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BENEFITS CORNER

A Sound Financial Plan  Beneficiaries

 What are you going to do with the money   Long Term Care

 Tax-Deferred Annuities  Two Incomes

A sound financial plan can be more important than a lifetime of work!

When planning your future financial security, it is important to set goals, initiate action, and periodically review your progress.  Retirement goals must be considered.  If a wage earner dies, funds need to be available for both Cash Needs and a family's continuing Income Needs.  

Cash needs could include:
· Final Expenses Fund for medical, legal, funeral and other expenses
· Debt Payment Fund to pay off your debts, including your mortgage
· Emergency Reserve Fund for unexpected bills not readily payable from current income
· Education Fund to provide for your children's education

After death, income generally comes from four different sources:  
· Survivor’s Earnings
· Savings and Investments
· Life Insurance Proceeds
· Social Security

Financial experts generally recommend that 70% of total household income be available after the death of a wage earner while there are children at home and 50% thereafter.  

Will you have enough money when you retire?  The earlier you begin setting money aside, the more likely you are to achieve your goals.  Retirement Income generally comes from three different sources:
· Social Security
· Employer Sponsored Plans
· Savings and Investments

If you need additional retirement capital you should consider:
· Saving more money
· Earning a higher return on your assets

If you are not able to accumulate additional capital, you may need to consider:
· Postponing your retirement, or
· Reducing your standard of living.  

If these options are not attainable, you can work towards doing a little bit of each.

If you aren't sure where you are, consider having us do a financial analysis that compares your investments and savings strategies with your financial priorities and concerns.  We can provide you with a broad, general guideline, which may be helpful in shaping your financial thinking about investment objectives and risk tolerance – and your future.  We can do reports and graphs with the data you furnish us.  Give us a call to set up an appointment to help you review your progress.  All at no cost to you as a brother Knight!  

 

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K of C Field Agent News  

Beneficiaries…Who Do You Love?

Do you know who the beneficiary is on your life insurance policy? It would be a wise idea to find out – and update your beneficiary if necessary. As your K of C agent, I can help you do that.

Why is this important? A life insurance policy protects the financial status of another person – or people – in the event of your death. Through a beneficiary designation, you determine just who that should be.

When you purchase a K of C insurance policy, you must select a primary beneficiary – at a minimum. You don’t have to name a contingent beneficiary – also known as a “secondary beneficiary.” However, it’s always a wise move because you might outlive your primary beneficiary. A contingent beneficiary (also known as a “secondary” beneficiary) is the person designated to receive life insurance policy proceeds if the primary beneficiary dies.

You should be as specific as possible in wording your beneficiary designation. By naming your wife, daughter, son, etc., as beneficiary, you make sure that the life insurance proceeds will be available in a timely manner to them.

Your life situation will undoubtedly change over time. Plan to update your declared beneficiaries periodically. Otherwise, the K of C will have no way of knowing what your intentions are at each stage of your life.

Changing your beneficiary is fairly simple. You just need to fill out a change of beneficiary form (#113A) for each policy you want to change. I can provide you with these forms – and I will help you to fill them out. I can also help you with beneficiary designations for any life insurance policy you hold – regardless of the company that issued it.

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What is likely to use up your hard earned money the fastest? 

Although you may not like to think about it, there may come a time when you may need help getting dressed, eating, bathing or have severe cognitive impairment like Alzheimer’s disease.  When that happens, you’ll need Long Term care either in your home or in a facility like a nursing home or in assisted living.  

If so, how can you maintain your independence and not be a financial or physical burden to others?  Would the people you live with or other family members be able to take care of you?  Are your children and their spouses both working or possibly live too far away so they can’t help you out?  Would you expect them to give up their job or move in with them to help you?  With longer life expectancy and changes in medicine, are you going to be able to pay for Long Term care when you need it?   

Right now, the average cost of Nursing Home care in Minneapolis is more than $50,000 per year.  Nursing Home costs have been going up about 5% a year.  If you are 55 years old now and the Long Term Care costs continue to increase 5% per year, it will cost you over $520 per day when you’re 85 (that’s the average age at which people go in the Nursing Home).  The cost of Nursing Home care (for a semi-private room) in 2033 is expected to be over $200,000 per year.  In order to cover that cost, you will need about $4 million invested at 5% to produce the funds to pay for it.  If you can’t pay for Long Term Care, who is going to pay for you? 

According to information on the U.S. Office of Personnel Management sponsored website (www.ltcfeds.com) this is how Long Term Care is paid for now. 

   Home Care costs                                      Nursing Home costs:

1.      Private LTC insurance 5.0%               1. Private LTC insurance 5.0%

2.      Medicare 15.3%                                     3. Medicare 8.0%

3.      Medicaid 17.3%                                     3. Medicaid 41.0%

4.      Out of Pocket 62.2%                         4. Out of Pocket 46.0% 

Social security was not designed to provide Long Term Care at all.  The social security act of 1935 was designed to provide retirement benefits.  The Medicare Act of 1965 was designed to provide affordable health care for the elderly using Social Security to fund it, but did not really increase funding.  So how will the government fund Long Term Care, especially when the baby boomers start to need it?   

What are the odds that you will need Long Term Care?  No one can tell you for sure, but right now, one out of every two people is expected to need Long Term Care at some time in their life.  In fact, one out of every four people needing Long Term care today spends more than $100,000.  Sandra Timmerman, Ed.D.  is the director of the Mature Market Institute.  In April 2002 she said “The projected average cost for one person is $61,320 per year or $153,300 for the average nursing home stay, causing many families to have to spend down their assets”.  

To get the information you need about Long Term Care so you can develop peace of mind for yourself and your loved ones please contact  me and I will help you before it’s too late.   

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WHAT ARE YOU GOING TO DO WITH THE MONEY? 

As you probably know by now, Congress and the President have provided significant tax relief for Americans in 2003.  There were many changes that benefit individuals, families and business owners.  All of the tax brackets have been reduced, taxes on dividends have been reduced, the child credit was increased, and more.  The questions you may be asking are “How much will we get out of it?” and “What should we do with it?”  

It has been estimated that the average family earning $40,000 will receive more than $1,000 in annual tax relief over and above the tax cuts enacted in 2001.  The child credit provides $400 per child per year, and the 15% bracket was reduced to 10% and applies to the first $14,000 of taxable income that results in an annual savings of $700.  The other brackets were reduced as well and joint filers could see as much as another $935 in annual tax relief.  To estimate your tax savings, it is recommended that you consult with a tax specialist. 

Now, what can you do with that new money?  Of course, you could spend it now, and some people will.  However, is that best for you and your family?  It is well known that Americans in general are very poor savers, and most people admit that if they could change one thing in their financial plan they would put more money away to work for them.  For emergencies, to send their children to college, for retirement, and more.  Well, here is an opportunity to do something more!   

The Knights of Columbus has programs that are designed for building and protecting wealth, and they are available to members only.  I can show you how these programs can benefit you and your family now and in the future, plus all of our programs have guarantees

As to that $1,000 per year – did you know that $1,000 saved now and earning 7% compounded annually grows to over $3,800 in twenty years?  And $1,000 saved per year for twenty years and growing at 7% yields nearly $45,000?  It’s your choice.  Spend it now, or put it to work so you can spend more later. 

Please give me a call so that I can show you how our programs can benefit you and your family. 

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Two Incomes Equals Two Insurance Needs

In the days of  “Ozzie and Harriet,” most families fit one description. Fathers worked full-time, while mothers remained home, raising the kids and taking care of the house. Nowadays, some families do still fall into the traditional, one-paycheck category. Yet others rely on two incomes to make ends meet – even if one parent works part-time or from home.

As much as things change, they remain the same. This maxim certainly holds true with life insurance planning. If someone earns an income to support a family, family-income protection through life insurance is of utmost importance.

As your agent, I can do a needs analysis for both of you. I’ll take into consideration the amount and the sources of your income, and suggest different ways to provide sufficient life insurance coverage for you and your family.

You take it for granted that you and your family should get an annual checkup from your doctor. But you’d also benefit from a financial checkup. Now’s the time, because chances are, your life and your financial obligations become more complicated each year.

Here’s good news for married people: If a husband and wife purchase permanent insurance policies at the same time, they can get our Spousal Waiver of Premium rider added to each policy at no cost. You have to apply for insurance on or before your 45th birthday, and you both must qualify for insurance at standard rates.

The Spousal Waiver of Premium Rider is an excellent feature for both dual-income and one-income families…and everybody in between. Call me. I’ll be glad to meet with you and your spouse.

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What happens when you can no longer take care of your everyday needs? 

Raising a family is costly. For many of us, there's not much left over for long-term goals...such as saving for our children's education or for retirement. 

Ideally, caring for a sick parent shouldn’t be part of that equation. Yet as with so many things in life, the reality is quite different. Today, many people start families in their 30s and 40s - while their parents live well into their 70s, 80s, and 90s. 

If one day you require nursing care, you might have to ask your children for help just when they're ready to send their own sons or daughters off to college. This is, in fact, a common dilemma among middle-aged people today. Experts have even coined a term -- "the sandwich generation" -- to describe those who are squeezed between these conflicting financial obligations. 

The average cost of nursing-home care is more than $60,000 per year.  That could easily force you to deplete your assets or to rely on your family for help.  According to the Health Insurance Association of America (1999) “Most older Americans are cared for at home; family members and friends are the sole caregivers for 70% of elderly people.”  Would the people you live with have the physical and financial ability to take care of you?   

Medicaid will help - but only after you’ve depleted your own resources down to welfare eligibility levels.  According to the Department of Health and Human Services, in 2001, Medicare covered only 14% of long-term care costs.  Individuals needing care, along with their families, pay for over one-third of the high cost of long-term care out of their own pockets.   

One of the challenges in planning for long-term care is accepting that you or a family member may need care in the future.  Overcoming this hurdle is critical to the planning process.  With advances in medicine and people living longer than ever before, the possibility of someone in your family needing long-term care is greater than ever.   

To give you information about these issues and help you develop peace of mind about long-term care for yourself and your loved ones, the St Al’s Knights of Columbus are sponsoring a program to help you in your deliberations.  Look for the specific information and details about this program elsewhere in this newsletter. 

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Tax-Deferred Annuities
 

Expecting a tax refund? Even if you're not, you certainly wouldn't want to pay more in taxes than you have to, would you?

Yet, that's what you can expect if you have savings that aren't in a tax-deferred account. Examples include bank savings accounts and certificates of deposit.

We can help you to find a good place to put your income-tax refund. The Knights of Columbus offers a highly competitive tax-deferred annuity. You don't pay income tax on the earnings until you withdraw them -- which most likely will occur after you retire. And these tax-deferred earnings compound at a faster rate than money saved in a taxable account.

You can make one payment and select the age at which you begin receiving benefits. Or, make periodic payments of as much as you want for as long as you want. Either way, an annuity with the Knights can provide you with a retirement income you can't outlive.

In a financial world characterized by uncertainty, a Knights of Columbus tax-deferred annuity gives you peace of mind. Your principal is guaranteed, and so is a minimum return. What other kinds of investment vehicles give you those guarantees?

We can provide you with a customized illustration of how an annuity would work for you. Just give us a call.

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