30 or even 50 years. That’s places a lot of pressure on your nest egg!

According to the Urban Futures Institute, “The big killers of the pre-World War II years…all had disappeared from the leading causes of death…by the 1980’s.” The main causes of death nowadays are cancers and cardiovascular disease. There are billions of dollars being invested in research each year trying to find ways to prevent or cure both.

Researchers are finding that current death rates for those over age 95 are far less than what had been predicted. Previously, it was anticipated that the death rate would continue to climb as one got older. What’s taking place, though, is that the death rate for those who live to age 95 actually drops off.

It’s not uncommon to see people live to be 100 or 105 or 110. Keep in mind that those age 100 lived most of their lives before many of the major medical advances occurred. In general, people retiring today are in much better health than their parents were at age 60.

It’s vital that your nest egg last longer than you do. The only way for that to occur is if the nest egg continues to grow over time. If you continue to take out more than you earn you are guaranteed to run out of money at some point. In that situation it’s a race between your money and your life span. If your nest egg continues to grow, though, it will always last longer than you.

This can be done. For instance, I started managing Joe’s account in 2002. He originally transferred in $432,000 and was taking a monthly paycheck of $3,000. His ‘paycheck’ was equal to 8% of his nest egg.

His paycheck is automatically deposited in his checking account at the beginning of each month. Taxes are even taken out of it so he doesn’t have to worry about filing quarterly estimated taxes.

Joe has continued to receive his monthly $3,000 paycheck. He can increase it if he wants but he hasn’t had the need to so far. He has received almost $150,000 in ‘pay’ since then. And his nest egg hasn’t decreased in size. In fact, his nest egg is worth over $510,000 today.

I imagine every retiree would like to be in Joe’s position. And it’s possible you can be by making a few, simple adjustments in the way you view retirement investing. I’ll explain the details of this approach in my next article.

Nationally-syndicated financial columnist and Certified Financial Planner® Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He’ll answer your financial question – FREE at www.guardingyourwealth.com.