And it usually says, “Spend me, spend me, spend me!”

This is one of the underlying fears of extremely wealthy people who fret about leaving too much money to their heirs.

People unaccustomed to handling large sums of money often end up in a dark place and/or are easy targets for others seeking to separate them from their sudden riches.

As California family law attorney and prolific blogger Mark Brian Baer highlighted in a recent post, the family of  Whitney Houston recognizes this risk and is fighting to change the terms of Houston’s daughter’s $20 Million inheritance.

While most personal injury settlements resolve for significantly less than these kinds of dollars, the same risk is nonetheless omnipresent.

For this reason alone, choosing a structured settlement for some portion of one’s personal injury claim makes all the sense in the world.

Often, the argument is made that “rates are too low for me/my client to consider structuring.”

But for anyone who can relate to the temptation brought on by the infamous talking money, it may be worth re-prioritizing the superior value of delayed gratification over speculative returns.

Returns which, if readily available cash is spent too quickly, may never materialize anyway.

Thomas Jefferson’s advice to “never put off till tomorrow what you can do today” might make sense for daily chores.

But when it comes to money, “putting off till tomorrow what you can spend today” may just lead to a happier, more secure place.

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!

Bloomberg:  Nevada Claims Settling for About $200,000 Apiece

August 21, 2012 – Early this morning, reports surfaced citing unnamed sources about Johnson & Johnson’s agreement to resolve three DePuy artificial hip lawsuits.  If confirmed, these will be the first known DePuy settlements to occur.

This news comes less than a week shy of the two-year anniversary of the voluntary worldwide recall of certain artificial hips manufactured by DePuy Orthopedics, a division of Johnson & Johnson.

Allegations of elevated chromium in patients’ blood, exceedingly high implant failure rates and intense pain and suffering are among the charges levied against the defendants.

For an excellent summary of the History of the DePuy ASR Case from the law firm that filed the first product liability lawsuit in the country against DePuy, we highly recommend following the posts from noted San Francisco personal injury law firm Walkup, Melodia, Kelly & Schoenberger.

For more information on how some of the more than 8,000 plaintiffs involved in various lawsuits around the globe are expected to resolve their anticipated settlements against J&J, visit ASRHipSettlement.com to see how structured settlements can help them.

While there, we invite you to watch a video on our firm’s YouTube Channel, currently viewed by over 2,900 people, to understand why this litigation is so personal at our firm and why we care.

We continue to monitor developments on this matter closely.  Please contact us if there’s anything we can do to  help you.

Tax Advantage Still Favors Structured Settlement

(Maybe)

August 16, 2012 – Two days ago, with a headline that couldn’t have been more blunt, Bloomberg News reported that the 5-Year CD fell below 1% for the first time ever.

While you’d be hard-pressed to find anyone championing this sobering report, it’s important to keep this news in its proper perspective.  If you believe economist Gary Shilling, author of “The Age of Deleveraging,” our economy is in for another five-to-seven years of malaise at best.

What’s a person to do?

For those who accept our current economic reality and simply want to “park” their settlement proceeds in a safe place until things turn around, structured settlement deserve a second look.  Consider:

• The national average for 5-Year CD rates is currently 0.99%

• The current best structured settlement payout that mimics a 5-Year CD (i.e. Return of principal plus interest over five years) is 0.78%

• Ergo, depending on one’s tax bracket the structure payout may be better/worse/the same as a CD:

• If Marginal Tax Bracket > 21%; Then, Advantage = Structure
• If Marginal Tax Bracket < 21%; Then, Advantage = CD

Since most people generally estimate a 33% marginal tax bracket, the Structured Settlement would seem the most logical choice for those seeking safety, security and return of principal.

Bottom Line:  Our advice to you is the same today as it was yesterday and will be tomorrow.  Know your tax position, compare and make an informed decision about how to arrange for your post-settlement affairs.

Please call anytime we can help you make the choice that’s right for YOU!

PS  I would be remiss if I failed to emphasize this analysis is just for the short-term.  Much goes into determining whether or not a structured settlement is an appropriate choice for you.  But even in this low-interest climate, when compared to “what else” you can do with your money, the structured settlement still merits your consideration.  Thank 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.

Dog Bite Claims Costs Increase 16% in 2011 to $479 Million

Despite the best intentions of National Dog Bite Prevention Week which occurs the third week of May every year, statistics reveal that the cost of claims for dog bites increased from a year earlier according to estimates from the Insurance Information Institute.

The average cost of a dog bite claim now stands at $29,396, up more than 50% since 2004.

And lest you think there’s no corollary between this trend and your insurance premiums, think again.  Dog bites now account for more than one-third of ALL homeowners liability claims filed.  State Farm, one of America’s largest home insurers, accounted for approximately 23% of all claims dollars spent on dog bites in 2011.  (USAToday)

Among several interesting observations in these articles:

• In the United States, there is one dog for every four people
• Half of ALL children will be bitten by a dog before the age of 12, usually by a family pet or that of a friend or neighbor
• A child is 900 times more likely than a letter carrier to be attacked by a dog
• Dog attacks resulting in death are extremely rare

When insurance claims are filed on behalf of minors bitten by dogs, structured settlements are frequently implemented to aid in the settlement and court approval process.  Settlement proceeds can be set aside to help meet a child’s future education needs and/or scar revision surgery which may be necessary as a result of disfiguring bites.

In support of Dog Bite Prevention Week, we are pleased to share this video of Dr. Stacey Wallach, a veterinarian who offers tips for parents on how to avoid dog bites.