Financial Conservatives -
Sound Ways to Chart Your Financial Future
by Paul M. League, QFP, CFP®
Conservative,
financially-minded seniors (those generally age 55 and above), as well as
other financially conservative persons, have a unique set of financial
concerns that primarily center on not outliving assets and being able to pass
on a legacy to loved ones like children and grandchildren.
Accomplishing these goals
requires that one get the most they can out of their retirement savings, while
reducing the payment of taxes on investments, as well as avoiding shrinkage in
Social Security benefits due to taxation.
Look at this astonishing
history of events surrounding Social "Security":
-
"The Social Security
Act" was signed into law in 1935.
-
5 years later Social
Security began making its first, non-taxable, benefit payments.
-
By 1983 a 50% tax was
levied on Social Security benefits.
-
Then, only 10 years
later, Congress increased the tax on Social Security to 85%!
The "SST" (Social Security Tax) is levied as you exceed a specified "threshold
income", which includes income from any and each of the following sources:
-
CD’s
-
Capital Gains
-
Credit Union Savings
-
Mortgage Rental Income
-
Passbook Savings
-
Pension Income
-
US Treasuries
-
Taxable Income sources
-
Etc.
If your threshold income
exceeds the following limits, up to 85% of the amount received from Social
Security could be subject to tax based upon current tax law:
|
|
Total Income Including Social Security |
% of Social Security that is Taxable (2010)* |
|
Single |
$25,000 - $34,000 |
50%
on Excess over $25,000, and under $34,000 |
| |
Over
$34,000 |
85%
on Excess above $34,000 |
|
Married Filing Jointly |
$32,000 - $44,000 |
50% on Excess over $32,000, and under $44,000 |
| |
Over
$44,000 |
85%
on Excess above $44,000 |
(*See Social Security Website:
http://www.ssa.gov/planners/taxes.htm)
The key to winning this "tax quagmire" is
to be positioned in conservative financial programs that do not contribute to
the above "threshold income" problems such as various types of annuities
offering guaranteed principal protections and other features*.
We believe in the saying of the famous,
widely liked and well respected Will Rogers, who said:
"...as a senior, I’m more
concerned about return of principle (safety), rather than return
on my principle (risk)."
What follows is a useful basic "financial
tip" that may be helpful to you as a kind of guideline in better understanding
ways of viewing your assets towards the goal of structuring financial programs
that best limit your risk. Subtract your age from 100, and what remains is
the outermost percentage amount of your assets that some say they feel
comfortable placing in more risky placements. We generally advise even less
of an amount at risk than the amount this somewhat useful formula produces,
especially for seniors, although a personalized assessment of your risk
tolerances and other factors must always be taken into account:
EXAMPLE of a 74 year old senior
citizen: 100 minus their Age of 74 = 26%
I conduct my
financial and insurance services around these kinds of conservative principals of asset
preservation, because I too believe in helping to protect one’s hard-earned
assets so that such assets will stand a better chance of lasting one’s
lifetime and/or providing a legacy to future generations.
If you are thinking retirement or
preservation of assets (return of principle), and like many you too have lost
more than a few dollars in the financial markets, then we believe we may be of
valuable service to you. If you are an advanced senior who is dependent
on CD or other fixed income sources that have been dramatically reduced due to
rate cuts, actions by the Federal Reserve Board or general economic and
financial conditions, then exploring other secure options makes sense.
Simply put, I don’t recommend
unsuitable financial vehicles for others anymore than I do for myself!
Instead, I work with my clientele to design financial programs where they can
select assets that allow them to participate in broader financial sectors,
while at the same time greatly reducing risk. When you think about it,
who needs unnecessary risk at age ranges of 65 and older?
Disclaimer: The material discussed
herein
is meant for general illustration or informational purposes only and is
not to be construed as investment advice. Although the information has been gathered from sources believed to
be reliable, it is not guaranteed. Please note that individual situations
can vary; therefore, the information contained herein should be relied upon only when
coordinated with individual professional advice. We are not licensed for
and therefore do not provide tax or legal advice (lup-050610).
About
the Author: Paul M.
League, QFP, CFP® is the Founding Principal of both League Financial & Insurance
Services (www.LeagueFinancial.com) & League Financial Services (www.LeagueFS.com),
which are privately held companies
located in Palm Desert, CA.
Paul and his companies specialize in assisting clients to
create, expand & preserve assets. Contact Information: Paul M. League, QFP, CFP®, P.O. Box
11800, Palm Desert, CA 92255-1800 · 800.482.5347 ·
Info@LeagueFinancial.com.
©Paul M. League. All Rights Reserved.
Please call us today 800.482.5347 so that we can also help you
in getting better control over your financial security!
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