May 15, 2013 – A note of appreciation to one of my colleagues in the structured settlements industry and best selling author, Don McNay, for calling my attention to an interesting article appearing in The Lane Report, a periodical focusing on business and economic issues in and around Don’s home state of Kentucky.
The article, “Pike County economy gets $54 million boost each year from pensions,” sheds light on a little talked-about economic reality:
People receiving regular, ongoing cash flows stimulate economies!
Much is written about the benefits of steady income, whether from pension, structured settlement or Social Security payments. So much so that most of us can extol their benefits in our sleep:
Makes it easier to pay your bills;
Safe, secure cash flows help lower stress;
Steady income creates peace of mind;
“Protects the needy from the greedy” (to quote attorney Joe Jamail);
And so on
But the focus of all the dialog is almost always on the benefits to the recipient of the cash flows.
This article goes a step beyond, quantifying the benefit of guaranteed cash flows to the broader economy.
Big lump sums might be nice. For a short while.
But when windfalls are spent, what then?
Who benefits when individuals no longer have the means to take care of themselves because they have no cash flow?
Not them. Not their families, And not their economy.
Even though people spend about one-third of their lives sleeping, you’d never consider going to sleep in 2013 expecting to wake up twenty-five years later, would you? (Although this option would have appealed to a number of my college friends)
And for the same reason it’s healthier to eat several small meals during the course of a day than it is to consume all your calories in one sitting, it’s better to have your financial means spread out over time.
All of this speaks to the wisdom of the “slow and steady wins the race” philosophy.
Pensions, structured settlements and retirement annuities. The Big Three of safety and security.
By the way, this article just emphasizes the benefits of pensions payments to one county in one state.
Imagine what happens if we extrapolate these statistics across the entire country and include structured settlement and annuity payments?
That’s a lot of economic stimulus that doesn’t cost the taxpayer a dime.
So, in a way, it’s not just a pretty good idea to choose a structured settlement instead of a lump sum when anticipating a personal injury settlement.
It’s practically your patriotic duty to do so!
Sage advice generally but a recent Ameriprise Financial Retirement Derailers Survey finds these words of wisdom to be especially true for those with retirement goals in mind.
This comes on the heels of another study we referenced in yesterday’s blog, “Peace and the New Retirement Realities,” so we’re not surprised to see so much attention to this demographic given the 79 million baby boomers in America just beginning to retire.
The Ameriprise study, though, confirms what most people understand intuitively and what Robert Burns observed in his poem “To a Mouse, on Turning Her Up in Her Nest with the Plough” way back in 1785:
“The best-laid schemes o’ Mice an’ Men/ Gang aft agley”
At least that’s how 18th century Scottish poets cautioned people to expect the unexpected.
Yes, chances are good it will rain on your retirement parade at some point. But with the right umbrella, you might be able to protect yourself from some of those those unpleasant surprises.
For instance: Most of the retirement annuities we offer have penalty-free withdrawal provisions which allow those working toward retirement to access some of their funds when unforeseen circumstances arise.
Also, one of the best “planning for the unexpected” opportunities that exists today is for plaintiff attorneys who structure their contingency fees. By electing to spread their fee (plus pre-tax interest they can earn) over a number of years into the future, they can effectively build a series of “rainy day funds” that will pay lump sums throughout their retirement.
And, of course, everybody should have some form of emergency fund that doesn’t have a magnetic stripe on the back.
So whatever your situation, let us help you get ready for your retirement. With an emphasis of safety and risk mitigation, we’re committed to helping you achieve your financial freedom.
May 14, 2013 – Art Buchwald once said, “The best things in life aren’t things.”
Baby boomers heading into retirement have taken the late Pulitzer Prize winning columnist’s philosophy to heart according to a new retirement study entitled “Americans’ Perspectives on New Retirement Realities and the Longevity Bonus.”
A recognition that the rules of the retirement game have changed is shaping the behavior of those heading into their Golden Years.
The 2013 Merrill Lynch Retirement Study, conducted in partnership with Age Wave, uncovers some interesting views on baby boomers’ retirement aspirations and expectations. Among them:
“Peace of mind” is seven times more important than accumulating wealth;
They are expecting to live AND work longer;
They worry about coming up short and being a burden to their families;
Maintaining close ties with family and friends is of paramount importance
None of the findings are earth-shattering or even particularly surprising. But it does give some insights into what 20% of America thinks about in terms of retirement planning.
Many are taking action.
In fact, baby boomer clients we have know for many, many years through our structured settlement and structured attorney fee practice are making life changes of their own. And because they value our expertise in the area of long-term financial security, they are seeking our guidance.
And we want to make sure you know we’re here to help.
Maybe you have accumulated assets over a working life and have a 401(k) balance you don’t know what to do with.
Maybe you still have more than a few years of work life left in your tank but want to do a better job planning for your transition to retirement.
Maybe you have a bad case of a rather recent malaise, Great Recession-phobia, and are seeking that peace of mind the Merrill Lynch study uncovered.
Whatever the case, let us help you evaluate your retirement options. If you have funds ear-marked for retirement, chances are good you will be happier and feel more secure if you convert some of your funds into a tax-advantaged life annuity.
Choosy mothers may choose Jif. But if safety, security and peace of mind are what you’re packing these days, choose to give us a call to see how we might be able to help.
May 13, 2013 – No sooner does FINRA and the SEC come out with warnings to, for and on behalf of people who might be considering buying and/or selling structured settlements and pensions (see our May 9 blog post) than we read about one state, Massachusetts, looking into practices of nine firms that buy these future cash flows.
InvestmentNews reports today that, among other things, the Commonwealth is looking into whether or not such offerings amount to unregulated securities.
This “Mass(achusetts) probe” comes on the heels of a similar effort in the State of New York where even stronger phrases like “fraud, misrepresentation and violation of usury laws” are being bandied about.
We expect to hear more about efforts like these and will be following this story very closely.
May 9, 2013 - You’ve seen the silly commercials.
Your intuition told you there was something wrong, possibly immoral, about a company advertising on TV to buy future income payments from someone in a wheelchair at a very steep discount only to turn around and sell those benefits to others at a hefty profit.
You put these companies in the same category as the guy who steals from his baby’s college fund to buy booze.
You understand and believe in the benefits of structured settlements and for years the practice known as factoring has been a bone of contention with you.
Well, as evidenced by today’s joint News Release issued by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC), you are not alone.
The Investor Alert entitled “Pension or Settlement Income Streams – What You Need to Know Before Buying or Selling Them” tells us that you weren’t the only one concerned.
In 2009, Sen. Dick Durbin (D-IL) addressed the National Structured Settlements Trade Association (NSSTA) about concerns he and his Senate colleagues had about some of the practices they were hearing about involving factoring.
Here’s a video excerpt of Sen. Durbin’s comments.
We won’t editorialize too much here because we want you to get right to the text of the alert. You can form your own opinions on the issue.
But understand that factoring, under current law, is legal.
And even we’d be hard pressed to disagree with those who insist that there are hardship instances when trading one’s guaranteed future security for cash today is beneficial.
Nonetheless, we champion this alert and are glad this is on the radar of these two regulatory organizations.
FINRA and the SEC exist to protect investors and to ensure the fairness of capital markets and they don’t issue these warnings lightly.
So we sincerely hope you’ll take the time to read this Investor Alert before buying or selling any structured settlement or pension benefits.
From our May 6, 2013 Newsletter:
Be sure to read my latest article
“Taxable Damage Structured Settlements:
Solving the unintentional verdict and settlement unfairness problem caused by Prop 30 and ATRA”
appearing in the May, 2013 issue of Advocate:
Click [HERE] to read the article online
For those outside the area who may be unfamiliar with this particular periodical, Advocate is a monthly publication of the Consumer Attorneys Association of Los Angeles, the nation’s largest local association of plaintiffs’ attorneys.
While the topic of structuring taxable settlements, verdicts and attorney fees is nothing new, recent changes to top end tax brackets, particularly in California and other high income tax states, have elevated the importance of this subject to unprecedented levels.
In short: Many taxable cash settlements come with a high cost attached which, for most, can be ameliorated by structuring.
For this reason, we have developed some proprietary analytical tools designed to specifically address the impact of Proposition 30 and the American Taxpayer Relief Act of 2012.
We invite you to contact us anytime for a complimentary and confidential demonstration so we can help you make more informed decisions about these taxable matters in advance of settling any of your pending cases.
BONUS: Schedule Your MCLE Session TODAY
As a service to the California legal community, we even created a seminar based on this timely topic which has been submitted for Minimum Continuing Legal Education (MCLE) credit. If your law firm, bar association or other attorney group wants to learn more more, please let us know how we can help.
I hope you enjoy the article and find it helpful in your practice.
Thank you for the opportunity to be of service and best wishes for continued success!
May 2, 2013 - When HAIR: The American Tribal Love-Rock Musical debuted at The Public Theater in 1967 as the venue’s first-ever production, our country’s social fabric was in the midst of a rinse cycle involving some pretty harsh chemicals.
Literally and figuratively.
Just twelve years earlier, the most popular album of the time was Frank Sinatra’s In The Wee Small Hours.
By 1967, it was Sgt. Pepper’s Lonely Hearts Club Band.
Yes, the world was changing. People were rejecting the values of those who preceded them. Sacred cows were no longer sacrosanct and established norms were feeling nearly as faded as Bobby McGee’s lover’s jeans.
This was the Dawning of the Age of Aquarius we would soon learn.
Annuities/(Let The Sunshine In)
Fast forward forty-six years and a similar rejection of what’s always passed as conventional wisdom is afoot when it comes to retirement planning.
More specifically, as Sheyna Steiner, writing for bankrate.com asks rhetorically in her weblog “Retiring on CDs Not Viable,”
And she’s not talking about compact discs, by the way.
The old rule of thumb that any retiree could choose a sensible mix of stocks and bonds and/or other securities, “draw down” their retirement nest egg 4% each year and have enough money to live on for the rest of their life no longer holds up to scrutiny in a post-Great Recession world.
Side Bar: We were ahead of this trend! For a link to one of our earlier posts on this very same topic, be sure to check out:
July 4, 2011: A Paycheck for Life
In fact, sticking with this previous generation’s establish formula could easily lead to financial ruin and even poverty tarnishing those Golden Years you worked so hard to achieve.
The failure rate for this draw down approach, or the probability of running completely out of money while you’re still alive, is estimated to be as high as 57%.
Life annuities, on the other hand, solve this problem for retirees and soon-to-be-retirees.
As we’ve advocated for years, annuities help people sleep better at night since they know the annuity will keep paying as long as they live. The highs and lows of market conditions do not impact guaranteed cash flows offered by annuities. Like a pension, you know exactly what you’re going to receive each month for as long as you live.
Structured settlement annuities, for those who are able to take advantage of them, can be even better and offer unique advantages unavailable to the general public.
But for the vast majority of Americans with 401(k) balances or other savings looking to secure their future as sensibly and cost effectively as possible, nothing can replace the peace of mind that comes with knowing that periodic payments, guaranteed by a highly rated life insurance carrier, will be there whether you live to age 75, 85, 95 or beyond.
If you were lucky enough to dodge the 2008-2009 stock market bullet, don’t take chances this time around. Convert a portion of your nest egg to a life annuity to secure your future. We have lots of choices available to you.
So call us TODAY for a quote so we can help you align your retirement Jupiter with your life expectancy Mars.
Then, all you gotta do is let the sunshine in!
April 23, 2013 - Today’s announcement that Sen. Max Baucus (D-MT) will NOT be seeking a seventh term is indeed a “mixed emotions” news item for the structured settlements community.
While we all wish our industry’s long time friend the absolute best life has to offer as he retires to the magnificent Big Sky country he calls home, his departure leaves a void that will be deeply felt.
“Our industry will miss you, Mr. Chairman.”
As Chairman of the powerful Senate Finance Committee, Sen. Baucus has continued to fight for the rights of accident victims.
He was an original sponsor of the tax rules that Congress enacted in 1982 which paved the way for more widespread use of the then-still evolving claims negotiation, resolution and settlement technique known as “structured settlements.”
It is because of Sen. Baucus’ ongoing commitment to the long-term well-being of those who are anticipating settlements for personal, physical injury claims that these laws exist today.
In addition to the original tax laws, Sen. Baucus was always at the forefront of other important pieces of structured settlement-related legislation. Among those to make their way into the law of the land were:
Taxpayer Relief Act of 1997
Victims of Terrorism Tax Relief Act of 2001
It might be fitting to someday create a Mt. Rushmore-like sculpture to honor those dedicated Americans who made structured settlements possible. If and when that day comes, surely the mountain will be in Montana and Sen. Max Baucus its most prominent figure.
Until then, I feel comfortable in speaking for the entire structured settlements community in saying,
“Thank you, Sen. Baucus, for more than thirty years of dedicated service to the structured settlements industry. We appreciate everything you’ve done for so many.”
You will be missed.
But never forgotten.
April 22, 2013 – With all apologies to Dean Martin, Tony Bennett and anyone else who ever crooned the old Hague/Horwit standard, it turns out “young” folks aren’t so foolish after all.
The first article, “Throw caution to the wind? Not young boomers,” features a study by Allianz Life Insurance Co. of North America which concludes that younger baby boomers are significantly more willing to accept lower returns in exchange for reduction or elimination of downside market risk.
Among the highlights of this study:
87% of respondents would prefer a 4% return with zero chance of loss to something offering an 8% return with a possibility of market loss
Among women, the preference for risk aversion was even higher with 91% preferring the 4%/no loss combination
It shouldn’t come as a surprise then that indexed and income annuity sales hit record levels last year topping $43.4 billion.
The second InvestmentNews article goes even younger. “NY Life cuts initial deposit for annuity to attract youth” announces the life company’s decision to cultivate clients from among the sub-boomer population by reducing its minimum initial deposit to $5,000 from $10,000.
That piece highlighted a Towers Watson survey of younger employees and the value they placed on guaranteed income.
We’re proud to have been a few years ahead of the trend on that one.
Bottom Lining It For You:
People generally want safety and security. Even if it means forfeiting higher potential returns, people across all age and income brackets are choosing the tortoise over the hare to meet basic retirement needs.
You’re never too young or too old to be smart with your money. After all, it’s yours. Why not hold onto it and put it to work for you.
April 8, 2013 – Things were so different in 1983 when I began my claims career than they are today.
Pretty much every claims manager had his own secretary. (And I used “his” intentionally since nearly every claims manager was male)
Among the tools in common usage today which had yet to be invented: The Internet, personal computers, cell phones, GPS and filmless cameras.
That same year, H. R. 5470, The Periodic Payment Settlement Act of 1982, as passed by the United States Congress’ Joint Committee on Taxation, went into effect ushering in an era of widespread use of a concept that had been brewing in the claims world for a number of years:
Back then, management span of control was narrower, claims training more prevalent and it was unheard of for someone to work from home. Even field adjusters reported to an office to receive their assignments (by hand) from their supervisor.
During these and the years that followed, as this new “structured settlement” concept grew, claims departments began embracing their usage as a creative solution to resolving injury disputes. Carriers developed their own structured settlement programs and in those high interest, high inflation years, structured settlements helped many an unsettleable claim, settle.
Fast forward to 2013.
Claims training is less prominent than it used to be.
Seemingly every day, greater demands are placed on claims professionals.
And fewer claims people understand the nuances of structured settlements.
Which made reading this month’s Claims magazine article, “The Perks of Structured Settlements: Faster Claims Closure At The Right Price” so compelling.
Bylined by respected veteran claims executive Brian N. Farrell, the article does a great job going “back to the basics” highlighting some of the overlooked reasons why claims departments should continue to embrace the use of structured settlements as a claims resolution tool in today’s economy.
In addition to the obvious benefits to the injured parties which are well documented, the author emphasizes the benefits of using structured settlements to establish proper reserves, control litigation costs and ensure good faith bargaining among other ancillary reasons.
It’s a good read and a timely reminder that structured settlements remain one of the best kept secrets in the insurance world.
Unlike other claims tools which have been replaced by bigger, better and faster alternatives, structured settlements have yet to be improved upon and more carriers would be well served by rededicating themselves to expanding their use.