Feeling comfortable about retiring

Feeling comfortable about retiring is all about asking the right questions, says a 35-year veteran retirement planner

At a moment when baby boomers are very concerned about where they’ll want to live during retirement, veteran investment planner Karlan Tucker says the better questions to ask yourself are, “How much is it going to cost me every month to live the way I want, and how soon can I retire on that amount.”

Tucker, CEO of Littleton-based Tucker Financial Solutions, says that traditional retirement planning is too focused on “How much am I going to need?” That’s because investment firms tend to talk to clients in those terms — “You’ll need $2 million,” or “$4 million.” But also because, after working for 90,000 hours, a typical retiree has a hard time switching from thinking about what they’re earning to what they’ll be spending.

The good news, Tucker told a crowd at last week’s Amazing Aging Expo in Denver, is that it may not take as near as much as you’ve been told — providing you first take part of your retirement savings and set up a secure monthly retirement salary for yourself as a baseline income that can be sustained deep in the future.

“A lot of what we do is psychology,” Tucker adds. Studies show that when potential retirees are presented a fictional sum, say a million dollars, and asked whether that would make them feel comfortable heading into the future, the responders are full of concerns — not at all sure whether that’ll be enough to make them happy. But when they’re instead offered a guaranteed monthly income that’ll always be there, they respond much more favorably.

Those instincts are good, Tucker says. In year 2000, a million-dollar stock portfolio would have looked like a viable retirement nest egg; however, that baseline sum would have dwindled to a scanty $145,000 by 2016 after the market’s ups-and-downs over that period, drawing out $40,000 per year for retirement spending. Tucker says such figures, coupled with increasing lifespans, are causing retirement planners to downsize their suggested withdrawal rates from 4 percent, standard in past decades, to 3 percent or even 2 percent per year now. Tucker says that latter rate is a better guess of what’s sustainable, figuring the uncertainties, including how long it will need to last you.

The better approach, developed by Tucker over 35 years of practice, is to set up an annuity that together with Social Security provides reliable income. After establishing income, Tucker recommends investments with market downside protection to supplement the income. “This approach ensures clients are more protected when stocks dive, as they did in 2008-2009,” he adds. Looking back at the past eight years of market increases, he recommends that those nearing or in retirement review their portfolios for loss protection.

Annuities are a preferred retirement vehicle of European nations that don’t have a social security system, Tucker notes. The way to get the process started is to determine three numbers: What you have saved; when you plan to retire; and what monthly income will give you a comfortable living into the future — figuring in Social Security, any pension you have and how much you’d ideally like to provide tax-free to the kids.

Even with a corporate or government pension, Tucker says you need to assure it’s fully funded.  (Pensions are being abandoned by employers as perks for new hires — and even government-backed pensions are called into question, as new metrics show how likely they are to perform in the future).  Tucker and his team are knowledgeable planners looking to provide you with a date when you could retire, and a plan to set that up. “One of the pleasures of my career,” he added, “is liberating people from their jobs at a date earlier than they thought possible.”

Tucker Financial Solutions has thrown two customer appreciation nights for Colorado clients over recent years, drawing 700 to the zoo and 500 to an evening at Union Station. But Tucker says a better testimony to his planning process is his own mother. She sold the family farm in Michigan in 1986, and passed away a month ago after living throughout retirement on steady income from Social Security and carefully selected annuities and investments.

-Mark Samuelson


The Hidden Truth About The Affordable Care Act


Our accounting firm has reviewed all 907 pages of the text, which is full of new financial mandates. Below you will find a summary of the taxes, fees, penalties and benefit reductions that will most significantly impact you, your business or your employer. As employers feel the increasing burden of these requirements, it is possible their response may be to lower benefits and/or reduce the amount they are willing to pay, leaving more for you to personally fund, both now and in the future.


An additional 0.9% Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds $200,000 for individuals, $250,000 for married couples filing jointly and $125,000 for married taxpayers who file separately.


Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D.


A new 3.8% Net Investment Income Tax applies to individuals, estates and trusts that have net investment income or modified adjusted gross income in excess of $200,000 for individuals and $250,000 for married couples filing jointly. There are certain exceptions for active business income; IRA and retirement plan withdrawals, self-employment income and tax exempt income. This tax does impact the gain from the sale of one’s primary residence; however, it is only calculated on the amount after the current allowed exemption of $250,000 for a single taxpayer and $500,000 for a couple filing jointly.


Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for taxpayers age 65 and older for years 2013-2016 only.

By limiting this deduction, PPACA widens the net of taxable income for the sickest Americans. This tax provision will most harm near retirees and those with modest incomes but high medical bills.


The amount that employees may contribute to a Flexible Spending Account (FSA) is limited to $2,500 (currently it is unlimited) and indexed to inflation after 2013. This portion of the bill is also known as the “Special Needs Kids Tax” because there are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.

Individuals are also no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). This portion of the bill is often referred to as the Medicine Cabinet Tax and went into effect in 2011.


Manufactures and importers will pay 2.3% medical excise tax on certain medical devices retailing for over $100.


Health insurers cannot take a deduction of more than $500,000 for any current or deferred compensation paid to an officer, director, or employee with respect to services performed. The amendment goes into effect for taxable years beginning after Dec. 31, 2012, but may affect deferred compensation attributable to services performed in a taxable year beginning after Dec. 31, 2009.


Fully-insured employer sponsored health plans must satisfy the non-discrimination rules by meeting certain testing requirements. If the plan fails to comply with the non-discrimination rules, the employer will be subject to an excise tax of $100 per day for each non-highly compensated employee who is being discriminated against, up to a maximum of $500,000.


This new credit helps small businesses and small tax-exempt organizations that typically employ fewer than 25 workers afford the cost of covering their employees. It is specifically targeted for those businesses with low- and moderate-income workers, earning $50,000 per year or less. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.


Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums.


A tax/penalty will apply to individuals who fail to maintain minimum essential health coverage on themselves and their dependents. The penalty is the greater of $95/person or 1% of adjusted gross income over the tax filing threshold. This formula increases for 2015 ($325/person or 2% of AGI) and again for 2016 ($695/person or 2.5% of AGI).


If an employer with 50 or more full-time equivalent employees does not offer health coverage and at least one employee qualifies for a health tax credit or cost-sharing reduction payment, the employer must pay an additional non-deductible tax of $2000 for each full-time employee after the first 30 workers. If an employee actually receives coverage through an exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period of 30 – 60 days to enroll in coverage, there is a $400 tax per employee ($600 if the period is 60 days or longer).


Large employers (250+ issued W-2s for 2011) required to disclose health coverage costs beginning with 2012 W-2s. Disclosure includes medical insurance, dental and vision plans (unless separate plans) and self-insured arrangements. Significant penalties for noncompliance, up to $100 per return and up to $200 per W-2.


Beginning in 2011, insurance companies are required to spend a specified percentage of premium dollars on medical care and quality improvement activities, meeting a medical loss ratio (MLR) standard. Insurance companies that are not meeting the MLR standard will be required to provide rebates to their consumers beginning in 2012. If employees pay premiums on a pre-tax basis, an MLR rebate is subject to federal income and employment tax.


Beginning in 2014 health insurers will begin paying an annual tax relative to health insurance premiums collected that year. Phases in gradually until 2018.


Starting in 2018, there will be a new 40% excise tax assessed on health insurer or plan administrator offering high cost or “Cadillac” health insurance plans. High cost is determined by the cost of the annual premium, $10,200 for single and $27,500 for family. A higher threshold ($11,500 single/$29,450 family) will be used for early retirees and high-risk professions. The tax will be applied to the premiums above the thresholds.


The Affordable Care Act requires all health insurance issuers and self-insured group health plans to make contributions under the Transitional Reinsurance Program to support payments to individual market issuers that cover high-cost individuals. EXCISE TAX ON INDOOR TANNING SERVICES
A 10% excise tax on indoor UV tanning services went into effect on July 1, 2010. The tax doesn’t apply to phototherapy services performed by a licensed medical professional on his or her premises. There’s also an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.

COMPARATIVE EFFECTIVENESS RESEARCH PLAN FEE (Patient Centered Outcomes Research Institute Fee)

For policy or plan years ending after Sept. 30, 2012, issuers and employers sponsoring certain group health plans must pay a fee of $1 per covered life per year. The fee adjusts to $2 per covered life for policy or plan years ending Oct. 1, 2013, through Sept. 30, 2014. For policy or plan year ending after Sept. 30, 2014, the dollar amount in effect for such policy or plan year shall be adjusted by the Secretary of Treasury based on the percentage increase in the projected per capita amount of national health expenditures. The fee will not apply to policy or plan years ending after Sept. 30, 2019.


With the increasing taxes we are facing in the Affordable Care Act, as well as increasing income tax rates in general, it is wise to employ strategies that will do two things for you:

  • First reduce your taxes by deferring or eliminating them all together. You can do this with products like tax-deferred annuities, Roth accounts, and Life Insurance which, when properly structured, allows for tax-free income.
  • Second it is important to increase your income to help you have more funds to pay for the increased cost of living, as well as increasing taxes. You may increase your income by maximizing your Social Security income and using the power of guaranteed withdrawal rates found in annuities, which are typically 4-7%.

Schedule a visit for your financial second opinion, where you can learn how to increase your Social Security income by as much as $1,000 monthly. You will also gain insight to determine if your portfolio is preparing you for a secure retirement.


Seminar Tips: Venue

Seminar Tips: Venue

The most common way that you can single-handedly sabotage your seminar is by booking the wrong venue. These are the most common mistakes that you can easily avoid when it comes to booking the right venue for your seminar. If you overlook any one of these when booking your venue; Congratulations! You have just successfully sabotaged your seminar.

1. Booking a Cheap Venue

If you book a venue that is inexpensive, it is generally a run-down facility in a questionable part of town that will serve to undue any incentive that the recipients of your mailer had in attending your seminar.

2. Booking an Extravagant Venue

If your venue is considered by many people in your community to be extravagant, this will also serve to turn people off from attending because they are convinced that there must be some kind of catch. For example, how can there be a free seminar about social security at the country club without them wanting something in return?

SOLUTION: Book a venue that is just right.

It should be clean, in a nice part of town, centrally located with respect to the zip codes you have mailed to, relatively well-known, easy to get to and have enough free parking in close proximity to the venue to accommodate everyone that will be attending your seminar.

3. Booking a Venue with Problematic Parking

The parking should always be FREE. NO VALET PARKING. NO PARKING METERS. If it is in a parking garage, how easy is it to get to the meeting room? Is the parking garage FREE? Is it well-lit? You should strongly consider having someone at the entrance of the building that comes in from the parking garage to meet attendees and tell them how to get to the location of your seminar or better yet, personally walk them to the room.

4. Booking a Venue that is Under Construction

Is there construction on any of the major streets and expressways or in and around the venue or at the venue itself that will ensure that your seminar will be a failure?

SOLUTION: Drive to the venue BEFORE you book it.

You must personally drive to the venue and ask yourself what your new clients will be thinking about as they drive to your seminar and walk through the facility to get to the room in which your seminar will be held. Keep the aforementioned list above as your guideline.

5. Booking a Venue that Lacks Professionalism from its Employees

If the folks that you interact with at the venue you are inquiring to book are not professional in appearance, demeanor, over the phone and most importantly, are lacking professionalism to return your phone calls, faxes and emails in a timely-fashion, you now know what to expect from them during your seminars.

You also know how your seminar attendees will be “welcomed” to the seminar. A negative first impression from the venue’s staff will destroy any opportunity that you will have to get an appointment from each attendee who is looking for reasons not to book an appointment with you.

SOLUTION: Book a venue that provides you outstanding customer service every time you work with them.

6. Booking a Venue without Noticing the Details of that Venue

Go to each of the meeting rooms to see what they look like, how the sound resonates as you speak and if the meeting rooms are well-lit. Are the tables, chairs, linens, walls, windows and carpets clean and aesthetically pleasing or will they serve as a distraction?

Is the screen large enough to display the slide show in order for all of your attendees to view it clearly? Is the screen clean, held together without duct tape and in one piece i.e. free of holes, scratches and markings or would it serve as a distraction for your audience?

SOLUTION: No detail is too small.

If your attendees’ first impressions are skewed in any direction, you need to control all of the variables that you can to skew them in the direction of booking an appointment with you and ultimately becoming your client.


Seminar Tips: Audience

Seminar Tips: Audience

1. Pre-Judging Attendees in Your Seminar

Many of the people that attend your seminars will be dressed comfortably in jeans and a t-shirt, worn-down sneakers, jacket that’s seen better days and a baseball cap that is missing more material than is left to hold it together. Underneath those comfortable clothes are your future clients. It is easy to take a look at someone dressed casually verses someone that is dressed in business attire and decides that of the two; the better-dressed person will be the one that you land as a client. Subconsciously or intentionally, you rationalize that the better-dressed of the two is the only one that will have assets.

That line of thinking will cause you to limit your time to just a couple of audience members. You will be missing out on a huge opportunity with the rest of your audience that do have assets to invest and are looking to work with someone just like you. Do not pre-judge anyone in your audience and you will avoid losing your opportunity with them because you assume they have no assets due to how they are dressed.

I have met several doctors, prominent business owners and attorneys in the audiences that I present seminars to that are dressed like they just stepped out of a Sear’s catalogue…from 1987. In fact, one of the best clients that I was able to help one of our agent’s land, was a doctor who had just finished doing yard work and had no time to change before attending our seminar.

2. Your Audience Does Not Owe You a Thing

Our sales force is very passionate when it comes to their thoughts on seminars. There is no gray area, either you love them or you hate them. In exploring the reasons that many men and women we work with hate them, they reveal horror stories of poor turn-out and the fact that they were not able to turn a profit and that they flat-out do not work. What you need to never lose sight of is the fact that the people that attend your seminars do not owe you a thing. You need to create a value-proposition by capturing the hearts and minds of your audience. Unless they see their lives being more than what they were before your seminar, they will not book an appointment with you.

There are so many variables that you cannot control that will impact the success of your seminars; weather, the number of other seminars that are taking place in the weeks leading up to, during and after your seminar; and how strong of a closer you are. Most agents can close about 15% of their appointments while the members of MDRT can close 30%. Often times, the men and women in our business who try seminars one time, the seminars did not provide them with the magic bullet they were expecting and never explore the power of seminars again. Karlan Tucker has built his personal practice, his in-house sales’ teams’ practice and his FMO on a foundation of capitalizing on the success of his seminars. We also run into variables that are out of our control, the same way that you do but that should never cause you to think that seminars are not effectively one of the most viable, lucrative ,profit-margin-rich means of acquiring new clients available to all of us.

Control everything that you can and realize that weather and what your competitors are doing are generally beyond your control. You must understand that people who attend your seminars are indifferent to you and that it falls entirely on you to make them want to learn more about what you can do to make their lives better. Ultimately, you must continually sharpen your sales skills so that after you have won them over, you can and will close them.


Tax-Free Lifetime Income? It Exists.

Tax-Free Lifetime Income? It Exists.

You probably have many clients who enjoy the guaranteed income options provided by annuities. You might also have clients that have life insurance, but they don’t know the many tax-free income options available with Index Universal Life Insurance. What if you could show them a product that combines the best of both products? Well, you can.

The Life of the Southwest’s FlexLife IUL with a Lifetime Income Benefit Rider can provide various income options while still offering the death benefit protection of traditional life insurance. Your client can access thecash value in the policy in two ways: tax-free loans or guaranteed income for life using the LIBR. In addition to being the only carrier with a LIBR on an Indexed Universal Life policy, LSW also has an impressive mix of living benefits included at no extra cost. Why should you have to DIE to use LIFE insurance? By electing to use the Accelerated Death Benefit Rider, the insured is protected from chronic, critical and terminal illnesses.

What triggers using these benefit riders?

  • Chronic Illness: If you can’t complete 2 out of 6 activities of daily living for at least 90 days, then you can accelerate benefits under this rider.
  • Critical Illness: If the insured is diagnosed with cancer, end-stage renal failure, have a severe heart attack or stroke, or undergo major organ transplant, then you can accelerate a portion of the death benefit with this rider.
  • Terminal Illness: If the insured is terminally ill with less than 24 months to live, then they may accelerate benefits under this rider.

The FlexLife contract also uses the power of indexing to grow the cash value. Your client has the option to choose between index crediting methods – four based on the S&P 500 and one based on the MCSI emerging markets index. The client can also choose the funding of the contract through level annual payments, a single premium payment, or by maximizing their payments to provide significant tax-deferred cash value growth.