August 23, 2016 – They call it “The Longevity Paradox” – People recognize they’re living longer but don’t seem to be taking the necessary steps to ensure long life financial security.
A few staggering facts from yesterday’s InvestmentNews article of the same name:
There are 44% more American centenarians today (77,197) than there were a decade ago.
That number is expected to grow to more than a million by 2050.
Remember when people living to age 100 was so rare it used to make the newspapers? (Heck, remember newspapers?)
Increased longevity probability is good news for those who are healthy and have the resources to enjoy their long life. But too many don’t or won’t for a variety of reasons.
Managing one’s longevity risk while simultaneously matching financial assets needed to meet uncertain and often-changing future needs is an impossible task at best.
Make Mine Insurance, Please
Fortunately, life insurance companies are in the business of managing large scale mortality risk and efficiently matching future dollars to the future needs of those who live long lives.
They can do for you what is nearly impossible for you to do on your own:
Guarantee income for life!
Here’s a nice little six minute video from WealthTrack featuring New York Life’s Chris Blunt and Kiplinger’s Personal Finance‘s Kim Lankford making the point far more eloquently than I could.
Annuities are like gravity. They work whether you believe in them or not.
About a year ago, we told you about a working paper which did an excellent job comparing and contrasting retirement income strategies. Here’s the link if you missed it the first time. Worth revisiting.
So if you need your retirement tree to provide enough cash to last your entire lifetime, a life annuity is your best choice.
By the way, balance is the key. Only rarely does it make sense to put all your retirement funds into an annuity basket. Likewise, only rarely does it make sense to NEVER put any of your retirement funds into an annuity.
Just make sure you sprinkle at least some annuity fertilizer on your retirement tree to ensure a healthy retirement.
July 29, 2016 – In March of 2009, in the depths of the Great Recession, I launched the Finn Financial Group with a pledge to help clients achieve maximum financial success and security through the effective use of structured settlements and related specialty products and services.
Pretty dumb of me, right? I mean, who starts any kind of financial business when the financial world is collapsing?
But it is precisely because people lost fortunes that I knew a market would always exist for individuals desiring to incorporate guaranteed future income for themselves and their loved ones into their overall financial planning strategy.
Since that time, our firm has helped hundreds of people in dozens of ways but recently, we eclipsed a major milestone that really humbles us:
That’s how many dollars worth of structured settlement and guaranteed income annuity contracts we’ve placed since our firm’s founding seven short years ago.
While the total dollars is indeed substantial, it’s what these dollars represent that matters most:
They represent financial security for children whose parents were killed in automobile accidents.
They represent college funding and future scar revision for children bitten by a dog or hit by a car.
They represent a safety net for someone injured on the job who can no longer work.
They represent restored dignity for someone released from prison for a crime they did not commit.
They represent common sense tax deferral for someone selling a business or investment property.
They represent retirement income for attorneys who often are so busy they fail to address their own future post-career security needs.
They represent peace of mind for soon-to-be retirees who choose to dedicate a portion of their retirement funds to guaranteed cash flow they can never outlive.
One hundred million dollars worth of trust and confidence from hundreds of clients across the country reassures me that I made the right choice when founding this firm.
I’m proud of the role I’ve played in helping people secure their futures, many of whom will continue benefiting from the plans we worked out together long after I’m gone.
So, to all our clients whose demonstrated trust enables us to continue our mission of helping people who require knowledgeable guidance when they are making some of the most important decisions of their lives we extend a heartfelt
“THANK YOU” for the opportunity to be of service!
July 18, 2016 – This brief post exists simply to call your attention to my most recently published article:
I developed the article for Claims Management, a publication of the Claims & Litigation Management Alliance, for the benefit of my fellow CLM Fellows. (That was NOT a typo. I am a CLM Fellow!)
The article is based on my peer-reviewed research paper written in fulfillment of requirements necessary to obtain my Master Structured Settlement Consultant designation which I was awarded last year by the National Structured Settlements Trade Association in cooperation with the University of Notre Dame.
I hope you enjoy the article and find it helpful to you in your practice. If you have any questions or I can be of service to you on any claims, lawsuits or verdicts involving nonphysical injury damages, please don’t hesitate to contact me.
BONUS FOR CALIFORNIA ATTORNEYS:
If your firm, organization, convention or bar association chapter is interested in learning more about this topic, be sure to ask about our MCLE-approved Taxable Damage Structured Settlements seminar which can be tailored to the audience and brought to your location at no cost. We’re happy to do this as a service to the legal community.
Meanwhile, remember the old saying . . .
“Everybody must pay taxes but there’s no law that says you gotta leave a tip.”
June 28, 2016– Financial markets like predictability. So when voters in the United Kingdom decided to pull a Snagglepuss by telling the European Union they were going it alone, the financial markets reacted accordingly.
They went barking mad, as it were.
With the pound sinking to its lowest level against the dollar in more than three decades and the Dow Jones Industrial Average (DJIA) losing 900 points in the first two days of trading, we’re surely a long way from predictability.
But like every calamity before this one since the beginning of time, calm will some day return leaving more than a few winners and losers in its wake.
Meanwhile, those whose fortunes rely on the direction of marketable securities better stock up (pun intended) on Pepto-Bismol. You’re going to need it even if the market eases up as it has a bit today.
Until then, some answers to questions that may be on your mind.
Are my structured settlements safe?
Yes. Safety and security are hallmarks of structured settlements. Benefits will be paid on time as scheduled. Nothing to worry about.
Won’t the stock market impact my structured settlement payments?
Unless your contract includes a future payments rider linked to a market index, such as Pacific Life’s Indexed-Linked Annuity Payment Adjustment Rider, your benefits will not change. If your contract does contain such a rider, Brexit will not cause your payments to drop.
What about the cash I set aside?
It depends on what you’re invested in. When settling an injury claim, many people hold back some cash in hopes they can “do better” than the structured settlement options they’re presented with. But the higher returns they seek aren’t possible without assuming a higher degree of risk.
If you invested in stocks, conventional wisdom says you’ll probably do OK if you don’t panic and have enough time to ride out the volatility. Meanwhile, ignore that grumbling in your stomach.
I’m an attorney and recently structured my fees. Should I worry?
Not because of Brexit, that’s for sure. In fact, you’ll probably win bragging rights around the bar association table since the effective rate of return for the structure you chose likely dwarfed anything the market could have done for you anyway. Minus the market risk!
Depending on assumptions about present and future tax brackets, some of our clients estimate they “earned” effective rates of return in excess of 10% because of the tax deferral. You made a very smart move.
Is it too late to get an annuity?
No. While structured settlement annuities must be chosen before the settlement concludes, a variety of others annuities are available for direct purchase. So if you’ve already taken some of your settlement in cash and are having second thoughts about investing on your own, an income annuity might be a good choice.
So, mates, best of British to you ignoring those collywobbles until the markets are hunky-dory once again.
June 13, 2016 – Some quick statistics we singled out from among the Key Findings of the 2013 Survey of Owners of Individual Annuity Contracts, conducted jointly by The Gallup Organization and Matthew Greenwald & Associates for The Committee of Annuity Insurers:
When Do People First Buy Annuities?
47% purchased between age 50-64
38% purchased before age 50
14% purchased at age 65 or older
Who Owns Annuities? (By Gender)
Who Owns Annuities? (By Occupation)
12% Support Staff
14% Blue Collar or Service Worker
15% Foreman or Manager
15% Business Owner or Company Officer
34% Professional, such as, Doctor, Lawyer, or Teacher
Reasons for Purchasing Annuities?
90% view as a “safe purchase”
How Long Do People Keep Their Annuities?
93% still own the first annuity they bought
This last one is especially telling since people tend to hold onto the things they like. For this reason, we think your time would be well spent checking out the full survey to see how your peers go about making their retirement choices.
It’s one thing to see a television commercial about the prospective benefits of annuities in the retirement planning abstract.
Quite another to see how people who have already taken the annuity plunge truly feel about their decisions.
With a 90% chance of feeling “safe” and a 93% chance of feeling “satisfied” with an annuity purchase, odds are good you, too, can benefit from dedicating a portion of your retirement savings toward an annuity.
NOTE: The referenced survey is limited to individual annuity owners who purchased their own individual annuities using non-qualified (i.e after-tax) funds. Structured settlement annuity recipients ARE NOT counted among this pool of survey respondents.
June 3, 2016 – It’s been less than a week since I read about the abrupt death of one of the structured settlement industry’s greatest champions Don McNay and I’m still struggling to come to grips with this tragic news.
Sing with me
Don and I only ever met in person at industry functions a few times over the years but we were definitely kindred spirits. Close in age, we were connected by our mutual appreciation for the written word, our commitment to helping people secure their financial futures and our penchant for frequently choosing classic rock lyrics to express how we felt about something.
Sing for the years
A tireless promoter of things he believed in and seemingly a fan of everyone he ever met, he was your favorite uncle, teacher, mentor, coach and you-name-it all rolled into one.
It was impossible not to like, be inspired by and root for Don McNay.
Sing for the laughter
Driven and accomplished to levels most of us can’t even comprehend, Don was an unpretentious and unrepentant advocate of things he believed in, primarily “God, the Cincinnati Reds and not taking money in a lump sum.”
Sing for the tears
But probably Don’s most endearing quality was the way he encouraged so many others, yours truly included, at every opportunity.
For instance: Every time I posted anything on my firm’s social media sites, Don invariably was the first to “like” or share it.
Sing with me
Less than 48 hours before he died, Don shared my latest blog post with his very extended network as he prepared to head off to New Orleans for the Memorial Day weekend.
He didn’t have to do that. I never asked him to help me promote my business.
I guess he just wanted to.
Just for today
I miss Don already. I miss the engaging columns and books he’ll no longer be writing. I miss all the things I’ll no longer be able to learn from him.
He wasn’t ready to leave all of us any more than we were ready to lose him.
But I can’t help thinking that somewhere in the Great Beyond there’s a bunch of souls wondering about this new positive force of nature suddenly in their midst.
And what do you want to bet this “Son of a Son of a Gambler” who rarely wagered has already made fast friends of them all.
The good Lord will take you away
Dream on, my friend. I hope this post would have made you smile.
The Finn Financial Group extends its heartfelt condolences to the family of Don McNay and to all his personal and professional associates, affiliates and organizations who mourn his passing.
May 27, 2016 – Yesterday the United States Treasury sold $28 billion worth of 7-year notes.
Probably safe to assume the collective wisdom of those doing the buying don’t believe rates are going to improve anytime soon. Otherwise, they’d sit on the sidelines and wait for a better bargain, wouldn’t they?
The 7-year Treasury yields were 1.652%.
Twenty-eight billion dollars.
One point six-five-two percent interest.
Combined, this seems a pretty good indication lots of investors are choosing safety and security over risk and aren’t anticipating any wholesale rate improvements anytime soon.
Too bad those folks can’t buy structured settlements directly since a structured settlement designed to mirror a 7-year Treasury is currently yielding about 2.15%.
In other words, when compared to Treasuries, a structured settlement would yield investors about 30% more money!
Apples to appelz
United States Treasuries are widely considered the ultimate risk-free investment. Buyers know promises will be honored.
Much of the same is often said about structured settlements.
Backed by some of the highest rated and most well capitalized life insurance companies in the world, structured settlements offer peace of mind to people who choose them because future payments are being promised by companies that have been in business an average of over 125 years.
Maybe they aren’t exactly the same color but it’s not a stretch to compare Treasuries to structured settlements.
Both pay interest that is 100% income tax-free and both are unmatched in terms of financial security.
To be clear, structured settlements aren’t guaranteed by the federal government. Insurance is, after all, regulated by the states. But with the many consumer protection laws in place for structured settlements and the state guaranty funds established, it’s hard not to draw safety and security parallels.
With structured settlements providing higher returns than Treasuries, those who qualify for them are uniquely positioned to take advantage of one of the best settlement options available.
Post-settlement asset preservation should always be a primary goal of anyone settling a personal injury claim.
By dedicating some portion of one’s recovery to a structured settlement, anyone settling an injury claim can feel confident they’re making a smart choice.
PS Works great for attorneys who structure their fees also!
April 20, 2016 – “Lynn” called me recently for help with a few structured settlement annuities I helped place on her behalf about five years ago.
Our firm occasionally fields calls from former clients who are moving, changing beneficiaries or banks and simply need help submitting the correct documents to make sure their money arrives on time as scheduled.
I always enjoy these exchanges because I get great feedback on the client’s structured settlement or retirement annuity experience several years removed from their decision.
Back in 2011, Lynn chose to structure a portion of her automobile accident claim settlement as it was resolving. Still working at the time, she liked the idea of deferring some of her settlement proceeds into future guaranteed tax-free income designed to coincide with her planned retirement a few years down the road.
With retirement now just a few weeks away and her first annuity payments scheduled to begin, she needed to fill out the appropriate EFT forms so her funds could be automatically deposited into her chosen bank so her pension and structured settlement cash flows would be properly aligned.
One of the questions on the standard EFT form had to do with tax withholding. She wasn’t sure which box to check when asked whether or not to withhold taxes having completely forgotten that structured settlement payments are 100% income tax-free when paid as a result of a personal, physical injury.
When I reminder her of this fact, her response was priceless.
“YAAAYYYYYYY!” she involuntarily and quite enthusiastically shouted.
Her excitement was contagious and I smiled as she offered all the reasons this was such welcome news:
Combined with her retirement income and Social Security, her combined effective tax rate in retirement would be lower;
It was an empowering sense of freedom and relief from having to pay higher taxes;
With prices increasing, not having to pay taxes on this income would help her money go further.
Her parting sentiment as we were hanging up is the kind of thing that always makes me feel so great about my career choice:
“You absolutely made my year!”
Glad to be of service Lynn. Thanks for sharing. Knowing I played some small part in you looking so forward to a happy retirement makes MY year!
February 29, 2016 – According to a recent InvestmentNews article citing a LIMRA Secure Retirement Institute report, 2015 saw a 13% increase in indexed annuity purchases over the prior year to a record $54.5 billion.
To put this figure into perspective, Starbucks’ Fiscal 2015 Annual Report indicates $54.5 billion is just $3 billion MORE than the coffee giant’s total net revenues . . . SINCE 2012!
When was the last time you saw a Starbucks where someone wasn’t waiting in line?
Not that there’s any direct correlation between retirement income distribution planning and the caffeinated brew but it speaks to the ongoing (and growing!) popularity of both and there are some similarities:
Both are optional purchases people make daily.
Each can be tailored to individual preference.
Consumers enjoy the end result despite any long line anxiety (or, in the case of annuities, the application process).
(NOTE: For compliance purposes, this case study is a hypothetical example presented for educational purposes only)
Consider the 60 year-old freelance consultant, still in demand, who plans to work another ten years in order to maximize his Social Security benefits.
He has no pension.
Still reeling from the aftereffects of the Great Recession, his greatest fear is losing his remaining accumulated wealth so he simply “parks” the bulk of his funds in a safe, guaranteed account, currently paying about 3.0% a year.
The Dilemma: With ten years to go before he plans to start drawing this down to live off of, how does he earn a higher return without sacrificing safety?
The Solution: Dedicating a portion of his portfolio to an Indexed Annuity from a highly rated carrier with a Guaranteed Lifetime Income Benefit (GLIB) Rider that does this:
A. Guarantees his account will be credited 7.0% per year until he chooses to start drawing it down.
B. Guarantees he will then receive 5.4% of the accumulated value for as long as he lives.
C. Guarantees he’ll never lose a penny.
All things considered – safety, security, guarantee, risk, capital preservation, legacy and life expectancy among them – this solution complements his retirement income planning strategy nicely since only Social Security, pensions and annuities can guarantee income for life.
Indexed annuities, like coffee, aren’t for everyone.
But they are undeniably an efficient and effective method of distributing a portion of one’s accumulated wealth over a lifetime of unknown duration.
Converting assets to income when one’s work life comes to an end needs to be a top priority for those seeking retirement planning advice.
And indexed annuities can fill that cup nicely.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
February 18, 2016 – It’s always nice when the structured settlement companies active in the structured settlement marketplace make the news for their superior financial size and strength.
Such was the case when half of the structured settlement companies we currently represent ended up on Best Review‘s recently published 2014 rankings of the world’s largest insurers based on non-banking assets.
Best Review is a monthly insurance magazine published by A.M. Best Company, an independent rating agency.
Of the top 25 companies listed, only four are domiciled in the Unites States; however, these four dominate the top half of the rankings accounting for one-third of the top 12 spaces.
These exceptional American companies all offer structured settlements.
These four companies listed below are very active in the structured settlement arena and their inclusion on this list reassures clients seeking security that these solid companies have sufficient assets to meet their future obligations. (Assets rounded to nearest billion dollars)
3. MetLife Inc. ($902 billion)
4. Prudential Financial Inc. ($767 billion)
9. Berkshire Hathaway Inc. ($526 billion)
12. American International Group, Inc. ($516 billion)
Congratulations and THANK YOU to MetLife, Prudential, Berkshire Hathaway and American General Life (AIG’s life company affiliate) for continuing to demonstrate the financial discipline necessary to support the future commitments we’ve made to our clients.
With all of the volatility rattling investors so far in 2016, it is indeed a “time for strength” and these four companies, along with the rest of the excellent companies we represent, have positioned themselves well to honor their future structured settlement commitments.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net.