February 14, 2013 – Let’s start with the obvious:  It depends on the event.

But since it’s St. Valentine’s Day and our thoughts turn to romance, let’s start with the odds that any given person will ever date a Supermodel.

The answer?  1 in 88,000.

At least according to “What Are Your Odds Of Winning The Lottery?” they are.

But those odds are good compared to the odds of being struck by lightning (1 in 700,000), attacked by a shark (1 in 11,500,000) or killed by a mountain lion (1 in 32,000,000).

And ALL pale in comparison to your odds of winning the Mega Millions lottery jackpot.

I won’t ruin the surprise here but you can find out for yourself your lotto odds along with those of many other random events occurring by visiting the aforementioned infographic article to see for yourself.

Spoiler alert:  They ain’t good!

The entire focus of our firm’s practice is helping clients avoid placing their money on bets with a high probability of failure.  That’s why we stick with the sure things:  Structured settlements and related products and services.

We like things that are tried, true and guaranteed.

Your odds of being safe, secure and living free from financial worry increase dramatically when you choose low risk options for your insurance settlement proceeds or retirement funds roll-over.

So if you must play the odds, at least bet on the sure thing.  Choose guaranteed security for yourself and your family.

And whenever you’re ready, we’ll be here.

You can bet on that!

Don’t Sweat the Big Stuff

January 21, 2013 – There are few golfers on tour more popular than Phil Michelson.

Movie star good looks.  Four major championships.  Second on the “all-time money” list of tournament prize money won.  Endorsements through the roof.

And apparently it’s the latter that’s finally catching up to Lefty.

According to Sports Illustrated, Phil Mickelson earned over $57 Million dollars in endorsements in 2011.  That figure accounts for about 94% of his entire earnings for that year.

Makes his 3.7$ Million in salary and winnings seem like chump change.

It now seems the new 2013 tax rates have put a burr under Phil’s saddle if you’ll pardon the out-of-context metaphor.  Fred Altvater, reporting in Bleacher Report, claims that the new rates have incensed the golfer so much that he’s pledging “drastic changes” because his “tax rate is “62-63%.“

Two quick bits of advice for the golf legend-in-the-making.

First, get a new accountant and financial planner because that just doesn’t sound right.

Second, take a good, hard look at Structured Celebrity Endorsements.

As Jerry Reed cautioned in his 1971 crossover hit, “When You’re Hot, You’re Hot,” winning streaks make life seem grand.  But when the tide turns, watch out!

Every “hot” celebrity should heed this caution because fame can be so fleeting.

One day you’re the lead singer of the most popular band in the world.  The next day, you’re just the bass player.

Celebrities who understand this dynamic can capitalize on their popularity and secure their future by spreading their endorsement earnings out over a number of years, even a lifetime, with a Structured Celebrity Endorsement – an offshoot of the structured settlement concept.

Choosing a Structured Celebrity Endorsement can help prevent the next tale of woe such as that which befell the likes of Jake LaMotta, Mike Tyson, Lance Armstrong or countless others whose star, and earnings potential, faded earlier than planned.

Give us a ring, Phil.  We’re here to help.  We want to keep you competing on the links in your native California.  Don’t pay all those taxes this year.  Spread it out and save yourself some money at  the same time.

Besides, I just can’t see you playing bass.

When my great-great-grandfather, Patrick Finn, arrived in Winsted, Connecticut as a young lad from County Cork, Ireland in the mid-1850s, he couldn’t have had any kind of future planned for himself yet.

How could he?  He was only four years old.

But by the time he was a teenager, young Patrick successfully landed a good job with the Empire Knife Company where he began honing (pun intended) his craft in the cutlery trade.

Probably glad to have any job given the prejudice which existed at the time.

At least I assume g-g-grandpa Finn found himself a good job.

After all, he worked there for about 60 years. Right up until age 77, just a few scant years before he died.

Blast To The Past

Fast forward almost a century and it turns out that maybe those long, hard “work ’til you’re almost dead because you have to” expectations aren’t such a thing of the past anymore.

In fact, maybe our forefathers had it made.

Post-Great Recession retirement planning, it turns out, has changed fairly dramatically according to Blake Ellis in his October 23, 2012 column for CNNMoney. 

In his article “More Americans delaying retirement until their 80s,” we learn that retirement may look a lot different than many of us planned when we jumped into the labor force.

Fortunately for those anticipating a personal injury settlement, a unique opportunity exists to help fend off this retirement killjoy.

Structured settlements allow an individual to choose, in advance of settlement, to arrange for their settlement proceeds to be paid out in future years on a tax-advantaged basis.

Personal, physical injury settlements are paid 100% income tax-free while certain personal, non-physical injury settlements can be concluded on a tax-deferred basis.

Either way, the potential for enhanced retirement security is very possible.

We don’t think people should sue someone just to boost their chances for retirement bliss.

But for those of you who happen to be in the throes of settling a personal injury claim, a structured settlement may hold the key to providing you with the future you once dreamed of.

And deserve.

Managing the Risks – A Delicate Balance

Achieving a happy, comfortable retirement is largely dependent upon how successful one is at managing the many retirement risks we all face leading up to, and during, retirement.

Depending on whose literature you read there are anywhere from six to ten or more risks people should consider when planning for their post-working life lives.

Over the years, we’ve spent a lot of time talking about the consensus greatest risk everyone faces in retirement:  Living too long!

• Because life expectancies are merely averages, basing your retirement planning (and spending decisions) on your statistical life expectancy, in an era when many people live well into their nineties, can lead to the very unhappy reality that your nest egg will predecease you.  And we think dying broke is one very scary proposition!
  

But in addition to this longevity risk, we want to introduce you to another concept you may not have heard much about but which can be just as detrimental to your retirement happiness if not considered:  Behavioral risk.

Behavioral risk is the risk of human biases getting in the way of sound decision making as it pertains to retirement planning.

Both longevity risk and behavioral risk, along with several others, are covered quite concisely in “Quantifying Key Risks in Retirement” produced by the Institutional Retirement Income Council.

Increasing Your Retirement Happiness

So you’ve successfully considered all the retirement risks you face and are now ready to take action.  What is the best way to achieve retirement bliss?

In our view, three words:

ANNUITIES . . . ANNUITIES . . . ANNUITIES

It seems an over-simplification but the more you look at annuities, the more you’re likely to realize how effectively they address so many retirement needs.

But don’t just take our word for it.  Here’s what Meir Statman, Professor of Finance at the Leavey School of Business, Santa Clara University has to say on the subject in a recent article which appears in Annuity Digest entitled “Meir Statman on the Behavioral Obstacles Affecting Investing and Retirement Planning” (emphasis added):

         “People who know they have a pension or annuity income coming every month have more than utilitarian well-being, they also have psychological well-being. People with pensions, annuities or other guaranteed income are happier in retirement and show fewer symptoms of depression than people with equal income from sources which are not as assured.”

– Meir Statman –

Such a growing body of research links happiness to having secure, guaranteed cash flow that we continue to recommend them for anyone facing retirement or anticipating a personal injury settlement.

So be happy.  Choose the annuity!

Adjusting Your Expectations in a Post-Economic Meltdown World

If you were fortunate enough to have invested in stocks over the past 30 or so years; and,

If you were fortunate enough to have stayed with it through the past four years when the financial world went crazy; and,

If you still have a good portion of what you’ve managed to sock away; then,

At the risk of over-stating the obvious, you are indeed fortunate.

But that was, as The Monkees once sang, then.  This is now.

Stock-Bond Return Gap Should Narrow

MONEY Senior Editor Walter Updegrave lays out a pretty good case for why folks may want to temper their expectations about future market returns in his article “The case for investing in bonds, too.”

Back “then” stock returns significantly outperformed bonds.

But “now” the rate of return gap between the two is predicted to be much narrower according to a number of experts.  This means bonds might still make a good deal of sense despite their current perceived “low” rate of return.

Even Better for Structured Settlements

Structured settlements, which are backed by portfolios consisting largely of bonds, offer superior financial security and, because benefits are paid out 100% income tax-free, they remain an excellent choice for those seeking safety and security.

And because of their decided tax advantage (principal AND interest are paid 100% income-tax free), returns can be commensurate with the after-tax, after-fee stock market returns.

Minus the risk.

Nobody knows for sure what the future holds.  But we know the wild run-ups stocks enjoyed during much of the 80s/90s were pretty exceptional by historical standards.  So choosing a structured settlement is still a wise choice for those who want to secure their own financial future.

Lifetime Income or Lump Sum?

There’s no such thing as a one-size-fits-all when it comes to making decisions about your retirement options.

But choosing lifetime income instead of a lump sum for your pension distribution makes tremendous sense for a variety of reasons.

The simple truth is . . .

“Nothing provides you with a statistically better chance that you will have guaranteed income you can never outlive.”

In his recent MONEY column “Your Pension: Lump sum vs. monthly payments,” senior editor Walter Updegrave compares the two choices and points out how difficult it can be to outperform the lifetime income option when you choose a lump sum distribution.

The article includes a telling graph which illustrates how dramatically your chances of running out of money increase as you age.

IF you take the lump sum, that is.

This risk of running out of money decreases to zero if you choose the monthly income option.

For those anticipating a personal injury settlement, the additional tax benefits can make the lifetime income option even MORE attractive.

Make your money last.

Sleep better at night.

We can’t guarantee a lifetime income option is best for you.   But we can give you the information you need so you can decide what’s best for YOU!

Guaranteed Income Solutions Appropriate for Most

Regular readers of our blog will notice a few recurring themes in our posts when it comes to retirement planning and post-settlement planning:

Protecting yourself from the risk of outliving your money is wise

Slow and steady wins the race

Things that look too good to be true usually are

A recent article in LifeHealthPRO reinforced our way of thinking.

In “LIMRA: Most Advisors Favor Including Annuities in Clients’ Portfolios,” we learn most financial advisors believe . . .

• Clients with less than $500,000 in assets should have some annuities
• Outliving financial resources is the biggest risk their clients face
• The benefits of guaranteed income products outweigh the benefits of non-guaranteed income solutions

Granted:  Annuities don’t quite deliver the same “thrill” other investment and settlement alternatives might.  But for safety, security, peace of mind and protection against “losing it all,” annuities deliver.

Surprising:  Even advisors with clients whose assets exceed $1,000,000 say guaranteed income solutions, like annuities, are appropriate for them.

Structured settlements for personal physical and (especially) non-physical injury claims are the “creme de la creme” of annuities because of the unique tax advantages they bring.

But for those who are simply looking for a sensible way to arrange for their retirement with accumulated funds, they can take comfort in knowing most of the experts advocate including annuities in their financial plans for their future.

Annuities

Sometimes it’s just fun to find new ways to talk about annuities.  (Get it? A-new-at-ease?)

A few days ago, MONEY senior editor Walter Updegrave dispensed some helpful advice to a 55-year old woman worried about protecting her nest egg now that she’s ten years away from retirement in his column “55 and scared: ‘How do I protect my nest egg’.”

Among the passages that caught our eye was one that we’ve been emphasizing for years:

“And once you’ve actually retired and security becomes an even more pressing issue, you might want to consider other moves, such as investing a portion of your savings in an immediate annuity that can provide an assured level of income beyond what Social Security can provide.“

Annuities aren’t right for everyone, but for safety, security and “longevity insurance,” it’s hard to beat a fixed income annuity in our view.  They’re low cost, easy to understand and you always know exactly what you’re going to receive.

If you are in the midst of settling a personal, physical injury claim, structured settlement annuities are even better because they are 100% income tax-free.

We help clients every day with structured settlements, structured attorney fees, roll-over 401(k) annuities and a variety of other applications.

Got a question?  Call us!  We’re here to help if you’re looking for guaranteed future financial security.  This is our firm’s specialty and we’re eager to be of service to you.

Are Your Eyes Open About Your Retirement?

Expanding on the theme of yesterday’s newsletter, “The Secret to Living Well at 100,”  which we sent our clients so they can properly plan for their financial futures, here’s some supplemental information you’re sure to find helpful.

And probably more than a little disconcerting.

Simply put, we all need to take off the retirement goggles and face some cold, hard facts:

• Most of us DO NOT have enough savings to live the rocking chair retirement we once imagined.
• Many of us WILL live a whole lot longer than we ever believed possible.
• Annuities and pensions are among THE BEST options to protect yourself from the possibility you will become someone else’s financial responsibility later in life.  Yet too few people take full advantage of these attractive alternatives.

People anticipating personal injury settlements and the attorneys who represent them are uniquely positioned to fill this retirement reality void by accepting  structured settlements and structured attorney fees when their cases settle.  Both offer so much potential to lay a strong foundation for a very secure future.

While the appeal of cash when a case settles is understandably very strong, large sums of cash have been known to cause as many problems as they solve.  Ask anyone who’s gone through an inheritance dispute.  Or many lottery winners.

By contrast, safe, secure, tax-advantaged future cash flows that are GUARANTEED make life so much easier.  It may not produce the same “thrill of being rich” (if only for a while) but it gets to the foundation of an injury settlement.  Structured settlements address real needs.

Retirement gap bridging is a very real need for almost everybody.

Some excellent recommended further reading from DailyFinance that highlights our concerns for our clients and some of our favorite quotes the articles contain:

“Should You Accept a Pension Buyout Offer?”

” . . . taking the lump sum puts the responsibility of investing on your shoulders.”

”  . . . if you make a bad investment, you’ll never get your lost money back.”

“Sometimes, the best answer will be to turn that money down and keep collecting safe, stable monthly checks for the rest of your life.”

“Prepare for a Scary Income Gap in Retirement”

” . . .38% of current retirees don’t generate enough income to cover their expenses and are thus already living on borrowed time.”

“When it comes to retirement funding, ‘hope’ is not a successful strategy.”

Whether you are a soon-to-be retiree considering your options, a personal injury claimant contemplating a settlement offer or a plaintiff attorney looking to solidify your post-legal career financial position, call us to let us help you evaluate your options.  We’re committed to helping you meet your long-term financial needs in the safest way possible.

OK, so it’s not really a “secret” that being healthy and having money are essentials to a comfortable retirement.  Pretty obvious actually.

But how prepared are you for the possibility that you just might be a healthy centenarian some day?

What if you live “too long”?

In addition to reading Robert Powell’s MarketWatch column “Planning for retirement?  Plan to live to 100,” you may wish to consider these statistics from the Journal of Population Research:

• Life expectancy in classical Greece and Rome was 35 years
• Life expectancy in the Victorian Era was 40 years
• Life expectancy in the 1900s was 73 years
• Life expectancy today is about 84 years

Thanks to improved sanitation, better living conditions, advances in science, not engaging in the carnage of neighboring villages, T-Rex extinction, etc., our life expectancies have improved dramatically over time.  Particularly in the past century.

To the north of us in Canada, the Atkinson Fellowship in Public Policy published an interesting and fairly extensive Special Report in 2007 entitled “Ontario braces for a grey wave” that is worth a read for anyone who wants a glimpse of what the future may hold as they age.

Boomers’ Biggest Retirement Fears

Last year, US News Money reported the findings of an AARP survey that asked 50-somethings to identify their biggest fears.  Not surprisingly, the top two fears of baby boomers were:

1. Health care; and,
2. Running out of money

Since we’re not experts in offering advice on how to improve your overall physical health, we’ll stick to something we do know a thing or two about:  Improving your financial health.

“Pensionize”

If forced to boil a sensible retirement strategy down to its simplest, easiest to implement solution, we would advise anyone who wants to protect themselves against the possibility of living too long to remember one word:

“Pensionizing” refers to converting a single lump sum via product allocation into a series of future tax-advantaged cash flows one can never outlive.  People, it turns out, like the idea of guaranteed lifetime income as evidenced by the high satisfaction levels of those currently receiving Social Security benefits and traditional pension payments.

And the longer you live, the better the value of your “pensionization” choice and the higher your retirement satisfaction.

Plus, “pensionizing” is a concept that is easy to understand and simple to implement.

The trademarked phrase originated from an excellent book Pensionize Your Nest Egg which analyzes the challenges faced by Canadian retirees and offers some solutions to the population there.  We highly recommend this book and hope the authors some day will write a version applicable to the United States.

In our practice, the categories of clients we most frequently help with “pensionizing”are:

1. Structured Settlements:  Those in the process of settling personal injury claims;
2. Structured Attorney Fees:  Attorneys representing clients who are settling personal injury claims; and,
3. Retirement Fund Roll-Overs:  Clients seeking to convert portions of their eligible 401(k) and IRA balances.

With the checks and balances built into the insurance regulatory system today, the safety and security of guaranteed lifetime income from a highly rated life insurer is difficult to replicate.

Even financial professionals who profess to loathe annuities, will admit that a portion of one’s retirement funds should be allocated to annuities as a hedge against a long life.

The National Structured Settlements Trade Association recently blogged about how nicely structured settlements can complement one’s retirement planning.

So whether you are being offered a structured settlement as an option for a personal injury claim, are an attorney looking to sensibly plan for your future or a current or “soon-to-retire” baby boomer tired of the ups and downs of the stock market, call us to let us help you make an informed decision about your future.