iSteward is associated with financial services and online private portal for individuals to track and gather all financial assets online and monitor them.  iSteward includes financial planning software for clients of Stewardship Matters.  Those that desire to have someone advocate for them or for others will find this tool very comprehensive.  The backbone of the platform has been around since 1999.

iSteward is registered with the State of Florida.

“We make a living by what we get. We make a life by what we give.”  -Winston Churchill

“He is no fool who gives what he cannot keep to gain what he cannot lose.”  -Jim Elliot

“The only antidote I can find in the Scriptures for greed and materialism is letting loose and giving what God has given you to help other people. If you do not release what God has entrusted to you, it will wrap its arms around your throat.”  -Chip Ingram

“The great use of life is to spend it for something that outlasts it.”  -William James

“I have held many things in my hands and I have lost them all. But whatever I have placed in God’s hands, that I still posses.”  -Martin Luther

“We always pay dearly for chasing after what is cheap.”  -Aleksandr Solzhenitsyn

“The less I spent on myself, the more I gave to others, the fuller of happiness and blessing did my soul become.”  -Hudson Taylor

“Any temporal possession can be turned into everlasting wealth. Whatever is given to Christ is immediately touched with immortality.”  -A.W. Tozer

1) Project Your Goals: Where you want to be.  Education, Retirement, Future Plans

2) Evaluate Assets: What you have. Investments, Accounts, Real Estate

3) Perform Gap Analysis: What you need. managing cash flow, insurance, assets allocation, savings plans, tax strategies, annuities options, risk tolerance, governmental plans, address personal values and their relation to investments

4) Provide Options: How to get there. detailed recommendations, comprehensive written reports, private financial web page iSteward

5) Implement Strategies: Activate the plan. asset allocation, tax strategies, estate planning, charitable planning, and Social Security claiming strategies

6) Monitor Plan: Optimize to achieve goals. performance thresholds, risk audit, automated alarms, periodic evaluations.

We start by helping you identify your goals and evaluate where you are relative to those goals.  We evaluate your options and recommend strategies to get you where you want to be. We don’t stop there. We help you implement the recommendations. Then, we continually monitor your financial situation to ensure you remain on track to achieve your financial dreams.  The ability to track and monitor and create alerts is the biggest difference than when I started doing this process in 1986.

Below is a short video that shares more on this process and what it looks like for you including a glimpse into iSteward.

1) Wallet or purse ICE card.  Great because we do not always have a phone with us and even then batteries go down. Contact Jane at 123-456-7890  Allergic to bees

2) Place dash and then the letters ice -ICE so this contact shows up a t the top of your contacts.  -ICE Mary and -ICE David and -ICE Joan.  Some add a sticker on back of phone with ICE printed.

3) you could use an app like iEmergency+ from Apple to download and have information placed in the APP to get rapid response teams more inform as to medical conditions.

I shared this with a friend of mine and she told me one of her best friends was at a hospital for 5 hours and nobody knew who she was or what to do next as she was in a coma.  This could have great helped for responders, friends and especially the one needing proper attention.

The current president of PPP or Partnership for Philanthropic Planning was here in town this week and it was my honor to spend time with him and hear him share the main functions of PPP with a local chapter.  Advocacy is major reason to be a part of something bigger and the national PPP provides influence and education for lawmakers.  Research is another competent.

Better yet let me share what drives it all the ENDS Policies- the follow is taken directly from www.pppnet.org  Strategic Plan section.

Organize-all your financial accounts and information

Simplify-see everything in one place

Up To Date- your accounts are updated daily

Monitor-track your financial progress

Store- your valuable documents

Access- 24/7 private access

Bottom Line- view your net worth everyday

Secure- highest security protection

Below is a video you can watch that further explains iSteward and how it can accomplish the above 8 key attributes and more. It’s titled “What’s In A Number?”

Should I invest any time and energy looking into these other options when my colleague in the next office, advises me to just file online and start collecting your benefits like them.

What would it look like to change my mind, say at age 67 and if I claimed at age 66? Option 1: you could claim “restricted option”. Option 2: you could claim “file and suspend”. Option 3: you could file on your own option or your spousal option.

Many of the advisors and individuals we talk to want to know if there is anything worth planning for financially.

We have a quick and easy online tool for you to test your options and let you know if there is real money at stake.  On the right side of the home page of Stewardship Matters www.stewardshipmatters.net there is a picture of a couple on the right side of the page, just click on them and use this free powerful tool. It will help you determine if you’re optimizing your benefits or are you leaving money on the table. Unfortunately most retiring individuals are led to believe that they only have one option for claiming their well deserved benefits.

For investors, settling a convertible term policy usually means that they will be buying a policy that is convertible to the latest generation of universal life.  Newer policies often feature lower mortality rates than older policies.  Getting a brand new policy also gives investors the opportunity to manage the policy premium flow to maximize their internal rate of return on the death benefit.  The combination of these factors puts convertible term insurance at the top of most life settlement investors’ shopping lists.  This, of course, translates into better offers for insureds.

From the policy holder’s standpoint, settling a term policy can also be a great opportunity.  Term is usually bought to cover a temporary, rather than permanent, life insurance need.  When the need ends, the life insurance policy is usually allowed to lapse.  A term life settlement is a great way to obtain some salvage value for a policy that would otherwise terminate without value.

Since the final quarter of the calendar year is the busiest in the life insurance business, many term policies have issue dates, and therefore renewal dates, in the fall.  The policy anniversary is frequently when policies are lapsed because their premium guarantee period ends.  Commonly, it is also when the conversion privilege expires.  These are critical dates for insureds to make decisions about the future of their term policies.  If and when the decision has been made to lapse the policy, then a life settlement  should be considered.

Found Money idea is that you discover money you did not know existed.  Life Settlements buying a Term Insurance policy is one example of found money concept.  You were going to stop paying the premiums on a Term policy and now with a little effort to get your situation addressed and shop the markets you could be putting money in your pocket.  What kind of money are we talking about?  69 year old with Term policy for $1 million could get $70,000 cash today for selling a policy that was going to lapse.  Good Stewardship or management should look for uncovering money and resources and Life Settlement Market is one of those resources.

1) 529 Educational Plan: will grow because you can use today’s dollars to fund fully paid college tuition for children and grandchildren’s education of tomorrow.

2) Health Saving Accounts: will grow significantly in the future because you can fund this type plan with deductible dollars and using them tax-free in the future on medical related items.

3) Cash Value Life Insurance and Annuities: will continue to grow as people seek ways to insure for a certain amount of income for their retirement plans and for easy solutions for tax planning.

4) S-Corporations may want to consider refilling their paperwork with the state and become C-Corporations as top tax rate there is 35% instead of 39.6% plus state taxes.

5)  The wealthy will seek advice on tax planning for income taxes in greater numbers and hopefully seek some of the specialized charitable ideas like “stacked giving”.  With the low interest rate environment we are currently in and with need for planning for the tax implications on selling a high capital gain asset or planning for the sale of a business.  ”Stacked Giving” is also known as charitable lead trust or iCLAT in other circles.  Using this strategy may be your new favorite planning tool, as it allows you to curb taxes on a large tax burden and to help you donate to your favorite charity, while still controlling your asset.  Seek advice from professionals really does matter.

The Success Formula: Starts with you taking a personal inventory; your needs and goals, time frame of investing and for retirement and what is your comfort level of risk.  The plan should address GAP analysis, a gap analysis is the comparison of actual performance with potential performance, then provide specific plan to help you take better control of your financial future. We believe that better clarity leads to wiser decision making.

You and your team of advisors can have real collaboration and efficiency when you have a “Live Plan”.  The Live Plan is automatically updated daily and is in an easy to understand and use format, which provides you the best up to date reporting of your financial plan.  If you do not have a team we can help you assemble one.

The short 4 minute video below goes deeper into what a “Live Plan” looks like and how it will benefit you and your family.

The survey went on to state that 67% of couples with assets over $250,000 expect their financial planner to provide advice on Social Security claiming options. A different survey but just as interesting done by the Social Security Administration, revealed that 57% of the survey respondents said they would look for another advisor if their advisor couldn’t or wouldn’t analyze their Social Security options.

Here is the link for the CBS Money Watch Article.

Over the past couple of years I have counseled dozens of women on how and when they should file for Social Security. Women should know and consider these facts: 1) Social Security is much more complex, than simply filing for your benefits. 2) A poor decision on how you claim can cost you thousands of dollars. 3) Widow and Divorcees benefits are not covered on Social Security Statements that you receive from the Social security Administration.

Did you know that there is often over $100,000 of benefits left of the table over a lifetime?  But before you call an advisor you should check out a very powerful free tool, with no obligation to use, it is found at the home page of www.stewardshipmatters.net.  There on the right side of home page click on Social Security Timing, when asked if you want help, answer “no thanks”.  This will open a robust benefits tool that will help reveal your top three options and the amount of money at stake if you do not plan for the various options available. Remember there are unique planning considerations that should be discussed with a knowledgeable professional on the subject of your Social Security benefits.

John Hancock Insurance, a leader in Long Term Care Insurance, changed how they are going to price their new long term care policies, from gender neutral to a gender based policy pricing structure (in 35 states at this time).  Genworth announced they are changing to gender based rates starting April 1, 2013 in most states.  There will be estimated 50- 70% increased premium costs for female age 55-66 year of age.

What does this mean to you, well if you are a middle aged, the cost of Long Term Care(LTC) just got more expensive and  the cost will not be getting any less expensive in the future. If you are considering funding a policy to help pay the high costs of home health care, assisted living or nursing care, then now is the time to purchase because acting sooner rather than later is in your best interest and will save you money.  My years of experience has shown me that when it comes to policy rate changes, that those changes happen very fast. If you have been thinking about purchasing a policy, which in this ever increasing healthcare cost climate is a great idea.  Act soon before the rates change.

Now for those women who are likely to wait, or believe they would never need long term care, please take a second look at what is happening now in America. Women are living much longer and statistics are pointing to the fact that we are all going to need some type of long term care. If you do not have a LTC your only other alternative to effectively deal with the rising cost of any type of long term care (home or a facility) will be things like reverse mortgages on your home, a hybrid long term care policies or riders on life and annuity products.

Medicare does not offer any help or assistance with long term care, but if you live in Florida and you would like to protect some assets to leave to family members or other heirs, than you will need to know the State of Florida’s rules of for asset protection concerning Medicaid. As of today the rule states that if you buy a qualified Long Term Care policy, the amount of coverage you purchase will be the same amount of money or assets in your estate you can protect for your heirs, while still being eligible for Medicaid assistance. Let me give you an example: Mary has an estate worth $300,000 not including her home; if she has no LTC policy in place, then  for her these were Florida’s Financial eligibility requirement as of January, 2012: Individual gross monthly income of $2,094 and asset limit = $2,000. That means she would have to use up her whole estate except for the $2000 and the difference between her monthly Social security and the maximum income of $2,094.

A seasoned professional will give you several options to address your individual funding needs, and listen for your concerns about your health and the needs of your estate and not simply sign you up to a certain product where one product fits all needs. Please get professional help before you encounter these complex decisions that deal with your individual long term healthcare needs, and to help the people that you love and who have your best interests at heart and are going to look after you when you need them most.

Roger is 66, this year he has finally retired after years of hard work, but unfortunately he is working as hard as ever because his aging mother and aunt are suffering from various illnesses, including both physical and mental issues including the  onset of Alzheimer’s.  He travels to see them frequently and does his best to monitor their bank accounts and to help them both with bills and money issues. Each day he logs into their different accounts and attempts to monitor all their activity, banking, credit cards and household expenses, it is time consuming and a major burden and only something that you would do for a loved one.

If you or someone you know  is like Roger, caring for another person’s finances, helping with their health issues, and you are getting worn out, please consider a using a process that family trustees and advocates have used for over a decade.

iSteward, is a tool and process to help those like Roger that are overwhelmed by the time and energy it takes to stay on top of their loved ones that mean so much.  How can iSteward help?

iSteward is a fast and easy way to organize and make the complex more simple. It is a private, safe and secure website where everything can be monitored and reviewed with the touch of your fingertips.  There are custom alerts in one place for all accounts.  No need to login to all the accounts and monitor anymore as iSteward has tools to help you. We like to think of it as a personal financial home page, with added layers of safety and security.

First, iSteward is NOT is transaction site. What do we mean by that phrase?  No movements of money whatsoever, unlike banking, credit card and brokerage account sites, there is never any movement of your funds through iSteward.  This web portal is designed to ease security pressures and allow for the very best in monitoring and reviewing of all your different accounts.

If you are working with multiple professionals, such as a health care advocate, an elder-care attorney, tax professionals and financial advisors, iSteward process will serve as a central depository for secured information. You no longer have to trust on outside emails and attachment files; rather utilize the  iSteward state of the art file security system to deliver sensitive materials to those different professionals.

As we all grow older and have become more cautious over technology, the more sense it makes to have a secured Non-Transactional portal to see everything and be on top of it all in one place. This safe and intuitive process is easy to set up and monitor all activities of brokerage accounts, banking, tax, insurance and legal issues.  There are thousands of professionals using this technology daily to do just that- collaborate and provide secure information and planning.

Want to learn more then check out other iSteward blogs and articles at www.StewardshipMatters.net, and while you are there watch a short video on iSteward.

Apple issued it’s a corporate bond deal worth $17 Billion on Tuesday its the largest corporate bond offering ever, and it was the first time Apple issued bonds in almost 20 years.  According to Wall Street Journal, there was $52 Billion worth of demand offers for the bonds.  These bonds were issued for 10 year period and a yield of 2.42% after priced by the markets big demands.  The U.S. Treasury 10 year bonds at the same time were offering 1.67%.

You ask yourself, why in the world would a company with a $145 billion dollars in cash, take on bond debt.  By raising the money through a corporate bond sale, it gives Apple a tax benefit. That’s because interest payments on corporate debt are tax-deductible and they can avoid a huge amount of taxes they would owe the government if the company brought back cash from its holdings in other countries.

I would expect to see other corporations with large international operations to follow Apple’s lead and raise cash by issuing debt security in America, and avoid paying taxes on the money they have in foreign holdings.

This reminds me of the Tobacco Companies leaving for Europe and South Africa to set up operation headquarters in court friendly countries, when the threat of lawsuits raised concerns and prompted a mass exit to other jurisdictions.

What we see here are corporations no matter how big are in fact sensitive to taxes and regulations. These corporations have changed the way they do business with their eyes on protecting the company profits from taxes, and providing a greater return to their shareholders.

Set yourself apart as a leader and team leader as you collaborate with other professionals and you are driving the information leading to greater success.  Learn more by watching the video below and building value in your practice.

Like a coach that helps you take a next right step, we are there for you. We help you clarify and prioritize your goals because you may only get one chance.  We want to help you grow and protect your hard earned assets.

iSteward is a process, and the with aid of a private and secure web portal, we provide a place to get your financial game organized. It allows for you to plan for your future, and helps you to keep your budget and spending under control.

This process will make you the head coach of your financial team, allowing you to share parts or your entire financial plan with your different advisors. This will give you greater control and clarity of your future, and allows you to choose which parts of your financial plan need to be changed as your personal future changes.

As a professional athlete you know success comes from discipline, hard work and experience. Let iSteward do the hard work and help provide the experience and you provide the willingness to see clearly and act responsibly as a trusted steward.

Watch the short two minute video on how iSteward can help you.

Weekly, I seem to meet individuals dealing with an elderly parent or relative and other professionals dealing with elderly clients, who are looking for and in the need of a financial advocate or at the least a good financial monitoring process.

Eldercare attorneys are teaming up with specialized consultants and advocates that look into medical and prescription drug overview for issues of health fraud on the elderly.  Why not incorporate financial overview as well?

We have all read about or have heard that identity theft is at the top of the IRS Dirty Dozen list of scams.  The radio and TV ads pound us to get a service that helps protect, monitor and defend our identities and other important information; both personal and financial. They warn of the growing threat of theft through technology and for the thieves that prey especially on the elderly.

Here is an example closer to home that you would never think would happen. It sicken me to learn of a nephew of a client of mine that had set himself up as co-owner or joint owner of a bank account  with his aging aunt. He then helped himself to more than $100,000 over a two year period without his aunt knowledge. Thinking she would not miss it and likely to pass away before anyone would miss it.  He defrauded and cheated not only his aunt but his cousins out of money and ruined his family ties to other family members. He was able to take and not be watched by anyone except the aging widow who trusted him. I still think about these issues and have asked myself what can the financial services industry do to help those watching over their elderly relatives?

Nothing is fool proof or perfect at this point of time in the area of personal financial security, but the iSteward process will allow for clean and secure monitoring process and help you to stay on top of all your finances and can help you save money and your time.

iSteward is a safe and secure web portal that can monitor and track most anything online dealing with the finances. Bank accounts, insurance policies, brokerage accounts, mortgages, and credit unions are easy to monitor and you can receive alerts both custom and automatically based on your personal preferences. What make iSteward unique is that it is not a transactional site and has the highest security protocols in the financial industry in monitoring and reporting.  Institutions, wealthy individuals and their families have utilized this process and technology for over a decade.

Imagine you set up an alert, which notifies you immediately of any changes in any of your accounts.  You have set the alert to inform you or your advisors to review and check out if there are issues needing attention; such as large credit card purchases or bank account balance changes of any kind.

Go check out our other blogs/short articles with videos attached to explain further how iSteward can be a valuable tool in helping us and those we love.

We hear a lot from advertising and marketing to seek out a financial advisor that is trained and has processes and resources that address your needs and concerns both now and in the future. Many state seek out a CFP or Certified Financial Planner is a good starting point. Many also tell you ask for referrals and find out from others who they use and why. Interview at least a couple of advisors before making a decision to compare not only their offices and support but their philosophy and approach to planning, investments and life values.

Here are a listing of courses for both CFP and ChFC and what is required of them.

American College CFP web page.

There are now 7 required courses (was 6 courses for past couple of decades)

The Chartered Financial Consultant ChFC web page

There are now 9 required courses (was 10 courses for the past couple of decades)

Both cover taxes, health & life insurance, investments, retirement planning, financial planning.

The CFP is marketed heavily by financial planning industry as the standard of basic or core competent materials.  The ChFC was for many years considered the financial planning step sister to the Chartered Life Underwriter or CLU.  Those with a ChFC and not the CLU were teased that they did not have a CLU (clue).  Reality is that ChFC at the core has same materials of CPF only a couple of extra courses.  When I took the ChFC there were 10 separate exams each about 2-2.5 hours and typically 150 question per exam (overall 20-25 hours of exams and 1500 questions).  The CFP was one exam covering 6 courses over only one day.  Now the two are becoming more and more alike in the way the exams and materials are taught.

While the CFP and ChFC are both good core or basic programs to train advisors these are administered on a pass or fail basis.  Another indicator you might wish to consider when evaluating potential advisor for your finances is to find out if they have been in the business at least a few years and are they passionate about helping and learning more about their industry and trends that affect you.

Example would be to see if they know about Medicare and Social Security and various claiming options.  Or if you have important values that you wish for your money and planning to reflect then how would the advisor address those values or beliefs in the plan and investments.

The American College site can be found at www.theamericancollege.edu

Do you know where all your financial investments and information are and what is the value, today?  If you don’t, you should.  Now available to the public is a great safe, secure tool to get your financial lives organized so you have a clear picture of your financial future.

Do you have a process in place to review ALL your accounts and know what they are invested in and how the overlap in your investments holdings can cause increased risks? Investing money into twelve different mutual funds with different mutual companies doesn’t guarantee proper diversification from holding the same investment in each fund or bucket.

Many of the online trading portals today do have “alerts” you can set and customize for your personal concerns.  And many of the banking software portals have ways to consolidate and view mainstream accounts at major firms.

What about being able to see all your investments, finances and obligations (mortgages, student loans) all in one place at the touch of your fingertips? To be in full control of your data, deciding which data you want to share with insurance, investment, banking or tax and legal professionals?

Now you can, with a robust collaborative tool that has proven itself safe and secure over the past decade. Individuals seeking greater control and clarity over their finances have found it useful and helped for them to get a clearer view of their present day finances and that of their future. It allows for the individual to have greater access to the necessary personal and financial data to share with their advisors.  We call this interactive management tool iSteward.

Watch the short video below, and if you guess and tell us who is the narrator, we will provide you a small prize when we meet in our office or talk with you over the phone.

The apostle Paul stated his perspective, to look at your life as that of two days: today and That Day.  When we are defined by the eternal or That Day, it gives meaning to the temporal or today.

In light of the following Scripture we should consider Time:

Psalm 31:5a “Into your hands I commit my spirit.”

God owns all things including time, and like all other the assets we have been entrusted, we should be good stewards with our time.

James 4:4 “Yet you do not know what your life will be like tomorrow, you are just a vapor that appears for a little while and then vanishes away.”

Today is a gift, that is why we call it the present. Unfortunately, we often need to be faced with death or experience firsthand the shortness of life by another’s passing away to truly appreciate the today.

Ecclesiastes 8:5  ”Whoever obeys his command will come to no harm, and the wise heart will know the proper time and procedure.”

When we presume our future will be there but by doing that we sometimes squander the opportunity of today.  To make the most of our time, we must steward time as God’s time.

Jim Rohn would say this about the present.  ”Wherever you are, be there.”

With technology and media hitting us with more and more distractions, it is all the more important that we intentionally pull away and unplug ourselves. This will allow us time to reflect on the order and the important things in our lives, so we can live into that purpose for which we are called.  This is a journey rather than a status of arrival or a place.

Time management experts often state, show me your calendar and I will show you what you care most about.  Another indicator is to look at how you choose to spend or invest your free time or leisure time (sometimes called margin). Is there any margin in your life?  If not, you should find a way to carve out some margin to reflect and think about your purpose and influence.

We often ask ourselves, “Am I taking care of today?” For so many people, having a daily agenda is an important tool in answering that question. They find an agenda to be a helpful way of keeping your thoughts organized and is useful for setting and accomplishing daily work duties or goals. In fact, it will help you in at least knowing what duties you can accomplish, which ones that you need to delegate to others and which ones must be put off to another day.

What can we do about the past?  Learn from our past successes and mistakes. If we have done wrongs, then we can ask forgiveness of others, apologize for a misunderstanding or perceived wrong in someone else’s mind. This will allow us to be able to set a new course and strive for higher calling and purpose and seek to make good on the present.

In the world of financial matters there are some tools that many have found to be helpful in making better decisions.

Check out one of our recent March blog posts, Decision Making Process and Seven Barriers .

Could you be wasting money sending children to college who are not ready to go to college?  I recently attended a luncheon where a University President shared how he interviewed freshman and sophomore students over a period of years and found majority had no idea what they were going to do with their lives. They said they were trying to find themselves, more important he noted they had no sense of purpose and how they would use their skills and interest to make a living. He came to the conclusion, for a majority of those students and their parents, that economically it would be cost efficient if the student took off a year, go on vacation, join the Peace Corp or go to work a year or two to find themselves than taking up space and wasting tuition money in college classrooms.

Parent should know that when they cosign on these loans it is the same as you signing for the money. Like many of the federal student loan programs, private bank loans and Parent PLUS loan do not offer any loan forgiveness; in fact student loans are one of only a few types of debt that cannot be discharged through bankruptcy.

We are hearing talk from the federal government that offer federal loan programs are now looking to place a lien on the Social Security payment checks of parents who cosigned their child’s federal student loans.  Another important consideration is how poor repayment can hurt individual credit rating or score.  What happens to the debt if God forbid the child becomes disabled or dies?

Parents we must take a good look at the problem that is starting to arise from these federal student loans and the amount of debt our children accumulate getting their college education.

One resource online is The Consumer Financial Protection Bureau and they have a kit called “Paying for College”, at www.consumerfinance.gov/paying-for-college aims to help students faced with lack of repayment and finance options.

Here are a couple of alternatives to going to a four year college or university right out of high school: Technical or trade schools are great, consider work where training is provided, or one of the more popular solutions, live at home and go to community college first 2 years. You can also join a branch of the military service, where one of the benefits of serving is your partial payment of your college tuition.

Have you heard about Sleep-ability insurance?

What is sleep-ability insurance? It works like a 401(k), it locks in gains, and it provides daily tracking and has flexible options.

Sounds like an annuity you say, well at its core it is an annuity, but it’s much more than an ordinary annuity. However, this annuity allows you   the ability to have a personal design and implementation and that lies at the heart of this annuity and provides for sleep-ability.

Bond and CD rates are at all time historical lows, and with the desire for secure and safe income from our investments, annuities have delivered what consumers want and need.

Warren Buffett, one of the smartest investors of all time, is saying this about bonds, “Right now bonds should come with a warning label.”  He makes this point in the context of the coming change in inflation; that bonds will not help in the wave of expected inflation in coming years.

Did you know that according to Investment News the number #1 non solicited product sought by individuals for the year 2012 was annuities?

What if you could have inflation protection on your annuity income, and be able to control or change direction in the future as well?  The sleep-ability annuity is here in 2013.

There is Three Questions All Individuals Should Be Asking Themselves?

1. What will the stock and bond markets do?

2. How long will I live?

3. What will inflation do?

How you answer these questions, is a big part in the possible solution for you.

1. No one knows what the future will bring to the markets except for the fact they will always have variations. And if you did know the future, you would already have all the answers.

2. You may a good idea of how long you will live based on your family history, lifestyle and on the conversations with your doctors.

3.  Inflation historically has been much higher than the past few years. But we all expect for inflation to come back into the picture as our economy gets better.

Here is real example Mary retired with $1,000 a month pension level payment in 1988.  What is feels like today is about $500 use the free online CPI Inflation Calculator.

If you are looking for sleep-ability and you feel like your current investment plan does not address these issues, part of the solution is to design a personal investment plan using annuities that will account for  inflation, give you greater control and that address longevity.

It allows you to get a clear, easy to understand picture of your finances with graphics and data. This allows you and your advisors to be able to make a plan with both you and them saving time, and the frustration from having your financial data that is incorrect or out of date.  Imagine you have multiple financial relationships and even some financial accounts that are held in a business name or with previous employers’ retirement accounts, now you can have all of your information consolidated and seeing all of it together to address your allocation to company or industry.

You are traveling or it’s a weekend and need access to important legal documents, now you can access anywhere in the world your personal vault document or perhaps a copy of your passport making the trip to Embassy much faster and easier to navigate.  Perhaps you left a family member with another care giver and the hospital needs documents to treat them and you open your virtual vault and simply email it to the parties with a simple click.

Unlike portals that are driven by a banking or investment relationship the iSteward is driven based on sound planning advice for a fee, rather than the same “old park your CD here” and we will help your organize your stuff planning.

We want you to know that stewardship encompasses all aspects of your life, and is not about only a part of your life like giving away some money. iSteward can help.

Treasury Inflation-Protected Securities (TIPS) provide protection against inflation. The principal amount invested in a TIPS increases with inflation, and decreases with deflation, as measured by the Consumer Price Index. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation. When TIPS mature, you are paid the adjusted principal or original principal, whichever is greater.

The interest rate can either be a positive or negative rate, unfortunately as of this writing April 2013; the rate is about 1.9% negative.  What does a negative rate mean? A negative rate means it will cost you a premium to buy (TIPS) and you will earn a zero percent interest payment, but you are paying for the opportunity to protect against inflation. These rates change daily on the secondary market.

• TIPS are issued in terms of 5, 10, and 30 years.
• The interest rate on TIPS is determined at auction.
• TIPS are sold in increments of $100. The minimum purchase is $100.
• TIPS are issued in electronic form.
• You can hold TIPS until it matures or you may sell it in the secondary market before it matures.

If you want to protect your interest income then TIPS are not the investment solution for you and may not support your lifestyle.  TIPS protect the principal but not interest income. If you are retired and looking for an income stream then TIPS are not the proper investment.

With talks of Social Security reductions in addressing inflation, it will become even more important than ever for retirees to address inflation concerning their income. If you are 66 today and reaching age 91 is realistic, then the income you receive today would be worth less than 1/3 of the today’s dollars. Let me ask you would that matter to you?

Here is an example for 3% inflation and 5% inflation on nest eggs.

$10,000 in 25 years at 3% will look like $4,776 in terms of purchasing power.

$10,000 in 25 years at 5% will look like $2,953 in terms of purchasing power.

If this will cause you sleepless nights do not lose hope, there are safe, reliable investments available to protect your income from inflation.

Why bring this up?  Because most physicians spend their time establishing practices, maintaining their practices while at the same time they must stay on top of the business management of their practice. This leaves little or no time for them to oversee all their personal financial matters.  Why do I mention iSteward? Doctors do not know this type of technology exists that allows them to have access to all their financials in one safe place, which uses technology to collaborate with their Attorneys and Tax Professionals and financial advisors. iSteward’s Wealth Management System employs the most advanced security features and protocols to keep your data safe, private and secure, 24/7/365.

iSteward is a leading provider for busy professionals wishing to know at any time what they have, and to receive the information is a meaningful manner to use and make wise decisions. For 13 years the iSteward process has proven itself as a leader in secured and non transactional reporting and planning.  SunGuard Systems clears 70% + of all global financial transactions, and is the backbone of the system.  Click on video below to learn more.

Have you tried mint.com, or similar programs that promise to deliver quality reports only to be disappointed? Want to know the real effects of inflation on your lifestyle and understand it? This is not banking and it does not allow transactions but rather is a useful tool to keep track of where all your assets currently are and how they are performing daily. You can see how they are doing in relationship to your goals and objectives. Imagine seeing all your investments from various sources consolidated in real time.

Would it make reviews with CPA, Attorney or other professionals easier and more productive?  Your investment advisor asks you to bring in your total picture and you dread the time and effort it takes to gather 401(k), IRA, banking and other programs such as annuities and life insurance.  What if it all could be seen daily in a secured personal homepage for you?  The future is now and this can all be yours today.

Watch the following video tour and see if this rings true in your heart and mind.

Video below.

How do we instill the building blocks needed by the next generation to be productive members of society?

The values list would include: a good work ethic, respect, responsibility, loyalty, stewardship, accountability, integrity, honesty, discipline, sacrifice, endurance, courage, morality and decision making.

All of these take time and are enhanced when challenges are presented. Children are watching if our character aligns with our words.  When I speak of work ethic to my children, I should be modeling it to them by example of how I diligently go about my daily work both at home and in the office.

How will your children handle the big things in life like work, marriage, money and time?  Observe how they handle the little things, like the caring for a pet or their bike. What do they do with money, are they learning good principles from you on how to handle money?  Do they buy junk with it or do they save it all, or do they have some balance between spending wisely and being generous with their giving.

If you want a glimpse of how they will take care of a car, look at how they handle their bike.  Do they follow the rules and wear a helmet and properly care for it? Or is it left at friend’s house for days, unaware of where it is?  Is their bike clean and cared for?  How will they handle a dog or cat? Observe them with a fish or gerbil first as a training ground.

When we see unhealthy attitudes in group activities such as sports, would it not be wise to provide appropriate ways to handle the conflicts they face? Rarely do a list of Do’s and Don’ts work as instruction for most of us.  Children need to fail and see and feel some pain and seek the next right step.  We all need coaching from an experienced coach on life’s issues; you are your child’s coach. What makes this task harder is our emotional connections, and how we personalize and internalize comments made by our teens. My attempts at humor in these teachable moments generally create expressions of embarrassment and frustration, all of us with a teen know that feeling.

Social Capital is enhanced when we are intentional and purposeful in our living.  By my example of living and giving speaks more loudly than the preaching or instructions.

Remember that it is possible to pass on assets with value and not pass on “values” or character.  You cannot buy character and often passing on value/assets without proper preparation spells disaster for your heirs.  Good news is you can start building values and character by investing into others with intention and purpose of life.  Contact us for more resources.

Impersonation of Charitable Organizations

Another long-standing type of abuse and fraud are scams that occur in the wake of significant natural disasters.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims. As in the case of a recent disaster, Hurricane Sandy, the IRS cautions both victims of natural disasters and people wishing to make charitable donations to avoid scam artists by following these tips:

• To help disaster victims, donate to recognized charities.
• Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible.
• Don’t give out personal financial information, such as Social Security numbers or credit card and bank account numbers and passwords, to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Here is some good practical advice to help from becoming a victim of fraud or a scam in this situation. Call the IRS toll-free disaster assistance telephone number (1-866-562-5227), when you are a disaster victim with specific questions about tax relief or disaster related tax issues.

Good Stewardship takes some effort.  It matters for you and for others too.

Listed below is # 5 on the 2013 IRS’ list:

“Free Money” from the IRS & Tax Scams Involving Social Security

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes promise refunds to people who have little or no income and normally don’t have a tax filing requirement — and are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

Scammers prey on low income individuals and the elderly and members of church congregations with bogus promises of free money. They build false hopes and charge people good money for bad advice including encouraging taxpayers to make fictitious claims for refunds or rebates based on false statements of entitlement to tax credits. For example, some promoters claim they can obtain for their victims, often senior citizens, a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college. Con artists also falsely claim that refunds are available even if the victim went to school decades ago. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

There are also a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return.

Beware: Intentional mistakes of this kind can result in a $5,000 penalty.”

This one makes me sick inside.  Why? These scammers prey on people because there are so many complications with filing taxes, and when is the right time to file for the right Social Security Retirement benefits for you, each individual is different.  Good planning will get thrown into this scam by many who need the proper planning on filing for Social Security Retirement Benefits but do not know where to turn for help.

For those nearing retirement, (typically age 62 to 66 year of age) and wishing to optimize their specific benefit claim, a quick and simple for you to see if there are REAL benefits awaiting you without any costs or risk to you is now available on the home page of   www.stewardshipmatters.net, look on the right side of the homepage for “Social Security Timing” and this calculator will help you find out if one of the 9 ways to legally claim your Social Security  benefits are significant to you and your family.

On the website you will find dozens of articles on Social Security Planning and how to improve your retirement benefits, just look on our blog. This is a free service with no sign up, just simple articles to help address the many complex ways of improving your benefits.

Many pre-retirees are reluctant to plan because of the pain to gather and pull together data and then track it afterwards and see the transparent and real returns and not just numbers the financial community reports for their piece of the overall puzzle.  Get all of it together so you know where everything is and how to take the next steps with confidence.  Managing well is good stewardship and good stewardship leads to living a life with more purpose and meaning.

Click below for brief video on how you might take more control of your financial future.

We are business owners that bring real life experience and understanding of actually having to make payroll, and being responsible for the success of our business. We know and share the feelings, and thoughts that you experience and feel each week of running a business.

Bill Gates, the wealthiest man in the world, was once asked “How do you use your money? He replied “I use it to save time, because you can get more money, but you we cannot get any more time, we just have 168 hours in the week” Click below for a short informative video and how we bring clarity and help you leverage your time with iSteward.

Here is an excerpt from the back cover.”But God doesn’t want us to live without hope. His Word contains, not just what we need to survive, but to THRIVE, in any economy. This important resource will help you navigate the road ahead with practical help and ancient wisdom, no matter that financial challenge is waiting beyond the horizon.”

There are a few reasons why I liked reading “Thrive,” and why I would recommend it to you? First, it was an enjoyable, easy and a fast read, it is only 120 pages. Second, the author uses well established financial principles and gives practical examples. Lastly, the book makes very clear how God works through our work and the responsibility of stewardship we have been given.

In Thrive, Bentley informs and guides us on Stormproofing our finances, while addressing budgeting as real positive experience. Bentley gives practical solutions on how to tame the money monster lurking in all of us, by using clear and concise examples of debt verses investing, and the real purpose behind money. Writing on how to not to compromise no matter what happens, Chuck takes a fresh look at integrity and explains how to spend money with a purpose.

Mr. Bentley is the author of two other books on similar subjects; The Root of Riches and The S.A.L.T. Plan.

If you have been fortunate enough to have already read Thrive, let me suggest another enjoyable well written book to you, Managing God’s Money by Randy Alcorn.

Before filing for benefits a question that you should be asked? Is there a value in the delayed filing credits and if so, what is it worth?
From the last Case Study, we learned to fund the above (2) annuities with 3% cost of living rider in March 2013, would cost $965,709 to provide these benefits. Now let’s suppose Jean files for her spousal benefit at age 66, and Harold decided to delay his claim of the $2,200 a month benefit until age 70. If there was no inflation during those 4 years, then at age 70 Harold’s benefit would be $2,993, but if historical inflation is the case (3% inflation), Harold’s benefit would be $3,340 a month or 51% increase.
What would it require to buy a joint life annuity on two 70 year olds with 3% inflation on $3,340 of monthly benefits? The premiums or cost to fund this in the private insurance market would be calculated on one annuity taken at age 66 for $1,100 a month on single life (Harold) and the other for joint life on(Harold & Jean) when they reach the age of 70.

Choose what you think might be the cost to fund the above annuities ($3,340 Joint 70, $1,100 month single 66)?

A) $749,900
B) $825,876
C) $998,020
D) $1,202,621

Before I reveal the answer to you, let me ask this question? Would it seem like the cost should be more or less as you get older when buying a annuity for a 70 year old couple verses buying for 66 year old couple? The answer, it would be LESS cost for the same benefit. Instead of the benefit of $2,200 on the joint life, it would have grown to be 51% more benefit for the older couple.
The answer to this case study would be D. While the cost goes down overall for the older the couple, their benefits are increased significantly from age 66 to age 70. Social Security Administration site will not predict or calculate inflation into the future, but only reports what has happened in the past. The www.ssa.gov site does spell out 8% delayed credits per year, but does not show the compounded effect on the 8% from age 66 to 70. Simple math would tell us 32% more (8% X 4 years) but the reality is a number larger than 32%. Are you earning more than 8% on your money? Again consider the generous offer by our government to provide greater long-term security, especially if at least one lives a long life.

“Dave does not use a values-based investing approach. Here’s why:

1) In values-based investing, you pick between two similar mutual funds that align with your beliefs–a good concept.

2) However, few of these funds stand up to Dave’s criteria for picking mutual funds (five-year or longer track record of strong rates of return, professionally managed by a team of mutual funds managers, etc.)

3) This is a very personal decision you will have to make, and it is sometimes referred to as a slippery slope. If you no longer invest in funds that might invest in a company that supports abortion, to be consistent, you will need to stop shopping at the grocer that sells pornography. You would also need to stop banking because nearly all banks contribute to United Way, which supports Planned Parenthood.

4) Do not choose these funds out of guilt.”

The above philosophy was similar to mine own after I was ridiculed by some hard core non values-based investment firms in the early 1990′s. Back then the financial the industry taught me to believe values-based approach was nothing more than a marketing gimmick or excuse for money managers to prey on an investors emotions.  I have learn a lot since then and in fact a tremendous amount of change has occurred within the values-based fields in the past decade.

I agree wholly with items 1 and 4.  After 27 years of reading and studying, along with applying values-based investment principles in everyday practice it does work.  Values-Based investing is not for everyone. In 1986 the first investment I helped my first client with was Calvert Social Investment Fund and they were thrilled with the fund’s values and value they received for their investment.  In fact they came into the office telling me they did not want to be a part of any companies doing business in South Africa because of the politics of that country.  Rarely does an investor ask for values-based investments, most investors and advisors know very little or next to nothing about the more than 500 + value based offerings today.  Some of these investments have 20 year track records and are considered top picks in their respected categories.  Today, there are screened Exchange Traded Funds in addition to mutual funds and private money management offerings.

Let’s address the 3rd item above:  His example of grocery store selling pornographic materials is both ignorant and a lame excuse. Here are 5 compelling reasons why: 1) Focus and where profits are derived in business, reveal values 2) Technology and resources are better today than ever before in screening values 3) Leaders in nonprofits have engaged deeply in investing in values based companies 4) Individual investors are demanding more and better ways to align with their values 5) Impact and results are proving values-based investing is a really good thing.

A question I would have for Dave above is this.  Can you draw a personal line in the sand as it relates to your values or standards in the following way? You have a choice between two grocery stores located next to each other and similar prices and service and selection on the key ingredients. Store A displays and promotes gambling and pornography openly and is one of the larger vendors in the state for these services.  Store B has lottery tickets available at service counter and does a little business in this area (less than 1% of their profits) and does not promote pornographic materials like Store A. So now what do you choose?

Nowadays there is great news; there are now tens of thousands of auditors and consultants inside public corporations looking at where profits are derived and reporting daily to various services such as the MSCI, GMI, ICCR and others.  We know who sells what and the profits they make on these items, including: land mines, gambling devices, alcohol, tobacco, firearms, abortion related services, usury, toxins or polluters of the environment. This is not a perfect science, rather taking steps either towards your values or away from your values. It’s about you and your values.

Please understand that these values, or screening for these values is important tool in aligning your values with your investments.  By screening you can also find excellent money managers and investment products that cater to your individual values.  This was not true when I first started almost 3 decades ago.

Click on video below on how iSteward helps teachers.

Life expectancy for Harold is 83 and for Jean is 90 years of age.  Survivor benefits will be the higher benefit, which continues for Jean after Harold dies while the lower benefit is no longer available to her.

Question: How much do you think it would cost to purchase an annuity in the private insurance market today, March 2013, to provide Harold and Jean the same income as Social Security is set up to provide for them?

Choose from the following:

A) Cost would be $267,450

B) Cost would be $486,325

C) Cost would be $965,709

D) Cost would be $1,240,500

Another way to ask this question: How much would the premium cost to fund a $2,200 monthly Joint Life Annuity with a 3% inflation protection, and another annuity for life on John only for $1,100 monthly with 3% inflation?

The answer is C) $965,709

I think Social Security is pretty generous, do you think so?

Check out this video below:

To better understand iSteward and the value it will provide to you, we recommend you  watch the short video below.

Any non qualified annuity can provide tax deferral.   Some tax advisors recommend you should not use annuities, as the earning in the future are taxed at ordinary income tax rates instead of capital gains rates of some other investments held longer term.  Some advisors are offended by the costs and fees associated with most annuities. These fees show up as contingent deferred sales costs or early withdrawal charges during early years (usually first 7 years).

There is an exception that advisors have realized is different and that is the flat fee annuities. There are more than 300+ investment choices but this product is available only through a fee based financial advisor or Registered Investment Advisor. One of the pioneer companies of flat fee annuity product is Jefferson National Life Insurance Company and their Monument Life annuity, which maintains only a $20 per month flat fee.  There are NO sales costs.  There are NO surrender fees. Again there are NO mortality and expense charges (typically 1-2% per year for most annuities).

If you’re in a top tax bracket and wish to tax defer large amounts of money, you may wish to check out a flat fee annuity.  The larger the annuity, the more it makes sense, as the flat fee becomes an insignificant cost at something like $20 in the example above.

Managing the fees on all your investments is good stewardship.  The fees you save could mean more to give, and live out your life with money behind your purpose.

Having a process to follow reduces the affects of the other 6 barriers, and helps you make effective decisions.

When I bake bread, there is a process I must follow in order to insure a good result.  Missing one part of the process, like adding cold milk instead of warm milk to potato bread, would reduce the effectiveness of the yeast and produce a flat dense loaf.

When making financial decisions the same can be true if we do not have the proper process to help us layout the decision.

1. “Time allotted for decision making process is critical”; each year at least one parent tells me about their child, who is now a senior in high school but has yet to take the SAT or ACT test, not realizing it almost too late to apply for acceptance to a college for the coming year.  Another classic delayed decision I hear, “Our car has been giving us trouble for the past year, and this weekend after a major breakdown it  has became too expensive to maintain the car”. Prudence would tell us to look ahead into options as we see signs of a decision coming near.

2. “Emotions”;  This is tough area, emotions are usually heavily tied to a person or family member that is close to us (spouse, child, brother or sister) where we will feel intense pain or pleasure as a result of anything happening to them. Try not to make big decisions when you are in pain or your emotional state is weakened. Let me suggest that for these times you and I should have a process in place that allows us to seek guidance in helping us with our decisions.   When you lose a loved one, it is not the time to make major decisions concerning your life; it is the time for healing and feeling better. It is the time for you to rely on the process you have in place and to call upon your advisor/counselor to help you before you make big decisions.  It is always wise after getting the facts to sleep on a big decision after praying.

3. “Get buried in data and information”; this is easy to happen to us, the internet provides easy access to mountains of information, unfortunately  by acquiring too much data  sometimes we subject ourselves to  “paralysis by analysis.” By having a decision process plan in place, you will be adhering to a wise saying, “data is great, but strategy is better”.

4.”Lack of skill in dealing with decision process”;  Decision making is an acquired skill, and if while growing up your parents let you plan small decisions and fail, you began to realize that it was a good thing to learn, plan and prepare so you would be better for the next challenge or decision.  Good decision making must be learned like any other skill, and it is never too late to learn.  I recall playing board games as a child and learning to make decisions in games like Monopoly, where decision making is a key ingredient to success, along with some luck as well. Having the right process in place takes the luck out of the equation.

5. “Answering the wrong questions”;  Often we would like to only have to decide between two choices, either A or B? But two choice questions or answers sometimes leaves out the potential for other options/choices. This can limit or flaw your chances of proper decision making, which is why it is imperative for to consider all the possibilities. Afterward, you can investigate your options and if possible ask a professional to help you see the other options.

6. In the area of faith and spiritual aspects of decision making, we are told in the Bible to bring our requests to God, believing He can help us with our request, and that He rewards those who seek Him (Hebrews 11). “I have prayed for a clear direction on a matter only to get silence”.   For me the problem of misguidance has been more about my impatience and lack of trust in God.  When I was younger, the typical prayer was God I want this so bless me with it.  Today, I often ask more for guidance and wisdom. I often ask Him, “What would you have me do today?”  Make a call; ask a friend, I seek to understand the motivations behind my own request and looking deeper at who I am being in the requests, and who God is to me.  This does matter and has made for more peaceful decisions for me personally.

The Rand Corporation created a process for effective decision making more than 50 years ago that is used by many professionals today.  It is a process to lay out on a matrix all the possible options, and then eliminate the inappropriate options with a logical process.

We here at Stewardship Matters make every effort to educate our clients so they understand these barriers and help them find ways that will  aid them in their decision making process. Our clients have found that this education helps to reduce the stress of making a decision based on your emotional state, or too much data, and a lack of proper exploration of the issues.

It is never too early to start thinking about any opportunity to save on your taxes. Here are a few ideas to keep in mind:

1) SEP-IRA provides up to 25% deduction on Federal Income Taxes, up to maximum of $51,000.

2) SIMPLE-IRA provides for a $12,000 deduction, and for those self employed who are age 50 and older you can make an additional $2,500 contribution for total of $14,500.  Unfortunately we must choose to use either a SEP-IRA or the SIMPLE-IRA not both. Ask for professional tax consultant what is best for you.

3) Health Savings Accounts contributions (see earlier HSA blog) are deductible for Federal Income Taxes, and in the future the distributions are100% tax free on all qualified medical expenses.

4) Keeping good records is a must for tax purposes, especially when you when making deductions for miles driven on behalf of a charity or business mileage, these can both add up to be significant deductions. Again ask your tax professional about your individual situation.

5) If you own investment real estate, if the property has been purchased or refurbished anytime after 1987, you should consider talking to your tax professional about doing a “Cost Segregation” study, this is an accounting method used to accelerate the depreciation and reduced tax liability, and increase your cash flow. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $200,000.

The above information is provided for informational purposes only, and should not be taken as advice. You should seek the advice of a Certified Public Accountant (CPA) or your tax professional concerning any of this information.

Think of  an IPS as a checks and balances system that helps you  monitor and rebalance your investments. It allows you to set guidelines for risk tolerance and timeframes.

Whether you have multiple advisors or do it yourself, you should consider getting all your accounts under review. This review will allow you to look for over exposure to risk or tax inefficiencies within your investments, these both change over the years.

Technology has come a long way in providing a way to help you and your advisors gain better insights into your investments and help make better decisions.  Risk matters, disclosure matters and having a method to monitor all of your assets  should matter, it’s about serving you and your needs. Good stewardship calls us to be clear about what is and is not there.

Ask yourself or your advisor if you have an Investment Policy Statement and how it is being utilized in 2013?

Video below.

Today in 2013, you are lucky to get 1% on a CD.  Look at this example: before when you invested $200,000 in CD it earned 5% and paid you $10,000 a year.  Today the rate is 1% so the income has dropped from $10,000 a year to $2,000, an investment income loss of 80%. This situation is a common place occurrence these days, and something to consider when planning your retirement.  How and what do we do to prepare for less income to pay for medical, food, housing and transportation?

Understanding a clearer picture of where you are now, and how to address the need for retirement income is the subject of this professional video:  Retirement Income .  Sometimes we are reassured by a familiar voice sharing what we know is true and right.  Share this blog and video with your friends. I would like to hear your feedback.

Video below.

OUR STORY

We started Market Colors in August of 2011. Throughout our trips to Malawi and Kenya, we came face to face with “poverty” in a new way. What we previously thought was just a distant land became a place filled with friends and some of our favorite, and most difficult, memories. Pictures in Time Magazine sent us back to visits with refugee women across East Africa. We found ourselves awake at night, restless… anxious and willing to do whatever God called us to do.

On my second trip to Malawi, I met Gloria and Tiliangati. Gloria was 8 and Tiliangati was just a baby. Their mother, Lamas, had AIDS and was dying of pneumonia. I learned that when Lamas died, she would not have anything to leave to her children and her neighbors would have to look after them. It wasn’t because she was a bad mother. As a single mother, she simply did not have the means to provide for them. We sat outside her hut, placing hands on Lamas, asking God to comfort her and provide for her children. She passed away 8 days later.

OUR SOLUTION

We want to equip families in Africa. There are groups throughout the continent teaching women like Lamas how to become skilled craftsmen. They are showing them there is another way: provide for themselves in an honest way that honors the Lord. As often the sole providers for their large families, the craftsmen are fiercely driven. They have an extraordinary work ethic and exceptional drive and determination. But these craftsmen have such a small market where they can sell their products. We want to equip them to take their products from the village market to the world market. We believe that Market Colors can and will do this through promoting and selling their products through our e-commerce website. Our work is centered upon the goal of creating thousands of sustainable jobs throughout the continent.

We sell products made by groups in Ethiopia, Kenya, and Malawi. Some products we carry are: purses, laptop cases, iPad carriers, scarves, rugs, and accessories. Our competitive edge lies in the fact that each product is 100% handmade and accompanied by a product card, providing details about the African craftsman who made it.

Rather than doing charity work with just instant gratification, Market Colors equips men and women to sustain themselves for years. All surpluses are reinvested in Africa. Public support is raised to expand our reach to new groups of craftsmen throughout Africa.

We are a nonprofit organization utilizing the most current domestic and international business practices, Internet technologies, marketing tactics, and international finance to create a successful and sustainable business model. We honor the World Fair Trade Organization’s 100% Fair Trade commitment and have established fair trade working principles of our own.

Visit our store! Add us on Facebook and Twitter. Follow our blog. Spread the word about the craftsmen!

Together we can transform lives throughout Africa.

Lizzie Wirgau
Founder

I personally have been blessed to take part in a few success stories in helping others thrive and flourish with the help of a small investment. You have heard it said, ‘If you give a man a fish, he eats for a day but if you teach him how to fish he eats for a lifetime’. In micro finance often the story is  more often, you teach a woman to fish and she feeds the whole village.  Market Colors is one such organization helping with fair trade in several African villages. I have purchased items for family and friends from Market Colors and can recommend them to you.

Why should you consider being a part of micro finance? 1) Likely could be the best return on investment you ever made in helping others 2) It is an easy way to care for others, while taking the focus off of ourselves.

There are several “Community Investment Funds” that focus on Micro Financing, and Calvert Investment   is one of the oldest and largest of them. There are many small community investment funds that use Calvert as a facilitator and for back office support, here are three: Everence OneWorld Community Investment Program, World Vision and Opportunity International.

Having years of experience with organizing the individual projects, Opportunity International is much more involved with the sustainability and accountability with these projects.. If you have a community of friends, you could in essence fund a third world bank with experienced local banker for as little as $5,000 to $25,000.

Kiva (appears) more hands on, whereas as you select a project online and often see the name and business opportunity attached to it.  Kiva is an online program, where small loans are packaged together from investments of several people to undertake a project often in third world countries.

Here are a few books I have read on the subject of helping others in the area of micro finance:
The Poor Will Be Glad by Peter Greer & Phil Smith; UnPoverty by Mark Lutz; The Hole in our Gospel by Richard Stearns.

One of the risks I mentioned involves these free reporting websites through national banks are actually tied to your checking and savings accounts, along with your credit and debit cards. Because of this fact, it  poses several risks due to them  being transactional accounts. Then I found iSteward, a non-transactional based web portal that my wife and I cannot live without.

Your private checks and balance system we call “iSteward” is safeguarded in many ways. SunGuard is the backbone of this data system and your personal financial website allows you to see changes and all of your data in one place.

The following link is prepared for your review as a short education of how your data is secured.

iSteward Security Logon

This  short video is only 2:20 minutes in length.

Getting a professional review makes sense, because over time our family’s needs change.  The amount of coverage I purchased before marriage was different then after the wonderful event.  When  children arrived, the  amount of additional insurance coverage significantly increased. Recently, the changes in the  economy has taken away some assets, and/ or perhaps the need for income replacement has become more critical .

Here is a professional video on Life Insurance and we hope you find it helpful, as you sort out your next right step.  It does matter to you and those you love.

Click on the space below to view video.

Watch this short professional video on the War For Your Wallet, and perhaps it will help you to make wiser choices and better stewardship.

Having a  proper perspective upfront before you buy something big can make a huge difference. This allows you to be clear on the costs and opportunities.

Like many things in life, it is really up to you.

Click on the space below to view video.

For the year 2013, the IRA contribution limit is $5,500, which is an increase of $500 over 2012 limit.  The catch-up contribution individuals age 50 and older is an additional $1,000.  The maximum contribution a 50 year can make is up $6,500 for the year 2013.

The contribution limit for a SEP IRA has been raised for 2013 as well, this retirement plan is designed for small business owners or self employed individuals. The contribution limit is now the lesser of $51,000 or 25% of compensation.

A SIMPLE IRA plan (Savings Incentive Match PLan for Employees) allows employees and employers to contribute to traditional IRAs set up for employees. It is ideally suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan. The contribution limit for 2013 is now $12,000 but for individuals 50 and older, using the catch up provision the limit will be $14,500.

Profit Sharing Plans/ 401K limits are now $17,500 for 2013, and those 50 and older using the catch up provision  the maximum contribution can be as high $23,000.

Individual   Health Saving Accounts (HSA) the new contribution limit in 2013 is $3,250.The new limit in 2013 for the Family Health Saving Accounts (HSA) is $6,450.

The catch-up provision for Health Savings Accounts is $1,000 for a family, where the head of the household is age 55 or older.  The maximum contribution will be $4250 for individuals, and $7450 for families and these contributions are 100% tax deductible from gross income. These funds can be used to pay for healthcare related expenses or healthcare insurance out of pocket expenses.

When planning your will or trust there are 3 principles that you should consider:

1. Treasure/Wealth Principle – You cannot take your wealth with you, but you can send it on ahead.

2. Unity Principle- Husband and wife must be in perfect unity in regards to wealth transfer decisions.

3. Wisdom/Values Principle- Never pass wealth without first passing wisdom (Values). Wealth will never create wisdom, however wisdom may create wealth.

These principles should help you with the wealth transfer decision, at the same time you should ask yourself these questions: What is the best/worst thing that could happen if a named person receives the money?  What else could happen and what can you do to minimize the effects? How likely is it to occur? These are some thought provoking questions you need to ask yourself when thinking about the future of your heirs.

Single $3,250

Family $6,450

If over age 55 there is additional $1,000 extra on top of the single or family limits.

For the year 2013, uncertain costs associated with healthcare, are driving up contributions and balances of  Health Savings Accounts according to JP Morgan.  JP Morgan manages over 1 million health saving accounts and 2012 saw the highest level of contributions in eight years.  Here are some facts from 2012 according to JP Morgan.

2012 highlights include:

• The average accountholder is saving approximately $500 in taxes annually (assuming a 28 percent federal income tax rate). Average balances are also increasing by approximately $500 per account per year an account is open
• The average balance in 2012 for new HSA accounts rose to its highest level in eight years growing two percent from 2011 to $1,009
• The average HSA balance in 2012 was $1,736 – up six percent from 2011
• The average account contribution in 2012 was $1,800 while the average distribution was $1,417, resulting in 71 percent of accountholders contributing more than they spent last year
• On average per month in 2012, 66 percent of accounts made contributions and 43 percent of accounts made a distribution
• Total investment program balances grew 31 percent in 2012, up more than 177 percent since 2009

Check with your local credit union, they offer accounts often at no costs and offer up generous options in terms of writing checks for free all while earning interest.

While you may be offered the opportunity to get an account with your employer, you should be aware that many employer based plans do charge annual administration fees and transaction fees as well.

What does this proverb have to do with stewardship?  Everything, the Vocational Stewardship idea is when we do secular work with the right purpose and motives; we are doing something very spiritual. But when we do spiritual work with a secular attitude and motives it becomes secular.

The Hebrew meaning for the word “righteous” is something that is a product of upright and moral action, according to scholars of the Old Testament.  In this verse another key word is rejoices, this is not I am happy I found a dollar or I am happy about some good news. The rejoicing is where the person is leaping for joy and outward expression is that of total joy and gratefulness.

I have watched friends leap for joy over another friend’s success in selling a business or getting a long expected windfall. I have seen this type of rejoicing jump by family members when they hear of success by their parents. I have witnessed this rejoice leap by newly hired employees when a good man/woman hires someone and pays them a fair and just wage.

Talk with a city politician and see the good in their eyes as they share how a business owner is having a great success, and how it brings good to the whole community. Inside each of us, we all want the good and righteous to succeed.

40% Maximum Rate and $5.25 Million Lifetime Exemption

The gift tax is charged on any transfer made during the donor’s life that exceeds the donor’s available lifetime exemption which is currently $5.25 million.

The gift tax is now permanently unified with the estate tax, so it uses the same rates and schedules as the estate tax, including the 40% maximum tax rate and lifetime exemption amounts.

Annual Exclusion Increases to $14,000

The annual gift tax exclusion is the amount a donor can give to any other individual each year without gift tax consequences.

Gifts exceeding the annual exclusion must be reported to the IRS, and this excess is deducted from the donor’s lifetime exemption.  If none remains, the donor will owe gift tax on the excess of the gift limits:

• 2012 Annual Exclusion – $13,000.
• 2013 Annual Exclusion – $14,000.

Question: If you have 5 grandchildren and wish to gift them either money outright or into a trust and not use up the lifetime exemption, then you could give $14,000 to each grandchild for a total gift of $70,000 (If grantor is married and both spouses wish to gift to the grandchildren, then the gift amount can double to a total of $140,000 a year).

Today, I would like to focus on Kingdom Advisors (KA), the premiere organization for financial advisors in the area of biblically based planning.  Their website is www.kingdomadvisors.org, and they are located in Atlanta Georgia. Ronald Blue is founder and president of Kingdom Advisors. Blue, also founded Ronald Blue & Co., LLC  and  he has written 20 books on personal finance from a biblical perspective, including the best seller, Master Your Money.

One of Kingdom Advisors’ sayings goes like this, “You can be a financial advisor that happens to be a Christian, or you can be a Christian Financial Advisor.”  Nearly 8 years ago, when I first heard this saying, I was thinking this is just semantics or marketing. After a thorough investigation, what I discovered was that Kingdom Advisors (KA) contains much more substance and that I was wrong about my initial assessment.

KA is first and foremost a group of highly skilled and well trained financial experts that have invested countless hours and many years applying biblical truths to their  financial planning and counseling process.  Recently, Indiana Wesleyan University opened the Ron Blue Institute for Financial Planning, adding more credibility to the processes utilized at Kingdom Advisors.

Currently candidates must take and pass twenty courses in the Qualified Kingdom Advisor Core Training to become a Qualified Kingdom Advisor. Here is a partial list of course titles: Worldview, Work, Biblical Advice, Leadership, Life Planning, Goals, Stewardship, Giving, Lifestyle, Debt, Taxes, Insurance, Investing, Wealth Transfer and more. Here is the link for finding a Qualified Kingdom Advisor .

Let me take a minute to focus on the annual KA conferences, they are unlike any other financial conference.  At the conference the participants focus solely on Kingdom perspectives, with the why and how to apply timeless truths during this world of uncertainty and fear.  This year Rick Warren, Senior Pastor and Founder of Saddleback Church in Southern California shared with the conference attendees, that “it’s not about you”, the investor but  to “trust God and lay it down”. The conference is truly an enriching experience, I wish all financial advisors could see and experience it.

What impact does working with a Qualified Kingdom Advisor make for the wealth holders and helping with the investment decision process? In short, it is the questions asked and educational coaching process that encourages you to consider your own spiritual capital, that enrich the financial planning, investment implementation and wealth transfer process.

Facts for widows:

• 80% of women will experience widowhood
• The average age in America for a woman to become a widow is 57 years old
• The minimum life expectancy of a widow is 18 years
• 82% of widows now in poverty were not in poverty before their husband died

Knowing these facts should be a wake-up call to plan for your future. What should you do now to ease the difficulties?

Get the legal stuff together and organize it.  Update your wills, and then consider addressing the end of life decisions: long term care, and other critical health concerns, like life support.

Here are a few other tips:

Organize assets, insurance and retirement plans so during this stressful time you already have in place the ongoing process which will provide some direction.

Review group and individual life insurance benefits and determine if you have the proper amount needed to attend to your lifestyle or are adjustments needed to be made.

Know that Social Security benefit on your spouse will end, and only one benefit will be paid to you.  Plan for the income adjustment with education.

Have in place a trusted advisor or at the least interview a few different advisors and  seek to have a relationship as a contingency, this way you are not picking an advisor strictly on emotions during a difficult time in your life.

The Fivewishes program is a well recognized and helpful program, it’s a free way to help address some of these future issues; here is the link http://fivewishes.org

There is an old saying, In the land of the blind (majority of wealth advisors), even the one-eyed person can be king. Now I do not presume to be a king, rather I see my vocation as one of helping investors to see what can be done to improve the process of aligning their values, with their investment portfolio, and how that can be implemented in the area of using screening technology. With nearly 25 year to the exposure and implementation of screening for financial investments, and countless conversations with experts and investors alike, I believe I have the experience to talk with investors and to open up their eyes about this important investment tool.

Historically, the process of investment screening started when the Methodist and Quakers over 200 years ago were approached by large trading companies, that were in the business of slavery, in those days slavery was very profitable. The Methodist and Quakers took a stand against slavery and encouraged others to not invest with the “Trading Companies” that were participants in slave trade. It took time but others followed suit by not investing in these companies and then the capital markets (banking), quickly dried up for a once very profitable business venture and eventually the end of slavery.

Why screen your investment portfolio for negative issues?  What is a negative issue for you? Does it really matter to you?  Or is this just another gimmick to give investment professionals the opportunity to call something more custom?

What would you do if…? Your mother or father died of lung cancer at an early age and now you are angry at the tobacco companies. Do you wish to have your hard earned investments be associated with any tobacco companies; even inside your mutual funds, annuities and stocks.

That was just one example of a negative societal issue, there are countless others; pornography, abortion, human trafficking, alcoholism, environmental.

According to Accion, an international microfinance organization, nearly 11 million micro-enterprises in the U.S. are not able to acquire loans through traditional means.

How are these loans being addressed here?  Community Development Finance Institutions a.k.a. CDFI.  Many of the CDFI programs have been pioneered by Credit Unions and are still highly supported in the Credit Union community.  Some of the other participates are banks, community loan funds and specialized bank like Grameen Bank.  Grameen Bank has even opened U.S. branches as well.  Calvert Foundation is another major advocate and provider of loans as well. Look locally for a community loan fund in your area over the internet.  Realize most of the funding is for lower income housing, however there are opportunities for business start ups as well.

Business incubators are another potential source for connecting angel capital and non-traditional finance.  If you have a business doing “social good” there may be some other options to explore like “B Lab” or B Corporation can be found at www.bcorporation.net . Inc Magazine ran article on Hybrids.  Real wealth creation is in and through businesses and not through governmental projects supported by taxes.  There has never been a greater need for capital to fund businesses.  Urge your friends seeking capital to look at these alternative methods to capitalize their businesses or projects.

I have asked several savvy business owners that own various precious metals and all of them indicated to me they like silver the best.  When I asked why, they all were quick to state silver as less likely to be manipulated price.

If you are inclined to buy a metal, then consider silver as first choice over gold or other metals is what others in the know tell me.

How can you be reassured that the benefits you chose when claiming Social Security Retirement are the right choice for you?

Four years ago I would not have known, what was a good choice, let alone the best option for your election of benefits.  Today, I am informed and equipped with software that does the tough calculations and provides three different options for claiming your benefits. Getting your options stated clearly on a page, is great start to making a wise decision and good stewardship for your future.

Most financial industry advisors do not realize that claiming Social Security Benefits is not just about WHEN, but HOW and which claiming strategy is implemented.

The WHEN only deals with the date you decide to claim.  The HOW looks at the 9 ways to claim and how to avoid improperly leaving money on the table, which in all actuality is a financial loss that can be avoided..  For example, if you simply state I will wait to age 70 to claim to get the largest benefit possible, you are likely leaving between $25,000 to $40,000 on the table unclaimed and lost forever.

What can you do to fix a previous mistake in Social Security?   That answer depends on the length of time from claiming your benefits. They may include: 1) Pay it back. 2) Go back to work. 3) Voluntary suspend. 4) Maximize spousal benefits.

For more valuable resources check out our blog category “Social Security”.

Why is it that the medical community advocates screening, while the financial community rarely even mentions the ability to screen your investments?  First, medical professionals are sworn to an oath of seeking to do no harm and to place the individual’s health and wellness in front of their own agendas. Early detection of most illnesses provides the best opportunity for professionals to treat with greater success and to help ensure better overall long term health.

In the heal thyself community, the idea of being aware of your body and when your body is in or out of physical alignment takes some intentional and  personal inventory of yourself and your values. Mental health counselors tell us that we are moving either towards mental illness or towards good mental health, I prefer to move towards good mental health and good physical alignment.

Over the past 27 years, I have heard a lot of excuses for the reasons there is a lack of or refusal to screen investments within financial services industry,.  Here are three of the more common excuses or myths I have heard are: 1. When an investor buys a stock in the secondary market defined as New York Stock Exchange or Over the Counter( OTC) Exchanges the money is simply exchanging hands from one investor to another. 2. That one individual’s or an organization’s money does not matter in the big picture (usually too small and insignificant). 3. That the professionals that do market their screened for values mutual funds or managed money as are using it as a marketing scam to trick people with an emotional appeal.

Many advisors argue that if you apply any investment screening, the opportunities to invest will shrink dramatically and reduce returns. While other advisors say let the professionals handle the details of managing the risk and focus solely on the  best returns without hampering the investment selection process.

Not unlike the heal thyself community above we should be acutely aware and intentional in our actions when partnering or investing our money with companies that profit from values that run exact opposite of our personal values. Perhaps we should follow Hamlet’s advice when said, “to thy own self be true.”

Why does screening matter?  Here are three three main reasons for screening: 1. You matter and your values matter and that should be seen in the way you invest your money, being true to yourself is a gift to you and an example to others(children). 2. You are a leader and influencer and leading in fighting for a cause or standing against a harm such as pornography matters to your community. 3. Screening is another way of taking a stand against evil and the harm it does to our community and society. Being being proactive and supporting good causes should matter to everyone.  What if no one stood up against Hitler?  What if your mutual fund manger bought millions of shares in a corporation that was known for dumping toxic waste in foreign countries and killing thousands?  Would it matter?  In the early days of the abolition movement in both England and America, it matter that some refused to support Slavery, and by not investing into those Trading Companies that permitted slavery, helped bring about the end of slavery.

You as investor can and will be empowered by engaging in the screening process for your values. You will have the satisfaction of knowing that you are only supporting the industries and companies that you value and believe are helping our society. This will result will be greater joy and peace.

Believe your own feelings and ignore the financial services response to the question of screening your portfolio for your values.  When you hear the advertisements for custom investments, find out if the company will screen, clean and pick a portfolio to reflect your values  that you state are most important to you or your organization. This is especially important for investment trustees of foundations and non-profits.

Screening matters to those with values that matter.  Stewardship of resources does matter and directing a tool like your money and investments will be a vote for your values.  Just like medical screening what we do next with the information determines the impact.

Enhanced found money would include niche planning, maximizing benefits from Social Security and doing advanced estate planning for your donor’s, that includes charitable gifts.

Extreme Found Money would fall into a couple of categories: 1) wildly and unpredictable windfall such as a donor that wins the lottery, or some other expected or unexpected gains, and is generous to a nonprofit. 2) The other is a predictable dedicated future income stream on an irrevocable basis, producing a large sum of money without costs to your donor or their family. The latter category is not designed for every organization or just any nonprofit group.  It is for a non-faith based nonprofit that has been in existence for several years, and has a strong older donor base.

What excites me most about “Found Money” or “Enhanced Found Money” or “Extreme Found Money” is that it does not have to distract or burden the nonprofit and its limited resources.  There is one factor that must happen for any of these to take place, which is engagement between development officers and their donors with conversations and education.  There is not a short cut here, how one gets into communication and conversation with their donors is more complex than this one web post can handle.

My clients went on to tell me some amazing stories about their “extreme coupon” games and savings.  I could not believe it, there in front of me were receipts for local grocery and convenience store with savings beyond explanation.  Spending $2.17 and getting $70+ dollars in consumable goods! Today another friend described to me how she buys items for her church pantry and for the same dollar she spent before couponing, she now delivers 300-400% more goods to the table for the same money.  I thought what a great idea and example of Found Money, so I decided to mention couponing as part of my stewardship writings and as a financial strategy to stretch money.

Last summer, I was thinking about the wear and tear on my vehicle as I would drive 1200 miles round trip to drop my boys at camp.  I rented a full sized car with better gas mileage than my vehicle and with a coupon rented the car for less than $70 for the weekend trip.  The savings in gas almost paid for the rental on its own; throw in the wear and tear I saved and it was a slam dunk winner in the financial savvy decision arena.

Another friend Meri saves hundreds of dollars each and every month on items she routinely uses at home by using coupons.  I reminded her that the U.S. Treasury is not sending her a tax bill for the savings either.  Think about the money saved by couponing as tax free income, Found Money, which now allows you choices in your giving and spending.

There are clubs and saving circles with websites that discuss couponing strategies and ideas as well.  Here is one called the Extreme Couponing from The Krazy Coupon Lady.  This site has current recommendations on huge savings deals going on right now for those wishing to join the pack. Every major manufacturer as well the major retailers has coupons on their sites as well.

If you are a non-profit board member, you may consider getting some others around you to save and give from the savings to your cause, or suggest it as a fundraising strategy to your non-profit.  Like the pantry stocking example above there are really wonderful ways to enhance others lives with Found Money.

A. Taxes and Investment Losses

Another way to consider this question is: “What causes the uncertainty in your financial world?” Next, what is the typical response to uncertainty in our lives?  Fear and a focus on survival are the natural response.

What if you could save for the future with 100% dollars and never incur investment losses and take a tax free income?  Sounds impossible and it was 30+ years ago.  This is what I would refer to as Life Income Stewardship.

Life Income Stewardship focuses on helping you keep whatever you make.  Never a negative return and yet an opportunity to participate in the market lifts, especially when inflation attacks. How can there never be a negative year? Annual reset on index as opposed to actually investing your money into the stock markets. How could it possibly be tax-free income? well contributions are after tax and so the amount put in (known as basis) can be taken and in addition there can be other distributions taken in the form of a loan without taxes.  No downside and no taxes with this unique structure of indexed life policies (also known as fixed indexed, or equity indexed) that are properly designed to provide income in effective way.  Not all states permit such polices and they do vary from company to company.  Know that there are strategies that many in the financial services community are not educated to share with you.  I was fed misinformation by friends, vendors and others not educated on such strategies. I was told that the fees are too high to make any money.  I was told that the indexes are really not real money and real gains and only creative accounting.  I was told that all the rules of the contract could be changed at anytime.  I was told that insurance carriers know very little about investments or markets or indexes and should not be trusted.  I was told that other products would provide more return and much greater opportunities and worth taking on the risks to ride the market swings.  I was told that no one could really understand these policies and the features and riders they offer and then cite some odd rider that made no sense as their justification not to explore any of these indexed products.  I was told by more than a few that indexed products would need to be reviewed and approved and controlled by the securities compliance people at the broker dealer level and was not a fixed life product.  What I found was yes there was a lot of confused agents and consumers scared to learn more.  I found real risk management and ways to reduce and control expenses that made such indexed products look more attractive than what I had been hearing. A big ah ha moment was when I understood the annual point to point reset and it’s ability to lock in gains and never go negative.  Understanding fee spread or margin verses straight fees was another helpful insight.

Such a strategy is not appropriate for 100% of anyone’s finances, but is very compelling strategy to divert taxes and losses.

Why not consider protecting the foundational money in your life?  By protecting assets in one area of your finances it allows you the opportunity to take on risks with other assets.  How are you reducing taxes and investment losses in your finances?  How are you reducing future taxes from your greedy relative Uncle Sam in the future? ROTH IRA, Municipal Bonds and Life Insurance are three efficient strategies in the Life Income Stewardship approach to wealth creation and protection.

I recently have been reminded of several camping and canoeing trips I took growing up in Florida.  I believe deep inside all of us we crave pure clean water and the beauty it provides us as we stare at it and watch the sun glisten off of it. This explains the crowds that visit water falls around the globe. A good question is how are we doing in light of the Cornwall Declaration?  What does good stewardship look like to you and what is one small step you can work towards to be more intentional caring for our environment?  Hollywood has been offering up several children’s movies stressing care for the environment.  The Lorax comes to mind of recent children’s movies.  A few years back the Lord of the Ring’s The Two Towers had an incredible scene of trees that walked and talked and had feelings.  The trees in fact helped fight against evil in war and were a force to be respected.  Another TV commercial I recall as a youth was one in which a Native American was crying over the pollution of sky and water in modern society. Being aware of what is going on around us is important start towards good environmental stewardship, it does matter to you and those around us.  Environmental stewardship starts with each of us, hear this; that caring for our environment is more than the recent movement or businesses trying to capture dollars in the green sector.  Each of us can do our part and it is not something a group of radicals is telling you to chase and pursue. Each one should search out what you should do and not be led by guilt or emotional pleads, rather from your own personal convictions to take one step in the direction of caring for your community. Caring for our communities is financially important at many levels- access to clean and healthy environment promotes health and productive lives.  Normal should not be the masses sitting in a waiting rooms of doctor offices and hospitals.  It matters to all of us.

I started this tradition in 1997 after I listen to Jim Rohn talk about the power of journal process in his life.  Not a dear diary, rather a way to capture thoughts and ideas and re visit them and use them and implement them.  I met Jim several years back and talked with him about his influence on me and my new found ability to act on thoughts and ideas using my journal.  I will not forget the look in his eyes and passion in his voice as he encouraged me to keep at this unique skill as it would serve me well.  I expect to journal the rest of my life. To me it is good stewardship and investment in my life.

We leave photo’s behind but do we leave behind our thoughts on paper or on audio or video?  Be intentional this coming year by writing down thoughts and ideas and then test them.  Discuss with your mentors or trusted advisors your ideas.  It does matter and you will reap the rewards.

When looking at a Insurance carriers’ Indexed Products, perhaps the ratings mean less. The most important aspect of choosing the right insurance carrier and its’ indexed product, is not the carrier’s rating for core financial strength, though this important for overall stability, rather the experience and ability at delivering on the managing of the indexes in the company’s portfolio.

Managing indexes is similar and yet unlike managing money for mutual fund industry.  It is similar in that trades are made in the capital markets and seeking combinations of indexes to reduce risk and increase returns is to optimize overall results.  Managing indexes is unlike mutual funds in that size does matter when executing trades and the costs associated.  Financial hedging used in the indexed products is much more efficient when done in very large numbers and more frequently.

Small insurance carriers are entering the index markets daily with a big disadvantage from the larger more experienced carriers such as Allianz and Aviva.  Allianz in Minnesota will trade on a typical day in excess of $1 Billion in indexes and hedges. While many of the other carriers may only do that amount of trading in the period of a quarter or even a year, even large carriers with big household names that have recently entered into the index markets are limited.

Smaller carriers hold money often for days, maybe weeks  in order to combine with other funds to make a trade, and the insurance companies new to the index markets are outsourcing and trading perhaps once a week and sit on the money without a true picture of what actually happens.  We have all seen the studies where if you miss a certain number of days of the upswings in the market over a long period of time the results are dramatic.

If you looked at a bank’s or brokerage’s financials when buying a mutual fund it would seem silly.  The same can be said for indexed performance compared to an insurance carrier’s financials.  Financials with carriers are significantly more important when looking at guarantees and fixed or stated dividend history. I believe choosing A- carrier over an A or A+ carrier is prudent when the A- carrier is vastly more experienced and has shown results in the indexed markets. If the index is the key determination for your purchase then how it gets implemented matters to you and your family.

Hear me out, I am not suggesting choose C rated or non rated carriers, rather do not let  A+, A- verses B+ rating sway you when you are ready to choose a indexed carrier.  There are other considerations beyond the index when choosing a life or annuity carrier, and there are policy Riders that can address your concerns and needs. Perhaps there is more to the comparison than the ratings.  Overall stewardship of the carrier’s operations, financials and commitments all matter.

If you had an opportunity to invest with a friend and they told you about the potential returns and they were involved in the investment and all the numbers sounded good to you would you invest?  Now, suppose they mentioned to you this was a business that promoted pornographic materials or it violated environmental laws, but because it was hosted in another country it is legal.

Does it matter how you invest is a question that has been around a long time but rarely gets serious attention.  The Quakers in late 1700′s refused to invest into the slave trade.  The Methodist also have not only avoided slavery, but other concerns like pollution, excessive interest charged and gambling.

Does it matter if we support a business that is know for doing harms to others?  Does it matter not to speak up when an employer is violating pollution laws?  Does it matter when we invest into a mutual fund that buys into vices and profits from companies that in fact use slaves in 3rd World Countries and damages the environment?  Does it matter for a pension to invest into businesses that profit in gambling, and other moral issues like pornography?

Think back if there was ever a time when you were offended by a business owner and vowed not to do business with them again over conflicting values?  Or perhaps you’ve read some disturbing news on a business and decided to not darken the doors of that establishment?

It did matter for several to speak up for slaves in North America and was part of the reason for civil war here along with taxes and miss aligned expenses and fees levied on South to support the North.  Pressure on investments in slavery was part of the making it right and ending slavery here.  Lincoln the movie did not address the money side of slavery but was amazing for the close captions and great drama to make us feel like we were transported to the era. Currently there are many groups that advocate for the voiceless or unrepresented. GMI Ratings is one of those groups looking at social issues, environmental issues.  BRII is a group looking at moral breakdowns in corporations and even what types of charitable contributions a corporation made.  MSCI is a major global power house when looking at screening global corporations.  There has never been in the history of the world more eyes and resources addressing morals, social and environmental issues.

Consider screening your values inside your investments and then cleaning them up as well.  It is a very small number of companies that violate the  values of most investors.  There is a disproportionate of the violators that are large corporations compared to smaller sized corporations.  Ask your advisors if they have a way to screen your mutual funds or other holdings?

Does God care how you invest?  I think you can find the answer to that one on how you did with the questions above.  I have posted a You Tube Video to educate viewers on what is screening and how does it take place called Screen It Clean It.

Social Security 2% tax cut to increase from 4.2% to 6.2% starting 2013.  Great time to review you pay stubs now and in 2013 for the changes.

7.5% Medical Expense Deduction threshold is increasing from 7.5% of your adjusted gross income to 10.5% in 2013 for those younger than 65.

Preferred Dividend Tax Rate is only 15% and scheduled to go up to ordinary income rates and max of 39.6%.

The Adoption Credit of $12,650 is going away.

The $2500 American Opportunity Tax Credit to offset college costs also expires after 2012.

$1000 Child Tax Credit will be reduced to $500 in 2013.

Lastly, the use of deductions and exemptions will again be phased out as your income increases.

Know that these are only a few of the issues each of us will need to address as Congress meets and turns of this into a political side show.  Bottom line is we all need to pay closer attention to tax issues in 2013.  Even those that have been in the 10% lowest bracket will now see a 50% increase in taxes as the lowest federal income rate will be 15%.

In 2013, you are allowed to earn up to $15,120 before benefits are withheld. For every $2 you earn above the exempt amount, $1 dollar will be withheld. This applies to all years leading up to the year in which you attain your full retirement age. During the year you attain your full retirement age the exempt amount increases to $40,080 and for every $3 you earn above the exempt amount $1 will be withheld.

What is considered income?

If you are employed by someone else only wages are considered earned income for the purpose of the annual earnings test. For people who are self employed only net earnings count. It is important to note that employee contributions to pension or retirement plans are included in gross wages.

Income that is not counted as earnings include:

• Government benefits
• Investment earnings
• Interest
• Pensions
• Annuities
• Capital Gains

Self employment income is counted during the year in which the earnings are received while W-2 income counts when it was earned.

Special Rule

For people who file for benefits mid-year and have already earned more than the exempt amount, the monthly earnings test is applied. For any month during that first year that you earn under the monthly exempt amount, you will receive your full benefit for that month, regardless of your earnings before you filed for benefits.

Check out our other post on www.stewardshipmatters.net and go to category of “Social Security” under the “Blog” title on home page.  We also have a free calculator on the home page on the right side to determine what is at risk?

Senior Market Advisor did a survey of advisors working in the senior market in 2012.  In the 2011 study advisors indicated that 64% of their clients were concerned about economy and 52% noted healthcare as major concern.  2012 the healthcare numbers rose to 62% while economy drop a little to 61%.

Ohio State University has a study they do on what makes seniors happy and they have been doing this extensive study since the mid 1990′s.  There are 4 major things that are consistent over the years that make seniors happy.  What are they? 1) Good Health 2) Mobility 3) Socialization 4) Secured High Income.

I have read a few other studies and have a compiled list of major concerns for those approaching retirement now.  1) interest rate rise and negative affect on bonds 2) inflation increases and less purchasing power 3) equity markets fall (run up since March of 2009 of nearly 100%) 4) What if I really live much longer than expected? 5) What if I need access to cash and I have invested into products or markets that are not friendly to withdrawals?  I have read several articles stating that boomers are having a tougher time writing checks to charities and they would be willing to leave assets to charities when they leave this earth.

You as a donor or your favorite charities may want to consider bringing in an experienced partner to the gifting process.  Donor Advised Funds or Community Foundations.  The level of experience in dealing with the following transactions varies greatly from one institution to another.

Many argue that volatility is the biggest risk of investing.  The following shows this is simply not true if no distributions are being taken. Notice we flipped all the returns of 1980-2010 on the table to the right so 8.12% on the right was 2010 return and the 25.77% (1980 return) is sent all the way at the bottom of the right table.  Right side runs out in 11 years (unlucky) Interesting that if no distributions then no effect on the values.  Bottom line is you can change the order of the returns anyway at all and it makes no difference on the end result if no distributions are taken.  Now look at the Sequence of Returns Risks below and notice it matters.  Lesson learned is that it does matter about controlling the downside risk and even more so when taking out distributions.

1) ROTH IRA proceeds for those over age 59 1/2 is one source of tax free income.

2) Municipal Bonds interest is tax free from federal, however if you have State Income Tax, then you may need to purchase municipals in your State to avoid the State Tax.

Other Ways:

Life Insurance proceeds in the form of withdrawal distributions of basis.  Also loans well planned and designed to provide income are considered tax free income- they will need to be paid back in the future often at the time of death.

Coupons that save you money are not counted as taxable income therefore are in a sense tax free income.

Loan proceeds could provide income and not trigger taxes but not without limitations-consult your tax professionals.  Home Equity Loans up to $100,000 are one possible way.  Above $100,000 access is considered risky advice according to my friends.

Here are few real life examples that should serve as a warning to those thinking estate planning is something you do AT SOMEONE.

(Names are changed here )

Sue and Betty are sisters and best friends through college and beyond.  Sue the older sister always looked out for your younger sister and when mom died and dad was sick Sue decided to take more on more control.  Sue paid herself fees for oversight of the banking and other issues of looking after dad and the estate.  Betty was struggling and recently divorced and asked for some help to which Sue withheld.  Betty started resenting Sue and her financially well off marriage to wealthy businessman.  Dad died and financial assets were split equal between Sue and Betty. Sue did manage to get some personal items Betty wanted.  Almost 20 years later the sister hates each other and will not speak to each other.  I worked with one of them and watched a highly educated women take on a bitter spirit that nearly drove her crazy. She is starting to recover some 20+ years later but still not talking to her sister (her only family member).

Dan and Dana were both married a second time and doing well.  Dan was doing well in sales and marketing and Dana living on assets from a first marriage.  Both had children in the first marriage. Dana was trustee for her minor children’s trust and as such was allowed significant trustee fee of six figures.  The children now majority age and demanding use of assets and control and fired parents with major rift and harsh words.  Trustee fees are now with corporate bank collecting and children and parents fighting over how things have been handled.

Uncle Bill leaves money to nephew and niece in equal amounts at majority age 18 in Florida. I watched both deal very differently with the money and the impact is still rough on the survivors many years later.  Claire and Jim handle the inheritance very different. Claire buys a practical house and saves most of the money she inherits while Jim decides this is his chance to wine and dine the ladies and over a period of 7 years blows through high six figures and kills himself with drugs and alcohol and dies at age of 25 miserable.  It broke my heart to watch and not being able to do anything. I do not think Uncle Bill had this in mind when he left the money unconstrained and free to his extended family.  Bill’s brother is still alive and heartbroken over the loss of his son and Claire views Jim’s lack of financial discipline as a curse on the family.

Joann has married a successful real estate broker Carl.  Carl manages several commercial properties.  Carl has a stroke and goes into a comma and doctors tell Joann and the family to expect the worse.  Joann does not suspect it but Carl’s older brother tries to step in and take over all the real estate assets because when Carl was single he told his brother handle his finances if anything were to happen.  Carl later marries Joann and now she is in charge and is shocked by the brothers attempt to take over assets for him and others in the family.  At first I thought this seemed abet extreme and then in sharing the story with other advisors found it to be more common and not an extreme case.

Two brothers and their sister are the heirs to a successful manufacturing company.  The brothers are active in the business and have been for past two decades and the sister is expecting cash for her one third share of the business.  The problem is the business cannot afford to pay her cash and still survive the stress and no bank will lend that amount of money and the debt levels would be too great.  The brothers blame their father for lack of planning and their sister for her strong and immediate demands for cash.  The business fails and the sister got her funding and the brothers became bitter and broke in the process.  None of them talk to each other hurting one another.

Nicole and Sarah are sisters.  Sarah lives in town with parents and cares for them over the final decade of their lives and graciously cares for them and gives of her own money providing for their medical needs so as not to touch any of her parent’s investments.  Sarah depleted her own assets caring for them and when they died she assumed the parents will was listing her as was a few conversations.  Reality was all the assets were held jointly and mom and dad both died within a couple of months of each other.  The problem here was expectations like many of the conflicts happening in families all around the world.  Nicole gets half and Sarah knows about many conversations that never concluded in real planning and implementation.

One of my friends tells me his definition of a successful estate plan is one where all the family members are hugging each other 6 months after the death.  Warren Buffet says I want to leave enough to my heirs they have “enough to do anything, but not so much that they do nothing.”

Clear communication and review of assets are great first steps towards this success.  Doing nothing to plan generally leaves others in pain.  Planning and implementation do matter.  You matter and what you do with your life matters.  Stewardship does matter.  Plan in light of what is best for others and not at them rather with them or for them. Be careful not to give false expectations towards money and assets or things.  Over the holidays are family times to encourage more open conversations about the “stuff”.  Many adult children as their parents what are your plans for the future and the homestead?  Never push rather asking questions tends to work better.  Invite the conversation without expectations is a good place to start.

Benefits of a Life Insurance Trust

• Provides immediate cash to pay estate taxes and other expenses after death.
• Reduces estate taxes by removing insurance from your estate.
• Inexpensive way to pay estate taxes.
• Proceeds avoid probate and are free from income and estate taxes.
• Gives you maximum control over insurance policy and how proceeds are used.
• Can provide income to spouse without insurance proceeds being included in spouse’s estate.
• Prevents court from controlling insurance proceeds if beneficiary is incapacitated.

Myth 3 Life Insurance provides 100% tax free income when taking out gains.  Not always as some policies are overfunded and become a Modified Endowment Contract or MEC.  Others are taking distributions as withdrawals and not loans and could be subject to income taxes.  Generally speaking distributions are tax free and insurance proceeds are generally tax free.

Myth 4 Life Insurance and annuities are asset protected.  Some state like Florida allows life insurance and annuities to be asset protected and some states do not allow protection.  Check with your state insurance commissioners.

Myth 5 Life Insurance Trust is fixed and set and not able to change over time to meet other goals like access to funds.  Many life insurance trusts are set up as rigid bucket and little changes over time in order to be most conservative and to provide for heirs in tax free manner.  There are trusts being set up in recent years to reflect more flexible approach to planning.  Spousal Access Trust, or Ultimate Life Insurance Trust are making the way to more publications and into more estate, retirement and asset planning.

Decisions made- set Direction and determine Destination.

Think- Believe- Act

Thinking and believing is not enough.

Conversion of head, conversion of the heart, and conversion of the purse.  Martin Luther on the three conversions.  He went on to say the purse was the hardest of the three.

Know- Believe – Do

Know where you are going

No decision is a decision

It takes courage to take the first step.  It takes conviction and discipline to continue the journey.

Spiritual goals with no human effort is just a goal.

Old Chinese Proverb:  The Best Time to Plant a Shade Tree was 30 years ago.

Shakespeare in Hamlet declares “To Thy Own Self Be True”.

Live into your best.  Serve others.

Act justly, love mercy and walk humbly.

In order to think and believe properly you want to listen and observe others worth listening to and capture thoughts in journal. Review the journal and look for passionate connections to you and your favorite things/people/events/places.

The biggest concerns are with insurance filings.  If you had a cloud secured vault of documents then driving to a place with power and internet connection could speed the access and reduce the frustrations in getting documentation.  If you had docs on the cloud and had legal, financial, or other pressing issues with the need for proper documents, those prepared ahead could be on the road to recovery faster than those with all their docs sitting in a safety deposit box in a flooded bank.

New Jersey’s Dept. of Banking & Finance has some guidelines for ensuring insurance claims go smoothly. They include:

• Assess the damage and make a record. Arrange for a qualified person to make temporary repairs to secure the property.
• Be fully aware of what is, and what is not, covered in a client’s policy.
• If a client needs temporary lodging, make sure all expenses are recorded.
• File in a timely manner – most insurance companies have deadlines for filing.
• Try to be present when insurance claims inspectors visit the damaged site.
• Beware of fraud – after a disaster, it is common for less-reputable businesses to offer their services. Always check for licensed contractors and get a written contract before any work begins.

It does pay to be prepared in time, money and stress.

With medical advancements many can expect to live beyond 100.  What I envision are many baby boomers surprised how long they will live and with longevity they will be wishing for high sustainable income for life.  Experiencing many changes (health, spouse passing, other events) along the journey towards age 100. With changes inevitable having a flexible option called” insured retirement solution” strategy could deliver really big on the conservative scale.

Hallmark cards has several birthday cards for those 100 and older.

The Society of Actuaries in 2000 determined that a healthy couple age 65 has 57% chance one of them will make it to age 92. And nearly 12 % chance of one making to age 100.  That is 35 years in retirement and a lot can happen and will happen over that time.  Inflation alone will be a major factor in meeting needs.

If you have access to 401h plan to fund it before you retire it could serve you well.  Tax Deductible plan that grows tax deferred and if used properly to pay for medical costs then all the payments could be tax free as well.  Think of it as a ROTH IRA for medical expenses.

What would happen to your purchasing power over 35 years at 4%?  Well $2,000 today 35 year from now at 4% inflation would be $506 or about 25 cents on the dollar.  Can you see why it is prudent for professionals to ask near retirees and retired to consider the affects of inflation?

Assets that generally work well in inflationary times: real estate, gold and other metals, commodities.  Some newer inflation indexed products tied to CPI such as TIPS, structured bonds, and annuities are creating more certain results as they are tied directly to an index.

Here is a powerful prayer called the stewardship prayer.  My friend Jay Link turned me onto it earlier this year.  ”Lord, what would you have me do next with all that you have entrusted to me?”

What has worked for me is  read a few scriptures and think about how blessed I am.  Note the little things I over look like clean water, and safety.  Then meditate on God making it all and allow me to manage or steward it.

I would challenge you to pray this prayer for the next 30 days and also to put a blank paper with pen in hand and ask what would God have you do next? Write down whatever comes to mind to be a blessing to others. Call, write, give, share, make, do, see, ask, or pray.  It it amazing how making yourself available to be there for others and think and pray about it opens up opportunities to serve.

To better understand this situation and the causes for it, consider the following staggering statistics:
• 80% of the US farmlands are being used to raise food for the animals that we eat. (Major Uses of Land in The U.S.)
• 30% of the world’s entire landmass is in production to feed the animals that we eat. (Livestock’s Long Shadow)
• 70% of all grain grown in the U.S. is used to feed the animals that we eat. (Plants, Genes and Agriculture)
• Nearly 50% of the fresh water used in the U.S. is used to raise the animals we eat. (The Food Revolution)
• It takes about 2,500 gallons of water to produce a single pound of meat. It takes only 25 gallons of water to produce a pound of wheat. (Newsweek)
• Animals raised for food produce about 130 times as much excrement as the entire human population and animal farms pollute our waterways more than all other industrial sources combined. (U.S. EPA)
• More than a third of all raw materials and fossil fuels consumed in the United States are used in animal production. (Ecological Cooking)
• Seven football fields of forestlands are being bulldozed every minute to clear more room for farmed animals and the crops that feed them as emerging nations adopt our western, meat-eating diet. (Smithsonian Institution)
• It takes 16 pounds of grain to produce one pound of meat. (PETA)
• It takes four acres to feed a meat eater and only ½ acre to feed a non-meat eater. A ½ acre can produce 5 tons of apples and ten tons of potatoes. That same ½ acre can produce only 100 pounds of meat. (FAO)

I have been eating less meat over the past few years and finding other ways to get the protein my body needs.  It is good to look at how we live and ask questions on what could we do to improve.

The hurried culture of fast food drive through meat consumption along sugar drinks are expected to yield more health and environmental problems.  Try cutting out sugar drinks for 30 days and see if you do not feel better I did a few years back and rarely have sweet drinks.

1) Set aside proper time in your calendar. (2-2 1/2 hours is reasonable expectation)

2) Have your proper identification (Driver’s License, SS card, Passport if used as your ID) and if married have a copy of your marriage certificate.

3) Take materials to read or things to do and it may be that you are asked to leave the building if you are thinking of making calls on cell phone.

4) Know that there are several options to choose from and the SSA agents are not allowed to give you advice, just as the I.R. S. agents are not allow to provide advice on tax planning.  In fact site www.ssa.gov clear states that advice is not given my agents.

5) Getting clear on what are the costs to you and your spouse in the long run are important decisions and one of the bigger financial decisions in your life. If you have any dependent under age 18 at home or adult aged child dependent on you due to a disability there could be money available for them as well.

6) Your health and life expectancy are an important part of how you and your spouse plan for your benefits.

7) Know that the statements online or in the mail are not reflecting your true income between now and retirement. Inflation or Cost of Living Adjustments are not factored in the calculations. Spousal and elections that often add significantly to the household are not addressed on the statements.

8) Get clear on widow and widower benefits.  Both benefits do not continue for married. If you are already widow or widower then you could file for benefits as early as age 60.

9) There are multiple ways to claim and the claiming strategies if properly done can yield tens of thousands more to your family.  Strategies such as “restricted” or “file and suspend” are two of the switch strategies.

10) Realize that if you simple are planning on delaying to age 70 for both of you then you are leaving a significant amount of unclaimed money on the table.

11) If you claim early then you may be leaving some significant money on the table especially if your are healthy and expect to live a long life.

12) Get advice and get informed so you can make the best decision based on facts and not based on another retirees experience.

Here is the link to free calculator- click “no thanks” when asked for help if you want to do it yourself. Social Security Timing .

Why do couples or individuals choose to buy a SPIA? Number one reason is highest cash flow with little to no risk and option to pay for life. Another popular reason is simple to know how much is coming in regardless of what the stock and bond markets or CD rates do.  Another way to look at the SPIA is to think of it as a private pension just for you or you and another person.  Joint life income does not mean you have to be married or related to the joint annuitant.

Why not buy a SPIA? Limited choice, once you start the motion the contract and payment are set and fixed.  Let’s say you retired and decide to fund a SPIA with 33% ($100,000) of your total investments ($300,000).  Your married and next year your spouse passes away.  Well the SPIA choice you made was for joint life income and now one of you are gone.  The joint life SPIA payout is less than single life payout and now your single.  If you get remarried the new spouse will not be able to be a part of the cash flow unfortunately.  Another situation is both of you pass was early and you did not elect installment or lump sum refund option and now there is nothing left for your heirs or charity.

While Single Premium Immediate Annuity is fairly simple to understand the basics there are a few other considerations like health or passing of spouse.  One possible solution around the inflexible nature that exist in SPIA is to utilize an annuity with life income option that does not lock you in from future changes.  It will pay a little less, but offers up ability to change multiple directions. So if you got remarried then getting the new spouse on as joint is possible.

The American College has some educational videos on annuities and the link to the left is one of their videos on how annuities could fit into retirement planning.  This 22 minute discussion covers a wide range of ways annuities are potentially utilized.

2. Longevity Risk — outliving your life expectancy and livelihood resources.

3. Excess Withdrawal Risk — encroaching the principal of your investments due to excessive withdrawals made, and/or too low interest rates due to slow economy or recovery from recessionary periods.

4. Market Risk — stock and bond market fluctuations.

5. Lifestyle Risk — too much debt or commitment of funds to taxes, maintenance of assets, insurance and other financial demands.

6.  Sequence of Returns Risk — receiving negative returns early on can have dramatic affect on ability to withdraw funds and often run out of money in the process.

7. Medical Expense Risk – medical and out-of-pocket costs can dramatically increase, largely dependent on how healthy or unhealthy we are as we age.  American College estimates are healthy couple age 65 can expect to pay out of pocket $290,000 between the two not including nursing home costs.

8. Tax Risk — increase in taxes, increased tax bracket, loss of deductions or new tax fees may not be referred to technically as “taxes”, but the net effect of these changes still decrease or deplete our financial resources like taxes.

9. Incapacity Risk — legal costs, nursing home care, home health care and/or caregiver expenses.

10. Personal or Event Risk — loss of spouse or loved one. Children or grandchildren needing help. Liability event such as damages beyond insurance coverage.

11. Asset Allocation Risk — poor allocations or lack of planning earlier in life of financial resources have major impacts later in life.

12. Entitlement Risk — Medicaid, Medicare or Social Security and the risk of these governmental programs.

How will you and your advisors deal with inflation over the next couple of decades?  Ask your trusted friends or consultants if they have clear way to address inflation and income for life? Do they have a way to lock in the Consumer Price Index for a long period of time?  In future blogs we hope to bring multiple ideas that will provide you solution alternatives with clear education. Think of the word “stewardship” in the context of manage, plan and administer.  Stewardship does matter.  How you deal with these real risk matters to you and your loved ones.

Very few are talking about the 401h plans and the ability to allocate part of retirement saving towards medical costs.  What makes this significant is the contributions are tax deductible like that of other pension retirement benefits and both grow tax free, but the difference is 100% tax free distributions from the 401h Plan.

What that would look like is the follow: you fund a portion of the overall retirement plan to pay for future medical costs.  Instead of needing to take $15,384 from the retirement fund to provide $10,000 of medical expenses you would only need to withdraw $10,000.  If top rates are going up then it only makes 401h plan look even better.

I suggest as you talk with your financial advisors, accountants and business consultants to consider this as one of the viable options on the table.  With medical inflation above others costs measured in the CPI generally here is a link for CPI medical. http://www.bls.gov/cpi/cpifact4.htm  And I recommend you check out some of the other interesting CPI stats on the Bureau of Labor Statistics http://www.bls.gov/home.htm

In order for the 401h plan to qualify for tax tree distributions their are key points that must be met:

The main tax-law requirements for Section 401(h) plans are as follows:

• The plan cannot discriminate in favor of officers, shareholders, managers or highly compensated employees (HCEs) pertaining to coverage or contributions and benefits.
• The plan assets can’t be available for any purpose other than providing medical benefits under the plan. (Payment for reasonable administrative fees is permitted.)
• The plan must specify the medical benefits that will be available and contain provisions for determining the amount that will be paid. These benefits, when added to any life insurance protection provided under the defined benefit plan, must be subordinate to the retirement benefits provided by the plan.
• A separate account must be established for the contributions used to fund Section 401(h) benefits. The plan must provide that any amounts that remain in the account after satisfaction of all liabilities arising out of the operation of the Section 401(h) plan are returned to the employer.
• The plan must expressly provide that if an individual’s interest in the medical benefits account is forfeited prior to termination of the plan, an amount equal to the forfeited amount is applied as soon as possible to reduce employer contributions to fund the Section 401(h) account.

Lastly, this is not about the old rules of some plans that said you use it or lose it.  It’s about tax efficient way to pay for future medical costs.

Loss                                                        Needed Return to Recover Back to Even or Zero

-20%                                                       25%

-30%                                                       43%

-40%                                                       66%

-50%                                                       100%

Managing the downside loss becomes more important as you approach retirement or are ready to draw income.  With interest rates at historical lows it begs to diversify and protect the downside.  The most recent high to low in the stock market from 2007 to 2009 was a 59% loss in the S&P 500.

Losses can occur inside of bond mutual funds as well as stock portfolio or stock mutual funds. If you are drawing funds from either and more than 3% then many advisors are stating there may be risk of running out of money.  Recently Moshe Milersky a finance professor in Canada is considered a foremost authority on retirement and how to take less risk in the “Risk Zone”. Risk Zone is 7-10 years before and after the date you transition from accumulation to distribution. He details how the sequence of risk plays a major part for retirees in his book “Are You a Stock or a Bond?”  Another book he co authored is “Pensionize Your Nest Egg”. He stresses the more you can rely on sustainable income and guaranteed income from pensions and annuities the less risk of running out of money.  Moshe and some other colleagues created a measure of retirement risk called the RSQ or Retirement Sustainability Quotient. Think of it has measuring the health of your retirement income plan.  He states if 100% of your money is in the markets of stocks and bonds you will likely need 20-25 times your income need. For example, your need is $50,000 year then 25 times would be $1,250,000.  However, if you had annuities or pensions of say $25,000 a year, then the multiple on other capital required could be less.  You Tube has some videos by Moshe Milevsky you can view and decide if it fits for you.

How will Wall Street and investors react to the scheduled increases in Capital Gains Tax by 58% from 15% to 23.8% and then on dividend income the current rate is 15% and January 2013 expected to increase by 182% for top tax brackets.  What will it do to mutual funds and stocks heavy in dividends stocks? Wall Street and investor want some certainty as to the rates and how to plan.  Having uncertain taxes and uncertain regulations creates less demand for equities and longer term investments and that translates to slower job growth and corporate growth.

With hundreds of Gold commercials on the radio hammering the stats of past few years and uncertain times do call for metals and other commodities. The flip side was run up in Gold commercials of Y2K late 1990′s ran up the price of gold only to fall back with the world did not crash and burn after the year 2000.  Package food companies did well and some are starting to advertise again with uncertain times.  Everyone should have a few silver coins as a short term disaster hedge.

If we were assured with great certainty what was the course of regulations and taxes over the next decade then I would bold enough to say jobs would grow and housing would gain significantly and auto’s would receive much greater demand as the average car is 11+ years old currently and much older than trends of the past (7+ years on average). With threats of rising inflation the logical choices would be commodities, real estate and stocks that capture increases in real estate and commodities.

Some are inclined to put all there money into FDIC insured Certificates of Deposit or Annuities with fixed guaranteed principal and interest payments.  Some are enticed by fancy hedge funds that have called the right changes at the right time in the past.  Some are trusting the advice of the past is good enough for the future.

No one has a perfect crystal ball and so wisdom would tells us to diversify into a few different directions to hedge the downside and yet get some upside in the likely event of inflation while reducing risk.  One getting ready to retire or recently retired should consider what we call an insured retirement solution for a portion of the nest egg. Insured Retirement Solution is having a portion of retirement guaranteed by insurance carriers.  There are so many choices and if your likely to live 25-40 years you should consider locking in CPI or Consumer Price Index for you income stream if possible.  There a few carriers staring to offer and the trend is likely to grow more as inflation looms on the horizon awaiting the simple fact that countries outside America could decide to take their money and invest elsewhere leaving the US Treasury in hock to raise rates significantly to attract investors. The indexed increase in monthly payments could be the key to your later years success or failure.

Here is one example of how inflation indexed income could benefit you: 20 years at 4% and start off at $1,000 a month in year one.  Simple annual interest rate of 4% over 20 years would increase the $1,000 to more than double or $2,191.  Did you know CPI has averaged 4% for the past 50 years?  Social Security Administration uses CPI-U data to determine it’s adjustments to benefits.  What if 1970′s inflation rates returned would you know what to do? Bond funds would not be near the top as they have been in the very low inflation environment.

Stacked or Accelerated Giving does just that.  It loads up many years of future pledges or future gifts to utilize that write off today.  Who would be interested in this idea would likely include and not be limited to: those with a large tax bill such as those who converted IRA to ROTH IRA, those with big bonus check from employment, those who secured/collected a large revenue under S-Corporation tax filing, and lastly those you have sold a business or sold off assets with significant gain.  Stacked or accelerated giving DOES NOT need to be set up prior to sale of a business.

Perhaps you work for a nonprofit and looking for a way to secure a larger ongoing gift.  Maybe you are a donor and looking for effective way to fund a donor advised fund or private family foundation.  Maybe you are tax professional looking for a proven method of deductions but one that most advisors have simply overlooked. Stacked Giving Plan can provide a tax leverage for donors that could help move up their gifts or commit to more gifts as a result of greater tax savings.  Ask your board if they are familiar with this stand alone planning for donors and if they have looked at it lately?

The legal structure for these is based on revisionary trust.  Other names that may or may not be relevant are charitable lead trust (CLT), charitable lead annuity trust, charitable lead unitrust, i clat, tclat, super clat, sharkfin trust, grantor trust, intentionally defective grantor trusts, irrevocable trust to heirs and current income to charity.  Some might describe these strategies as “give some now and give more later” due to tax planning and gifting rules.  There are differences in the above names of trust and some are subtle and others dramatic.

There is a perfect storm for this type of planning due to all time historical low rates and tax rates on the rise and much less work and expense to set up a stacked giving plan.  We would love to discuss more ways in which this storm could be beneficial to you and your favorite charities even if that includes a family philanthropy bucket for future gifts and greater control.  How you plan and when you plan has advantages not previously seen in our lifetime. Giving matters and now we are seeing that “how” you give matters too.  Remember this can be done as stand alone planning and does not require changing many of the things you are already doing.  Keep current advisors if you wish and if tax rates increase in early 2013 as expected this may be the best idea you have heard in 2012 to help ease the tax burden.

Very few advisors in general know there is a charitable and family money bucket that can deliver big to both and is perfectly suited for helping offset big windfalls or other income. The advisors that do know about “Charitable Lead Trust” consider them too complex or expensive or not right and often because they presented the idea several years back when the 7530 rate (AFR aka Applicable Funds Rate) was multiples higher and the tax benefits were almost not existent only a couple of years ago.

What is the downside? The money in a revisionary trust is taxable so the income generated will be taxed to the grantor/donor.  Often municipal bonds are utilized as the investment choice if the trust is funded with cash as muni’s are tax free.  Raw land is good choice for a portion of the trust as the gains in value over time and lack of income production are considerations that may or may not work well for your situation. Some choose to continue with dividend paying stocks in order to seek out more inflation protection to the assets left to family.  Please seek out advice and get someone who has done a revisionary trust recently.

I recently was asked to explain what investing with values means to investors?  My reply,”do less harms in the values important to you is part and the other part is seeking to align with profitable corporations that are well run with qualities you like and would be proud to be associated with or even enjoy a meal together.”

There are 51 million households in America and some $11 Trillion invested and some $3 Trillion is in stocks.  Mutual Funds make up a significant portion of investments today and corporations will listen to both individual investors and money mangers as they raise questions of concerns related to environment, social and moral issues. While many of the larger charities do some form of screening and many governmental pension have to per Patriot Act. On the other hand mutual funds rarely connect the dots of individual values and investing.

I have a 6 minute video on Screen It and Clean on You Tube videos.  There is not one evaluation or screening service that gets everything perfect.  We have utilized three different services for different approaches and needs in the screening process.  One of our service evaluation screens does a very fine job on social and environmental but lacks greatly on some moral issues.  Another program does rather good job of screening moral issues but misses the mark on the actual holdings of some mutual funds.  The real surprise is when we screen the funds that claim to be restricted and align with certain values only to find major differences in how screening takes place and the level of evaluation.

What is the end result for most? Most are pleasantly surprised there are not many corporations that are causing harm, however some are causing a lot of harm.  For example, one Catholic values screen fund looks at the Russell 3000 index and only 150 of these 3000 corporations are doing harms against Catholic values fund screen.  It is important to be clear on your values and what is being screened and how and how the process cleans up harms. Negative screening is only baby steps towards purposeful investing.  Advocates and proxy voting and selection based on corporations that align with your personal or organizations values has other benefits.  Be true to yourself and know what you own.

You could also check out some video’s I did in 2011 called the 5 Myths on You Tube as well.

In 2012 the limits on both 401(k) plans are as follows: employee contribution limit $17,000 and if 50 or older the “catch up” amount is additional $5,500 for a total of $22,500 for the employee portion.  The employer match and other contributions (Profit Sharing) in addition to $22,500 max on emplyee portion is a total maximum contribution of $50,0000 year combined (employee + employer).

This is much more than the $5,000 ROTH IRA limit with $1,000 catch up provision for those 50 and older.

A ROTH 401(k) allows greater contributions to this tax free employer sponsored bucket than Individual Retirement Accounts.

What is the 5 Year Rule concerning both ROTH 401(k) and ROTH IRA?

The 401(k) plan is measured on calendar year basis and the period ends when the 5th consecutive tax year is completed.  Example: Jean start on Dec. 1, 2012 and January of 2017 she would have completed 5 years even though it was only 4 years and a month.

If Jean doesn’t make it to 5 years in the 401(k) and then decides to roll it over to ROTH IRA then it would start a new 5 year term.  It does not add say 3 years from 401(k) and then 2 years from the IRA to equal 5 years.

If on the other hand Jean has completed the 5 years in the 401(k) ROTH and then rolls it over to ROTH IRA there would not be any clock started and all would be good as it the 5 years was satisfied.

Even if the 5 years were not completed the basis or the contributions would be accessible tax free and without penalty.  After the 5 years are completed then the earnings would also qualify as tax free assuming you are now over age 59 1/2.  Some other exclusions include- education, first time home buyer and disability.  Seek advice on these other issues as it is easy to get the details mixed up and it can costs potentially a lot.  It does matter.

Here were a few executive summary thoughts as my take away:

The idea of Nonprofits as stand alone fortress with high walls and limited engagement outside of key donors is a dying model.  Even though your nonprofit may not engage in Social Media the world around us is talking without your engagement.  Ms. Fine expressed in several ways that story and engaging stories of personal interest are best.  Do not send out broadcast messages to the whole world on how wonderful your group is and what help you are seeking.  Rather find “Free Agents” those blogging and get their influence to re-tweet a story that get attention.  The free agents are not loyal to a group rather they are seeking conversations and making observations to a large crowd that in turns has a much larger crowd connected to them.

Think of the network as tinker toys and the nodes are people (free agents) and the sticks are relationships and the conversations that connect each other.  Fine was mostly talking about Face Book and sharing wonderful successful examples.  Realize that when a free agent re-tweets something about you or your organization to the world that carries much greater weight, trust and credibility.

Social Media has always been here- tribes and communities and story are the way we connect over the centuries.  Digital media is inexpensive and easy to use and 2-Way conversation and grows bigger without resources required in traditional marketing.  Broadcast TV, radio for example you pay for eyeballs or ears and not so with social media.

It is intentional and not a spectator sport rather requires actions.  Paint what is possible in your stories to those you connect with online and learn both the language and framework of the social media space.

Framework starts with BE: understanding networks and then work with crowds.  Be creative social culture and then do the work with free agents.  Be ready to listen, engage and build relationships so you can then do friending to funding. Be trustworthy through transparency (break down the walls) so you can then do the governing through networks.  Lastly come from clear simplicity and tell stories.

Honor others in the network and report back to them when you ask for opinion or feedback. She gave some excellent examples on how this is walked out in real life.  Again not about what you had for breakfast this morning rather the change you stand for and how your life is making change  in and around others associated with your vision and passion.  Get networked takes more than setting up the right accounts and asking a few to join you.  There are huge opportunities to build awareness and support with intentional work and focus.  Have fun! It matters.

Mary retires again at age 66 and Social Security will recalculate her benefits over the past 3 years with the offset.  When she retires the benefits would be virtually the same as if she had waited to age 65 to retire.  It could be a little higher if her earnings from age 63 to 66 were higher than past history prior to age 62.

Social Security automatically does this recaluculation and whatever money you don’t take is given back later- This is called “forced suspension”.

Recently, I have had a several couples where one of them has had major health issues.  It might be best to talk to a specialist (usually attorney) in helping apply for disability benefits.  This can be done prior to age 62.  Know this if you are on Social Security Disability currently your benefits are not reduced and the amount you receive is in line with your full retirement benefits.

So, 15% will increase to 23.8% for a total tax rate increase of 58% for any Capital Gains tax in 2013.

Did you know that even a “Single” income tax filer earning less than $8700 per calendar year is going to see a 50% increase in their taxes as well.  The 10% rate is scheduled to increase to 15% tax rate in 2013 for those at the lowest end of the taxpayer scale.

Potentially, a larger tax rate is looming over the scheduled increase in the “Dividend Rate” to an ordinary income tax rate as well.  Stocks, REITs (Real Estate Investment Trusts) and mutual funds with dividends are scheduled to change from taxable at the Capital Gains rate of 15% to a potential tax rate of 42.4%; that’s a 182% increase!

What we might expect are values of prices on stocks and mutual funds driven by the reduced dividend rate are likely to be slammed hard.  Expect the cost for tax planning and tax advice to increase significantly in 2013 as the tax laws are soon to become much more complicated.  Expect to see more seminars on tax planning and philanthropy than you saw this year in 2012.

One strategy you might wish to read up on is that of “stacked giving”. Check out www.stewardshipmatters.net and under blog click on “financial strategies”.

See our blogs on longevity and what makes the mature adults happy.

What goals do you want to accomplish during your retirement years?

Prioritize the below areas in rank order of importance to you (most important = “1″, etc.):

Health

Family

Friends

Spiritual Development

Travel

Recreation/Leisure

Community/Chartable

Financial Security

Leaving an Inheirtence

Other____________

Now review your list.

What stands in your way?

If this leaves you frustrated or confused, then consider some more education and coaching as you move toward retirement.

In a recent survey, I notice over half of retirees approaching FRA (full retirement age) were looking forward to retirement as a time to reinvent themselves, and age like a fine wine.  Now, that’s living!

Check out this wonderful site as it has excellent resources:    http://www.compass1.org/

There is a strong leadership team, with a much broader scope of equipping believers at Compass.  Here is what the core values are in regards to …

The Small Group Experience

During his life on earth, Jesus preached to the multitudes, but His primary focus was on the small group of twelve disciples. Similarly, a primary focus of Compass is teaching God’s way of handling money in small groups. In small groups, people can be loved and cared for and held accountable to be faithful to apply what they are learning. The small group is also an effective environment for fostering close relationships among the participants and developing future leadership.

You can download a free spending plan (under “resources”) and watch videos and read articles well done without being sold stuff.  The couple of times I have met Howard filled me with the thought this guy really cares and acts on his calling from the Lord.  There are Q&A and other ways to get engaged into this important conversation.  Stewardship is about all parts of our lives,  and Compass is a resource available to help you, your family and your friends. It all matters. Stewardship Matters.

Safety of principal and previously-credited interest.

No risk of loss if held to term.

Guarantees in both accumulation and distribution phase.

Choices of interest crediting strategies based on changes in market index or in guaranteed options.

Income options not available in banking or investment products.

One guaranteed option is that of Consumer Price Index Urban for either 20 or 30 years guaranteed(not available in all states).

May avoid probate.

Some other benefits to consider:

In annual reset annuities, a downturn in the market index will not hurt potential growth in following years.

Any adjustment applied can never cause the annuity to receive a negative interest or crediting.

May offer joint life income on accounts like IRA’s that typically do not offer joint life guaranteed income.

Life insurance may provide both income tax free and estate tax free proceeds.

Properly design ones allow lots of other flexible options like confinement rider, inflation rider, guaranteed death benefit or access to some free withdrawals.  Some annuities offer daily valuations/access to funds, as well as check writing.  See our write up on “insured retirement solution”.

Misuse of funds?

Board conflicts of interest?

Poor purchases or over-payments for unnecessary goods and services?

Outright fraud or ethical violations?

Funding a family slush fund or luxury vacation?

Expensive over the top event or gala?

Redirected Funds to conflicting charity?

The list could go on and on.  Think about your own frustration with a nonprofit and any issue that may have driven you away from future giving?

When talking with several accountants, attorneys and nonprofit consultants there is a disproportionate number of small charities with financial abuses than the larger charities.  Why?  Larger charities have accountable audits, more intentional boards, more overall corporate structure and systems in place that manage and oversee funds.  Large charities, which are typically described as those with over ten million dollars in annual revenues, are still open for fraud but with far many more eyes watching it is less likely to find issues there.

“Doing less harm” seems to be one common mantra among larger charities.  Another distinction is that larger nonprofits tend to afford well-groomed professionals with a deeper understanding of financials and business savvy issues.  Larger boards with more professionals are able to dissect, question and help along issues and guide the organization more than a small board of passionate people.

Susan Koeman, fighting cancer, made a donor error earlier this year with a gift to Planned Parenthood.  20/20 vision tells us that the whole issue could have been avoided or at the least, greatly reduced had communication not been avoided.  While the media jumped on Koeman for not responding, it only raised speculations and created a bigger stir than if they were ready and able to respond to questions directly asked of them.

How did the Invisible Children miss the mark here and allow the means to justify the end?  Invisible Children has the objective of making the issues of child slavery and child soldiers understood here in North America.  They succeeded but at what costs? Lies about chasing and potentially getting Joseph Kony in 2012 when he is believed to have exited Uganda several years ago and not seen since.  Wonderful to get young people passionate but should they follow lies and they drop all their future involvements due to being made foolish to believe? It happens all over inside churches and civic groups and yet being true or truthful in how we evaluate should be at our core.  Perhaps after getting jaded a few times, we choose to discount or disconnect to real and life-changing movements.  Lessons learned: don’t trust the media to deliver truth, nor the internet.  Be a person of substance and one who directly researches charities through reliable sources or has assessments done in a professional and respectful manner. One way to get help for your nonprofits is to have them plug into groups like Partnership for Philanthropic Planning, or Association of Fundraising Professionals or Advisors in Philanthropy or Kingdom Advisors. Donor stewardship matters now and for the future.

To be young is to study in schools we did not build.

To be mature is to build schools in which we will not study.

To be young is to sit under trees we did not plant.

To be mature is to plant trees under which we will not sit.

To be young is the worship in churches we did not build.

To be mature is to build churches in which we may not worship.

So, perhaps you are currently working for a company, or have worked for a company and are currently retired. Perhaps that company is now offering various pension payment buy-out options.  How can you safely navigate through these dangerous minefields? When should you accept the lump sum payment option, and when should you choose from various cash flow or annuity plan options?  Should you automatically rollover your pension plan buy-out to your existing IRA, or do you need to consider other strategies to ensure protecting the downside?

Have you already started these important conversations about how these plans will affect your overall retirement plan in terms of what cumulative effect they will have in determining both your retirement tax bracket, and your RMD (required minimum distribution) payments?  If you have company stock within your pension plan, is the company stock associated with NUA (Net Unrealized Appreciation)?  If so, did you know this could represent a significant taxable difference to your bottom line? Did you know NUA is taxed out of your retirement plans at capital gains rates instead of being classified as ordinary income? What this means to you is a 15% tax versus a potential 35% + tax difference — now, that is what I would call significant impact to your bottom line planning!  This one strategy regarding corporate stock can save you a bundle. It saved a banking client of mine over $200,000 in saved taxes alone several years ago.  That’s why having these type conversations are absolutely crucial considerations to your retirement planning process. Most of us work hard for many years to earn and save for our retirement, so these important strategies can make a huge difference in deciding whether it is you and your family, or someone else, who ultimately benefits from your retirement benefits.

Some other considerations are PBGC limits, and how you can protect what is at risk.  Consider the inflation option. Learn how to lock in your own inflation-protection rider option using the 20, or 30-year guarantees offered by major insurance carriers to insure that your income continues to grow according to the Consumer Price Index Urban (CPI-U) standards.  Check out our related articles on PBGC and inflation, and the Insured Retirement Solution discussion as other important things to consider.

Today, we now have the opportunity to change our current retirement plan so whether your martial status changes, your level of investment risk or longevity risk changes, your pension plan design options can be adjusted to meet the specific needs of your family today that weren’t available when your pension plan was first established.  Take the time to consider your unique “Big Picture” for the future. Don’t just listen to the person in the Benefits office or someone down the hall who says “just take the cash”.  Take the extra steps now to become better informed about all pension options available to you by seeking educated counsel in the financial field, and then decide which one best meets the needs of your family. Don’t take a backseat to driving your retirement planning; you are the only one who knows what will best fit your family’s specific needs.

Our families matter, so the choices we make today will matter and make a difference tomorrow.  Be prepared. Your family will reap the benefits of your taking the time today to plan ahead by asking the right questions now. Plan today the type of retired lifestyle you want for your family tomorrow.  Stewardship Matters.

2012 15% tax rate for this couple or $3,000 in taxes to convert over now and have tax free going forward

2013 28% bracket or $5,600 in taxes or the cost would be currently in the 2013 rates $2,600 more taxes in 2013!

My sources point to higher taxes at all levels.  Even the single filing with 0-$8,700 is scheduled to be tax at 15% instead of 10% or 50% increase in taxes.

The new Medicare tax and increase FICA taxes and estate taxes are three more reasons to consider converting to ROTH 2012 instead of 2013.

If you are given a choice to take a bonus in 2012 vs 2013 please get in touch with your tax people and get clear on the costs for each year.  Evaluation of these financial issues matters.

Right now, the Law is scheduled to return to the $1 million exclusion for each of you this coming January, 2013.  Many of my friends and colleagues suggest this will be adjusted, but no one knows for sure what it will be.

So, here’s the very important question to ask yourself NOW: Is it more politically correct to tax the living and voting population, or to tax deceased persons and their estates who no longer can voice their vote?

Time is running out friends so please be advised to take the time to have this very important conversation soon with your professionals now so that you can ensure your estate and loved ones are taken care of before 2012 comes to a close, which is just around the corner.

- Mahatma Gandhi

Your Legacy

They don’t remember what you said, they don’t remember what you did, however they all remember how you left them feeling.

Not sure who said it but it’s a good one

Forecasting is difficult, especially about the future. Chinese Proverb

Best time to plant a tree is twenty years ago. Chinese Proverb

“I never skate to where the puck is, but to where the puck is going to be”. Wayne Gretzky

“Whether or not you are successful as a parent will not be determined until your children have raised their children.” Dr. Howard Hendricks

Inspiration is an outside job. Motivation is an inside job. – Pat Williams

“It is not death that a man should fear, but he should fear never beginning to live.” ~ Marcus Aurelius

The best advice I ever came across on the subject of concentration is:” Wherever you are, be there.” – Jim Rohn

“In the middle of every difficulty comes opportunity.” ~ Albert Einstein

Consider your favorite quotes and start collecting them and read them to inspire and help others.  I suggest you write them down in a journal and review them.

The Rule is this: If you file for benefits before age 66 then the earnings test for that year prior to claiming is $38,880 of annual earnings.  If you exceed it then there is a take away of $1 for every $3 earned above the limit.  Example: Mary turns 66 on December 1st and decided to claim in August of that year early  Testing backwards over the year could reduce benefits if she exceeds the limit.  After reaching FRA are no limits or testing or take away.   So her benefits would be REDUCED by $1 for ever $3 dollars earned in that year only.  She could earn UNLIMITED and not have a take away once turns age 66. It might be more prudent to wait until you turn age 66 to claim as to not leave money on the table.

Do you know what the limits are for ages 62 to 65?  $14,640 a year or $1,220 a month. And the take away at these ages is $1 for every $2 earned.

On a positive note here if Mary keeps on working and drawing benefits the SSA looks at each year and if the earnings currently are higher than previous high 35 years then the lowest would be replaced and she would see an adjustment upwards to her benefits going forward (up until age 70).

Know what your limits are with Social Security in terms of earnings. Be careful of the limits when you continue to work and earn.  Taking distributions from a pension or IRA is not considered earnings. Getting good advice and clear direction are good stewardship.  As you can see it does matter.

Here are the SSA links

Excess Earnings Link at SSA

Monthly Earnings Test at SSA

Fee is fixed percentage rate like 1% regardless.  Example $100,000 at 1% fee is $1,000 and if you earn nothing or lose money then still a fee based on the rate.  So zero return with the fee yields $99,000 net.

Fee Spread is dependent on making or earning money.  If no earnings, then no fee it’s that simple.  $100,000 with a fee spread of 1% and zero return then no fee as it can only apply to gains (still $100,000).  Most fee spreads are reset annually and most are clearly spelled out and disclosed.  There are very few that carry a warning.  The Warning is some have carryover fee so the spread is based over multiple years not reset and forgiven.  Or in other words zero return above example if the next year earns at least 2% then it could be the contract would double down on your fees.  This is not normally the case for fee spread.

Fee or Fee Spread is not the way to evaluate one choice over the other in financial products.  Back tested illustration on the actual fees or run the testing forward can be helpful.  Look at the other features and riders and benefits as an overall decision rather than focus on fee vs. fee spread.

Recap: a fee is going to be assessed regardless of whether you make money or not.  A fee spread comes off if and only if you make money.

Yes, the basic structure of an “Insured Retirement Solution” (IRS) is an Annuity; however, the distinguishing characteristics that set apart the Insured Retirement Solution from the basic annuity product are as follows:

- Flexible nature to address whatever comes;

- Unique way of addressing income and inflation; and

- Strong Guarantees.

Ask your insurance or financial advisor if your current annuity can do all this. Now, what is your idea of what an IRS  (Insured Retirement Solution) Annuity can do? Guaranteed not to decrease in value? Turn income on and off whenever, and however you wish? Allows for  generous free withdrawals however you choose them? Cost of Living Guaranteed with Consumer Price Index (CPI) up to 30 years of future payments, then leveling afterwards? No caps on the index upside? Even does checkbook withdrawals? Confinement and Terminal Illness Waivers? Daily valuations so you always get 100% of what you earned? All of these are the unique distinctions available when funding an IRS annuity.

After addressing your questions of how an “Insured Retirement Solution” annuity can outperform just a basic annuity, you, too, will see the reason for the named distinction.  I believe we will see more and more annuity carriers working to provide the unique, flexible options that the Insured Retirement Solution vehicle provides over a basic annuity. Think of it as “new generation” of annuity products to meet multiple needs or changing needs.

Your situation may also warrant some other features such as a “family endowment rider” (another name for a life insurance rider). Another feature found on many annuities as well as the IRS (Insured Retirement Solution) is the hypothetical account bucket or income bucket that accumulates at a fixed or variable rate based on the markets to provide either a guaranteed amount to draw upon in the future, or opportunity to participate in indexed rate that varies and gives you another potential way to lock in an income or cash flow.  One last question for your insurance or financial advisor would be this one: when this “income bucket or roll-up bucket” accumulates $X, do I need to fix my payments, or are they flexible to allow for changes as my needs change on a basic annuity? Usually this is not the case, but the IRS annuity does offers this flexibility. So, take this into consideration when you’re planning for your financial future.

The inherent design of financial and insurance products do matter.  You matter, and what you decide matters both today and in the future.  Stewardship matters.

Dan & Ann Kemper  both are 61 years young and mostly financially set.  They love to give to their church and other charities each year.  Dan plans on retiring at age 66 and has a decided to list his business for sale over the next year with idea of being retained as consultant for 3-5 years.  He has turned down an offer to sell for $2 million and expects to get more offers.

So how could a legacy planning strategy provide more to heirs and charity and reduce taxes today and in the future? Sounds like a big promise; it is and many are realizing the benefits of a different twist on old planning idea and low interest rate environment.  Dan and Ann meet with their advisors and hear about “stacked giving” and the use of revisionary trust.  A revisionary trust is an irrevocable trust that become revocable trust after either a specific time period of 2-50 years or upon one’s death.  For the time the trust is irrevocable the donor does not include it in their estate when reporting taxes.  It’s possible if constructed properly a way to get heaped or stacked income tax deductions never before possible due to the current interest rates reported by the United States Treasury (lowest 7520 Rates of only 1%).  This is a good reason to get informed and get into a conversation with professionals that understand and know how to implement such trust. (check out our blog on “stacked giving”)

Dan & Ann had a concern if they were to commit funds to future gifts they might wish to change their minds as to the charities they would fund.  Things do change and values sometimes change over time and new seasons of life have new gifting opportunities.  This was easy to address as the funding of the trust could provide annual gifts to their “Donor Advised Fund” and they could chose when and how to whom they wish to give either now or later.

The power of having the ability to take significant income tax deductions today and future tax advantages was more than even their advisors thought possible. The idea of being able to get a large deduction now to offset taxes is great and having the ability to fund a bucket of money for both current and future giving even for future generations is possible.  The creative and controlling ways currently available are powerful leverage to get more to your family and heirs without the usually pains. Loss of control, taxes, costs to establish, complex management are usually some of the reasons not to do this in past and today they all are greatly reduced or eliminated.

Other important and maybe less know designations include: CASL, FSS, RICP, REBC, LUTCF, CLF, MSFS. www.theamericancollege.edu explains each of these programs. There are course details for each of their courses in case you are interested in what your advisors are studying that may apply to what you are asking them to provide.  Beyond the American College there are local chapters of various groups providing ongoing continuing education and other resources.  Estate Planning Councils, Planned Giving Councils, Life and Health Underwriters Councils, and other specific national groups like Advisors in Philanthropy, Kingdom Advisors, Partnership of Philanthropic Planning and others.

Here is contact number for the American College  888-263-7265 .

There web link is above and wanted you to have this resource as you evaluate and get educated about the main programs for training financial planners, insurance agents and health agents.

Here are the 2012 Maximum coverage per employee at the follow ages:

Age 55     $25,128 yearly or $2,094.03 monthly

Age 62     $44,114 yearly or $3,676.19 monthly

Age 65     $55,840 yearly or $4,653.41 monthly

These rates can be found at the PBGC website and the link is provided.

http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html

Why should this be of interest to you or your family and friends?  The 2011 report from PBGC showed a $103.8 billion deficit.

Do not be surprised if more and more corporate pensions start cashing out and sending the lump sums to retirement accounts instead of making promises in the future they can not and are unable to keep.  United Parcel Service ended their Plan many years back to avoid the liabilities and they are especially glad they did it.  USA Space Alliance this year (2012) ended their pension and many of the more than 6000+ employees received checks or rolled over to their IRA accounts.  Expect more corporations in the future to follow these examples.

Some Defined Benefit Plans are starting to allow partial rollovers to diversify more as well.  If you are 65 and your benefits exceed the coverage limits ($4,653 month) you may want to consider rolling over a portion to your IRA and protect the downside and plan for guaranteed income on your own.  Some of the municipalities (mostly States agencies) are looking at ways to reduce or shut down their pensions as the unfunded liabilities are exceeding tax revenues or other funding. The PBGC is not a part of the municipals it is associated with corporation’s pensions.

If you have a pension and it exceeds the 2012 limits their are a few solutions to reduce your personal risks.  See our reports on “Insured Retirement Solutions” for some baseline education and what is possible.  How you address these issue does matter both today and in the future.

Here we look at “flexible options” to meet changes. Married couples experience a loss of life or the other spouse needing some outside help in the form of nursing or assisted living.  Sometimes the unexpected requires a large lump sum.  Example: Your spouse goes into assisted living facility, they die, your pension gets reduced, you need a small lump sum and do not wish to turn on income at this time or you just elected to take income for life and now an event hits you and your family.  All of these are real and happen daily to us and others around us. If you decided you wanted to change this to a SPIA that is also an option but not required.

If you elect what is called in the industry as Single Premium Immediate Annuity (SPIA) then just realize there are some serious limitations that go along with a high current cash flow.  You are locked in forever with these products and yes they are very appropriate for the right situation- limited resources and need for high sustainable income for life.  The real beauty of Single Premium Immediate Annuity is guarantees of payments over life- banking products do not offer a life guarantee in the same way only insurance carriers offer this feature.  While it may be perfect to have some of your money in these fixed unchangeable products life seems to change quickly and requires some flexibility and downside protection.

What if you could turn on retirement income and turn it off again and turn it on and off as you wished.  When you turned it off the cash would accumulate and build for future or your heirs or charities if you so choose.  What if you realize you have enough saved for unknowns of assisted living and are currently paying for Long Term Care Insurance? Consider one of the hybrids of life, annuity and Long Term Care combo’s to provide better for your family and rely less on the traditional stand alone Long Term Care Products.  Old expression of killing two birds with one stone applies here.

Another one of the big hot sizzles terms is the term “rollup rate” for both variable and fixed annuities.  What occurs with the rollup is a separate account that has a guarantee of either 5%, 6%, or 7% typically and this is accounting to show your side bucket balance increasing every year and this can be a good thing.  Often there is some small print consumers overlook for forget that exist.  It is that in order to capitalize on the rollup account value one would need to lock in and annuitize the account for either life or for a period.  Get clear about what has to happen for the roll up rate or sizzle rate to apply to you and your money?  Ask about what are the other options other than committing to a life annuity?  If there are no other options in the product you are considering then think of what could happen when things change in the future like inflation, confinement, cash needs, guarantees without total commitment of annuitization.

The Insured Retirement Solution ideas are not offered by the majority of insurance carriers in 2012.  Most seem to have the mind set of what was done in the past was good enough and no reason to fix what is not broken.  I can appreciate that, but ask that times are a changing and people are living longer and less pension money than was available in the past. Having options to change  does matter.

Is this a new idea? No, estate and tax planners have utilized this idea of stacked giving to charities for many years and it works better in the current low interest rate environment.  The U S Treasury publishes a rate called 7520 rate.

How does it work? Pick a term or period of time in which you will give from say 2 years to maybe 50 years.  Payments to charities could be equal or increasing.  The current 7520 rate is only 1% as of August 2012.  Let’s say you have been giving a set amount each year to charities of $30,000 a year.  Did you know you could give to your own “Giving Fund” instead of your regular charities and retain the funds for future gifts?  This process will not disrupt your current estate plan rather it is designed to give you better tax control and distributions as you see fit. The practical side is you fund a trust with $1,000,000 and it earns 4% or $40,000 and your payout to charity giving fund is 3% or $30,000 for the next 20 years.  The $1,000,000 is still in your estate and goes to your directed heirs as before.  The upfront deduction for the future gifts of $30,000 a year provides $541,368 deduction.  So instead of waiting to realize the tax savings over the coming 20 years you take the deduction now to offset income and the windfall.  Back when the 7520 rate was 4% the deductions would have been cut dramatically to a small fraction of the current  deduction.

If you are a nonprofit looking for creative and proven idea to help you donors that have been loyal over the years then an education on “Stacked Giving” could be a win win for both of you.  For those of you experienced in planned giving this is part of the family of  CLT’s or Charitable Lead Trust.  Many of the CLT’s have been utilized to provide complex estate planning and here we are not; it is designed as standalone tax beneficial and less costly, less complex that many of the CLT’s out in the marketplace.  This is not legal advice, rather a conversation starter towards “Found Money” conversation.

*When you do decide to sell in the future the homeowners association only approves the sale on March 1st each year?

*When you sell there is an attractive offer from the builder stating they will guarantee a buyback of the house at 7% gain per year on your equity, however you would have to receive payments over your life and they choose the rate to pay you at the time of the sale?

*If you decided to rent your home to others then you would be locked in on rent for life and not allowed to raise the rent revenue as restricted per the homeowners association?

Not likely.  

There are individuals and couples every day buying annuity products that are not so dissimilar to the homeowner association example above.

Most Equity Indexed annuities today only have a once a year valuation.  So, when the markets go up the gains are kept by either the insurance carrier or their hedge managers.  This occurs only when markets are up and you take any type of distribution throughout the year (Like RMD).

The big roll up rates of sizzle (7%) that attracts one to the annuity are based on the individual or couple having to lock in and take a life payment stream without the flexible options of just taking some income and opportunity to grow and change your mind about starting and stopping these payments.

Like the renters example above many annuities make you either cash out or take life only or some other life with joint provision and often not adjusted for inflation protection.

According to the U.S. Inflation Calculator the historic inflation rate since 1951 is 4%.  If you take an income stream of payments would it not be a good consideration to look at inflation option?  Some of these options are fixed rates and others can lock in Consumer Price Index with a capped upside of say 10% per year.

There are several other articles at www.stewardshipmatters.net under the blog tab and several different categories.  This article was under the “financial strategies” section.

When might it be a good idea to have one?

Gift assets to avoid the capital gains like real estate, stock, bonds, mutual funds etc.

Do not wish to give all the proceeds of the above proceeds to one charity or at least not all at once.

Desire to encourage other family members in giving and participating in gifts together or allocate a portion for them to give. Creates a giving fund.

Want to take time to evaluate charities and tap into resources on various charities and DAF can be helpful resource.

Who offers these charitable giving fund accounts?

Several of the mutual fund companies offer these and expect they will require a large portion of the money to be invested into their funds.  Some are set up through charities and others set up with national foundations as a sub account. There are over 150,000 donor advised funds established and first one was set up in 1931. Community Foundations offer accounts with greater flexible options and resources and generally costs a little bit higher, but could be much more appropriate if you want local research and help in bringing gifts together with others.

If your giving requires more options and control, then you may wish to investigate the private family foundation.  Check out our blog on private family foundations.

How could DAF work for you?

You might only utilized one as holding bucket upon your death and usually no costs to set up and have the ability to make gifting after you die much easier and with more control to those you leave in charge.  Back to the Windfall of wealth from sale of business this could help avoid taxes and provide a bucket in which to give more efficiently than cash.  Warning on the sale of the business if you wish to establish charitable options after you have discussed the sale of your business then you are too late.  Be sure to discuss this with your advisors as early as possible to see what benefits could be realized.  Check in with your local planned giving council as additional resource. The DAF could work well for many families both while they are living and giving and later upon their death as viable planning tool.

Could it be that God allows conflicts in our lives to test our trust in Him?

Could it be a simple acknowledgment of Him is what God is seeking to show us is what truly matters.

I have put my trust in things and people and government and that is not the answer.

In the United States of America, we have written on all our currency “In God We Trust”.  Do we share this same truth our ancestors once held as sacred?

Could it be that the struggles of this world could be resolved by God’s mightly hand, so that we could see his work and worship Him more? Acknowledging God, and trusting in Him does matter … if we want this country to continue to be great.

I do not pretend to know the “whys” of stuff that happens, only that it does matter to acknowledge God as who He is, and what He is able to do.  I hope this is a word of encouragement for you and your family. Hebrews 11:6

Like any financial decision there are trade offs of one choice verses another choice.  Having the proper information about the strategies and the impact are important in making such large decisions.  Again the Social Security Administration states they are not allowed to provide financial planning. They can provide you some potential payout based on your limited information.

If you have earmarked some money to leave to a child with “special needs” or desire to leave charity with a specific dollar figure or anticipate goals in later years for how you wish to bless and enjoy life then all of these are considerations in when you claim and how you claim. When and how matters.

Our calculator on the home page is simply looking at your age and benefits at various ages and then letting you know what is potentially at stake?  Often the optimal is $100,000 or more greater than simply claiming at age 62 or age 66.  Also know that waiting to age 70 to plan and claim leaves money on the table for married couples, divorced and widowed. You might wish to check out my previous article on What makes SS so unique?

JP Morgan has excellent charts and data to give perspective on current and past trends and may be available to you through your financial advisor.  My observation is with increased national debt and the Fed working hard not to raise interest rates has in past made good sense.  Economist like David Kelley of JP Morgan believe we need to raise rates for the purpose of giving banks a proper incentive to make money.  Current low interest rate environment does not encourage them to lend, but rather to hold on to the money in reserves.  This increase will do more to stimulate the economy than governmental spending at this time.  I absolutely agree with the logic. I would expect to see rates rise by 1-2% over the next year.

The estimated impact of 1% increase in rates on 10 Year Treasury would be -9% and for 5-Year Bond -4.9%. Corporate Bond Index would fall by -7% for each 1 percent increase in rates. Munis would fall -7.5% for each 1% increase in rates.  Are you alright with negative 5% to negative 18% on your bonds?

Warning

If you are holding individuals bonds and willing to ride it out then all should be fine.  If you have a majority of your money in bond mutual funds then expect not only the hurt of price reduction, but net cash out flows to draw down the returns greater.  If you are in a managed risk fund of funds, you should in theory ride out better than simply holding individual bond funds.  Check with your advisors or firm holding your bonds to see if there are risk measures in place: reduce the length of time on the bonds held, shifting to allocations that reduce volatility.  Remember that hedging strategies are risk reductions at a costs and not contractual guarantees.  You might wish to position some money in bank CD’s or Insurance Company Annuities to get the word “guaranteed” attached to your conservative holdings. Check out recent post of Bond Interest Rate Risk Is Currently Red.

One study states that for each day you live from today you should add 5 hours for each day or for each month about 6 days should be added to your Life Expectancy.

The Society of Actuaries have reports on couples mortality.  The chances of 65 year old’s living to various ages based on the joint mortality.

To Age 80  90.6%

To Age 85  78.4%

To Age 90  57%

To Age 95  30.6%

To Age 100  11.5%

There are additional discussions of factors not considered here as the above is based on ALL 65 years currently.  The other factors we need to consider are economics, education, ethnic, married, active lifestyle, purpose and new medical advances.

In other words, if you elect your Social Security benefits prior to Full Retirement Age (currently, FRA is age 66), then you have deemed your election, which is an irrevocable permanent election of benefits, and you will maintain this reduced amount for the rest of your life.  There are 2 exceptions to deeming benefits. Exception 1: you can include “Survivor Benefits” when greater than your benefits, and this may increase your future benefits (claim your own solo benefits). Exception 2:  if you are age 62 or older, and have a child in your care age 16 or younger, then deemed benefits would not apply in these cases.

Another follow-up scenario for you to consider is if you have elected Social Security benefits early, and then later find yourself in a better financial situation after reaching Full Retirement Age, you could suspend benefits at that point, and then receive 8% delayed credits annually currently being offered between ages 66 and 70.  The 8% delayed credits earned per year for those 4 years yields a 32% increase in potential benefits to be received for your lifetime benefits, and the corresponding Cost of Living Increases on that as well.  Another resource available to you is a “what is at stake?” calculator link, which can be found on my home page of www.stewardshipmatters.net on the right-hand side.

Why Red?  Because we have not had bond interest rates this low in the last 60 years, and this is not good news for investors in the bond market.  What will happen when interest rates increase in the next couple of years?  10-Year Treasury bonds with currently about 1.5% and if Treasury bond values increased to 3%, then the value of that bond would be reduced by 25% or more in value. Here is what The Economist states, which seems particularly relevant: “Investors who bought Treasury bonds at a 2% yield in 1945 earned a negative real annual return of 2.3% over the following 35 years.”

Your safe $10,000 bond would be worth only $7,000 over the next couple of years.  OK, bonds did great in the last decade, but considering how the tide has changed and the fact that interest rates are no longer falling, where does that leave bond holders now?

In the 1970-1979 period, Treasury bonds performed at negative 1.2% annually.  After the Great Depression, we can review Treasury bond rate performance during the years from 1940-1949, and see that they only provided a negative 2.5% return annually in terms of real return.

Is there a way to shift this risk to someone that can reduce the risk and effects, and bring value back to individuals?  High Net Worth investors can go to hedge fund groups to hire their services to reduce the risk … for a fee, of course.  Main Street could consider going to the insurance carriers that purchase large amounts of bonds, and then turn and hedge them, and also provide an often stable way to secure your money without the wild swings the bond markets can and have reflected in the past.  There are private money managers that have a range of fund approaches that can help reduce some of the risk associated with holding a bond fund.  How? Allocation changes to the mix of funds, duration of the bonds, or how long until the bonds mature affects these fluctuations.  What would have served you well in the 1940′s or the 1970′s would have been to shift risk on conservative money to insurance carriers or banks, or buy commodities and other investments known to work well in higher inflation environments.  What has worked for the past decade is unfortunately not going to work moving forward in our current economy.

Can you see a few flaws with this advice? First, is suggesting Jane take Social Security now at reduced rate provides about 34% less than at age 66. Second Jane comes from a family of long livers in fact mom is alive and doing well in her mid 90′s.  Jane is in excellent health and expects to follow her her footsteps or more. When you look over the Social Security Website you will see a reduction numbers of 75% for taking early.  The fact is that $1658 represents 34% less than the cash flow of $2,211 afforded her at age 66.  Next issue is Jane might get a good job before age 66 and then Social Security will take .50 for every dollar earned over $14,640 according to SSA.gov site.  The conservative bucket or stable income account is only yield 1% in the current market.  Let’s do the math on the stable account $125,000 at 1% is providing only $1,250 a year.  Would there be better opportunities to increase that cash flow with stable account shopping? yes in deed but the advisor with the 401K is discouraging an in service rollover as it takes money from the firms assets.  The advice of wait until age 70 1/2 to take IRA dollars seems to be the industry norm at least in the many training circles I have seen over the past quarter of a century.

I forgot to mention Jane could consider claiming a spousal on the ex-husbands Social Security provided he has claimed at Full Retirement Age (currently age 66).  While the spousal might be a little less than her benefit alone it could potential afford her a special delayed credits and she could possible afford to wait until age 70 to claim her own benefits at highest level age 70.  Get this the $1658 at age 66 is $2,211 and age 70 would provide $3,029 a month for life and the inflation protection on a higher number as well. Jane get’s 82% more and collects spousal along the way would be more appropriate advice would you agree? So taking some of her IRA before age 70 could help secure more lifetime income.  Do you think her IRA grew by more than 82% guaranteed over the past eight years? Consider sharing this article with your friends and family getting ready to retire. Remember the online resource in the calculator at the home page of www.stewardshipmatters.net as well.

Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment and you are 65 years old and a citizen or permanent resident of the United States. You might also qualify for coverage if you are a younger person with a disability or with End-Stage Renal disease (permanent kidney failure requiring dialysis or transplant).

Here are some simple guidelines. You can get Part A at age 65 without having to pay premiums if:

• You are already receiving retirement benefits from Social Security or the Railroad Retirement Board.
• You are eligible to receive Social Security or Railroad benefits but have not yet filed for them.
• You or your spouse had Medicare-covered government employment.

If you are under 65, you can get Part A without having to pay premiums if:

• You have received Social Security or Railroad Retirement Board disability benefit for 24 months.
• You are a kidney dialysis or kidney transplant patient.

While you do not have to pay a premium for Part A if you meet one of those conditions, you must pay for Part B if you want it. In 2011 the monthly premium for Part B is $96.40 for most with incomes under $85,000 (single) and $170,000 (married). However, the monthly Part B premium for 2011 will be $115.40 for people enrolling in Medicare for the first time in 2011. It is deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. If you do not get any of the above payments, Medicare sends you a bill for your Part B premium every 3 months.

If you have questions about your eligibility for Medicare Part A or Part B, or if you want to apply for Medicare, call the Social Security Administration. The toll-free telephone number is: 1-800-772-1213. The TTY-TDD number for the hearing and speech impaired is 1-800-325-0778. You can also get information about buying Part A as well as part B if you do not qualify for premium-free part A

If you wish to get more then visit https://www.maturehealthcenter.com/medicare_solutions.cfm

You can get great service and quotes from Mature Health Center at the above link.  We are not compensated for this recommendation and want you to find professionals to trust as you purchase the appropriate additional benefits.

A friend of mine has good friend that is claiming Social Security Retirement Benefits and collecting $20,000 a year and is married to a much younger wife and just recently adopted her 8 year son.  Now the stepson is provided $10,000 a year and only by having a conversation with informed financial advisor did he learn of this significant benefit.  Ask your financial advisor if they are up on the Social Security claiming strategies?  If they reply yes, then test them with some of the 2 dozen informative articles we have on this blog regarding Social Security.  Next, ask why they have not discussed it or mentioned it previously.  Perhaps you could ask them to explain to you if ” file and suspend” would be beneficial to you and your family?

So in recap.  If you have claimed Social Security and have dependents in school under age 18 then you could be claiming benefits for them as well.  Below are some additional issues we have addressed and the links to the articles at Stewardship Matters.  This is another example of “Found Money” we discuss with seniors and nonprofits that wish to enhance their community.  If your favorite charity has shared this link with you and you find real money with this advice would it not be nice to share some of it with them?

Here are some of the other issue we address in this blog:

Taxation

Switch Strategy

Divorced

Survivor

Delay vs Early

Case one assumes you are past Full Retirement Age (currently age 66 or older is FRA).  You have been busy with life and did not claim benefits at FRA and now claim.  If you are now say age 67 and claim you can “retro” claim up to 6 months and receive a lump sum equal to 6 months at current rate.  Carl claims $1,500 a month today at age 67 and then file for retro back 6 months and receives additional $9,000 ($1,500 X 6).  If Carl is married he might want to consider “suspending” his payments to increase his monthly benefit amount and also increases his spousal benefits.  There are several considerations here and getting custom advice to your situation is always recommended.

Case two is someone who filed for benefits at age 66 and then suspended them.  Mary is now 69 and half year of age and dying of cancer and now has an opportunity to retro claim her Social Security benefits all the way back to age 66 in a lump sum.  Let’s say Mary’s monthly benefit is $2,400 at age 66.  She was advised by an informed financial advisor that knew how the system worked and had her file and suspend her benefit back 4 1/2 years prior.  This did not reduce or cost her anything.  Now Mary can claim retro and receive a lump sum check for the past 42 month or 3 1/2 years!  That is a lump sum check for Mary and her family in the amount of $100,800 lump sum. This would not be possible without proper planning and a discussion with her advisor in previous years.  While doctors only give Mary a few months to live it was at least comforting to know she had this extra money to provide for her family and others she wished to bless.  When this actually happen to a best friend of an advisor I know it changed my view of Social Security Planning and the need for proper and informed planning.  I asked is there any downside to receiving the lump sum check?  Yes, there are a couple of items: Taxes in a single calendar year. second if Mary was going to live a long time then realize she could have claimed a much higher monthly benefit at age 70 than at age 66.  It would be 37% more than at age 66 and if you look at the monthly over 4 years with 8% per year increase it would seem to be 32%, but the increase is actually 37% more.  There are lots of reasons to get wise advice on this complex system called “Social Security Retirement Income”.

Some additional resources for you are under the “blog tab”  at www.stewardshipmatters.net and in the category ”financial strategies”.

James is retiring this year. For the last 35 years he’s earned the maximum taxable amount for Social Security purposes, paying about $131,079 in Social Security taxes. If he had been allowed to keep that money and invested it in the S&P 500 along the way, including dividends, he would have had $697,500 at the end of 2011. If he had invested only in T-bills along the way, he would have $230,765.

Mike is a middle earner, earning the Social Security average wage every year for the last 35 years and paying about $53,372 in Social Security taxes. If Mike had been allowed to invest that money in the S&P 500, it would be worth $269,678. Investing in T-bills, it would be worth $94,206.

Either way, James and Mike have both paid a lot into Social Security. They didn’t choose to make these contributions, but now they are now faced with some very important choices about how to distribute these funds (choices that will have a major effect on their financial futures). As their advisor, you need to be aware of every tool and every strategy available to help them get every penny they have coming to them? What’s the return on this awareness (ROA) for your client?

• For a middle-income couple, it is not uncommon to see an $80,000 difference between a good decision and a poor one when it comes to when and how you take your benefits.
• For a couple with a maximum earner and a lower earner, $110,000 is not uncommon.
• If there is a substantial age gap between you and your spouse, the number is often larger.
• If you or your spouse has substantial longevity in your family, the number is larger.

Consider these 4 foundation building questions:

1) Who owns it?

2) How much is enough?

3) Who is the next steward?

4) Is that steward prepared?

Stewardship on a biblical basis requires us to ask these questions and it matters how we answer them.  Perhaps having some transcendent principles as a reminder would be helpful in your planning.  Do your current advisors offer diagrams to help you see how these may apply to your life.  Do you get a fence to sit on or are you given a place to see what is possible in your family?  Consider looking at the How Much Is Enough post here. In regards to is the next steward prepared look over my post for parents and for those without children what would God have you do?  There are opportunities to build a social and spiritual legacy with proper planning.

Some other questions along the journey to consider.  What does your spouse think about that idea or question?  Is there someone uniquely gifted to address the spiritual capital and within a biblical context? Are your plans done “at” others or are they done in light of and with others in mind? Does it matter how you leave assets to your heirs? What is the impact on 18 year old receiving a large inheritance ?  Are your advisors providing you a framework to address your faith in and through your planning of your estate?  If you wish to hear some inspiring stories of giving and legacy then consider visiting the site Generous Giving at www.generousgiving.org .

Both the financial services industry and insurance industry have been promoting 401(k)s, IRAs and annuities with great vigor over the past 30+ years.  Today, the advertising focus is less on funding IRAs and much more on Rollover Your Account with us.  Perhaps the two reasons: bigger money means bigger fees, and reality; there is a huge movement in 401(k) and 403(b) rollovers occurring right now due to lay offs and retirement.

The taxation of your Social Security benefits is determined by the amount of your Provisional Income. “Provisional Income” (PI) is defined as adjusted gross income + tax exempt interest + one-half of Social Security benefits [there are other minor items included as well]. Your Social Security benefits are subject to taxation only if your Provisional Income (PI) is above the stipulated levels discussed below; however, IRA money is taxable from the first dollar (for traditional IRAs). Since 100% of your IRA income is included in the Provisional Income formula and only 50% of your Social Security benefits are included, it is to your benefit to boost the relative size and absolute amount of the lower taxed Social Security benefits by delaying when you start them. Also notice, tax-free income from municipal bonds is included towards the taxiation limits of Social Security. However, tax-deferred income from safe money investments, like fixed annuities, is not, and nor is tax-free withdrawals from Roth IRAs.

Why do so many financial services professionals down play or ignore Social Security Retirement benefits when it typically represents the only source of income that does the follow four things? Inflation protection CPI-U, government guarantee, lifetime of income you can not out live, and tax advantaged.  Can you name another financial product that delivers ALL FOUR OF THESE? I did not think so. Neither could I.  If you go to www.stewardshipmatters.net and click on blogs there are several articles and look up under “financial strategies” to find over 15 articles on Social Security and how it matters to you and your family.

What are some other ways to deal with less taxes in retirement?  ROTH IRA is most obvious answer.  Other methods are real estate passive income with depreciation (rentals or REIT’s), oil and gas royalties with depletion, properly structured life insurance with cash values and loans provisions.  There are many other methods that involve charitable strategies like Charitable Remainder Trust, Charitable Gift Annuities, Pooled Income Funds are a few.

The four pillars are again: Good Health, Mobility, Socialization, Sustainable Income for Life.  All of these are interdependent.  Without mobility it makes it difficult to be social.  Without sustainable income there are health strains and mental strains. Without good health do any of the others matter?

“The researchers say they were somewhat surprised that neighborhood satisfaction didn’t play a larger direct role in the well-being of the elderly.” The Society of Advancement of Education and the Gale Group have more at this hyperlink.

While it may be easy to identify what is good health, mobility and socialization it is often difficult to determine what is sustainable income for life.  Sustainable means long-term and consistent or not risky.  Count on it as one would a pension or conservative investments.  If you want the word guaranteed attached it means you will be looking for an insured retirement solution.  Insured mean insurance not risky investments that over long periods may have produced.  Many of the asset allocation strategies are challenged and strained by the extraction of assets on periodic basis.  Simply put taking a cash flow when investment values are down is hazardous to your financial health.  If you just want the highest guaranteed cash flow then a single premium immediate annuity is most logical choice.  If you wish to create some control then look elsewhere.  If you are considering an indexed annuity you want to find out if you will be credited with gains during the year.  Why? because stuff happens and most retirees have either monthly income needs or RMD (Required Minimum Distribution) the amount the IRS requires when you are over age 70 and half and have qualified money aka IRA.

What is a pension?  It is a stream of income payments made over one or two measuring lives.  Most pensions require that if it continues that the other life be a spouse.  Extensive study done by The Ohio State University that the elderly love a high steady income stream.  What if you could have the best of the pension world and yet avoid the negative events of pensions?

Some of the negative issues associated with pensions: few have inflation protection and if provided often a fixed 2 or 3%; if you are single there usually is not an option to leave to others benefits; if married and both die then nothing left for heirs;  lack of protection if your benefit exceeds the PBGC limits of protection (2011 max for 65 year old $54,000 year); lastly if you needed some additional cash a pension would not provide any lump sums in the long journey of retirement.  See Longevity.

If a steady strong cash flow is “all” that one is seeking then a Single Premium Immediate Annuity or SPIA may fill the order.  Often consumers are surprised to hear their are other options associated with annuities than just straight or joint life income.  Here are a couple of choices in regards to an annuity.  Choose fixed term like 10 or 20 years only or choose life with refund of the initial premium to make sure at least the premiums paid in were at least paid back to the annuitant or their heirs.

Currently inflation could be addressed by a fixed annuity with a special rider that locks in the increases utilizing CPI-Urban Index.  In the past the only options were to plug in 1-6% annual increases and if you choose 5 or 6% then the starting amount was very small compared to non inflation option annuities.  Some carriers will offer inflation protection, but if you choose to take the income monthly or any point other than once a year event then loose all the earnings and forfeit gains.  Ask your annuity sales person if the Equity Indexed Annuity they represent will provide income on a daily basis or only once a year AND are you getting gains credited to you?  Think about it, you are required to take RMD or Required Minimum Distribution from qualified accounts like IRA’s. If you take it and the annuity will only provide once a year distribution then limits your ability to lock in gains and use them as you need them and more importantly when you need funds.  Suppose you are in one of these annuities and you die a couple of days short of next annual reset.  What you would expect to happen is the gains of the past year would be credited.  Most of the time it will not happen and the insurance carrier is simply keeping all the gains and not passing them on as the rules state MUST CREDIT on Annual or Bi- Annual (2 year) reset date and not before.

Insuring your retirement may be the best way to reach a long-term sustainable high income.  NOT getting Cost of Living adjustment upwards is one of the greatest fears according to recent survey by Spectrum Group.  70% of those surveyed with assets greater than $100,000 indicated that inflation is their greatest concern financially.

Shakespeare once said; “To Thy Own Self Be True”.  Look at your current financial situation and ask am I addressing inflation and are those that give me advice addressing inflation and more importantly are any sharing ways to lock it in?  If inflation runs 6% for the next decade due to poor monetary policies and over spending in Washington then would it not be prudent to explore CPI-U rider on your next financial purchase?  It is possible to lock in CPI-U on your retirement income and few advisors are discussing it.  Often they are simply asking you to trust the full swings of the market and weather the changes in valuation of your hard earned savings and retirement dollars. If you are of the belief that inflation will be higher and potentially very high like 1970’2 then consider getting a full lock in on CPI-U indexed income for life.  It can be guaranteed and can be a deciding factor in your happiness in your elderly years.

Do not forget to ask your agent or advisers the following: if you take money from your annuity during the year would you be credited with all the earnings and growth up to the day you take the money?  Most Equity Indexed Annuities do not provide and you could give up a large amount of money in an otherwise undisclosed fee or costs.  Recently, I was in a meeting and heard this question asked of agents and they thought their clients would get the earnings and gains on Equity Indexed Annuity and to their surprise it was not the norm.  Most DO NOT pay you out YOUR gains.  Beware.  Ask you insurance agent or advisor if you change your mind and wish to draw out a lump sum or get access to some of the cash bucket if you can do that after electing to lock in life income stream?  Chances are most do not allow this option and it make make all the difference in the world to your family.

Stewardship does matter when you choose your advisors, financial products, insurance plans and banking.  Your money does make a difference in your lifestyle and health and happiness.  There is a connection to your health, mobility, socialization to your desire to have a high sustainable income like the study at The Ohio State University revealed.

Three Myths on Mortality

1) Most of the Life Expectancy Tables are based on all ages and includes infant mortality and accidents of teens and others.  Therefore the numbers are reduced from real life expectancy.

2) Women will live longer than joint life of husband and wife.  Joint life will always be greater than the life expectancy on a single life woman.

3) Organ manufacturing will be available many years in the future.  Truth is it is here now and lungs and heart and kidneys are not being transplanted in humans and success rates are excellent due to new technology.

So what are numbers we should focus on as you prepare for retirement or plan the income needs within retirement?

The Society of Actuaries in report for United States Annuity 2000 Mortality Tables did the follow work up for joint lives of 65 year old living to various ages.

Age 80     90.6%

Age 85     78.4%

Age 90     57.0%

Age 95     30.6%

Age 100    11.5%

And this did not include known examples of improvement noting in other studies:  Include race, education, and financial considerations.  All having shown an impact to increase or lower mortality. So the above is averages and reflects less years than reality for many we meet.

If one third of life is in retirement years as indicated above would it not be prudent to consider the option of insured retirement solution?

Reality, many will out live their retirement plans savings and especially if adjusted for inflation during the decades following retirement.  We recommend getting educated about Consumer Price Indexed Inflation guarantees on lifetime guaranteed income as a foundation or base strategy for retirement funding.

Your permanent life insurance policy is a financial product funded with specific performance expectations. Cash accumulation goals for retirement.  Survivor income for your family’s needs.  Funding strategies for your estate plan.  Have you compared your actual results vs. your original expectations lately?

If not, you could be in for quite a shocking revelation. Your policy may be at risk and could lapse!

Many cash value policies are interest-sensitive, meaning some elements of the policy – dividends, cash values and even premiums – can change as interest rate conditions change. Declining interest rates and vulnerable markets place many policies in jeopardy of lapsing.

Performance Evaluation is a process initiated from dramatic changes in the life insurance marketplace over the past few decades. While today’s low interest rates and under-performing dividend performance have caused the bottom to drop out on many policies, the life insurance industry has responded with some of the best-priced, most efficient products ever available.

The Performance Evaluation program gives you an understanding of actual performance, with an eye toward maximizing value.

Step 1: Performance Evaluation – analyze your policy to make certain that current premiums fulfill your expectations.

Step 2: Market Survey – determine if you can reduce your premiums, enhance cash accumulation or extend the life of your coverage.

Step 3: Solution – recommend changes to your current policy that meet your goals and expectations.

The resulting Performance Evaluation Report provides the analysis you need to make informed decisions on this very important financial product – your life insurance policy.

Talk to your financial advisor about a free Performance Evaluation. Subjecting your life insurance portfolio to a formal Performance Evaluation is an important, financially sound practice.

“WHY” Evaluation

Update your Needs Analysis. Change is the one thing you can count on these days. Business start-ups become industry leaders. Children grow up and have children of their own. Bigger houses, smaller houses, vacation houses. Tuition. Retirement. A lot can change in your life after you buy a life insurance policy – and those changes can affect the policy you own.

Performance Evaluation helps keep your financial strategy intact. If needs or plans have changed, then your policy may need to be adjusted to fit your new circumstances. You may have too little or too much insurance for the present situation and future goals. Performance Evaluation integrates existing policy coverage and performance analysis with your life insurance needs and current product efficiencies.

Product & Pricing Improvements

The policy you bought, when you bought it was (most likely) an excellent product – a market leader and very well suited for the times. Products today are much more efficient than they have ever been. Medical advancements and healthier lifestyles contribute to longer life expectancies. New product developments, such as no-lapse guarantee pricing, have changed the landscape completely.

Even if your policy has performed up to par, the innovative products available today may improve cash accumulation, strengthen underlying guarantees or reduce premium outlay. Often the result is either greater positive cash flow or improved death benefit long term.

The end result may validate your original policy, offering only a few funding tweaks, if any at all. On the other hand, your Performance Evaluation may also result in a complete policy overhaul. Either way, you achieve the goal of evaluating an important financial product in your portfolio – your life insurance policy.

Lastly, if you are over age 70 and have cash value policy and are considering cashing in the policy, then consider selling to a Life Settlement Company rather than just accepting what the insurance carrier tells you.  There are firms that seek the best and highest payout to you and the numbers can vary a lot.  Google the Life Settlement industry and it could be worth a lot especially if your policy is over $250,000 of death benefit.  Realize that if you policy is only $50,000 then you might not get much attention.  Best if over $100,000 policy face amount when dealing with Life Settlements.

What are the 5 reasons to revisit investing cash into cash value life insurance contracts?  Before I share this with you, please realize you may very well utilize the current plan you have in place as well as have it properly funded for the best results. However, in these uncertain times, wouldn’t it be wise to have an overall policy review evaluation performed to be sure, even if you have to pay a fee to revisit your plan as still being what is truly best for your future? After all, the best laid plans completed a few years or even a decade or more ago may have changed what is currently in your best long-term interests considering recent years of economic fluctuations in the marketplace, and how these events may have adversely affected your overall big picture.

Reason 1: Insurance carriers take on risk in the market place as it relates to investment risk (including bonds).  Fixed Rate Life, or annuities have lifetime guarantees and current rates (usually good for 1-year).  Consider investing instead in Fixed Rate Life insurance … rather than buying bonds or mutual funds of bonds which fluctuate widely and shift risks to you.

Reason 2: Asset protection is important. With lawsuits abounding, many states have protection in place for life insurance and sometimes with annuities.  Florida has protections for both of these vehicles currently.

Reason 3: Tax-deferred growth on income assets.  If properly structured, tax-deferred growth can possibly be tax free with loans and withdrawals.  You are in the driver seat deciding when and how to receive “your” money, which places you in control rather than governmental required distributions, like in the Individual Retirement Account (IRA) scenario.

Reason 4: You may have a need for life insurance to cover debts, provide for lack of liquidity in assets, or provide a specified amount to your beneficiaries in your unexpected passing.  In the long haul, it can be cheaper than term insurance, but generally not cheaper for periods of less than 15 years, in my experience.

Reason 5: There are also options within Life Insurance (as an Asset vehicle) worth revisiting as well.  Accelerated Death Benefit, for one example, is a hybrid, long-term care program and found to be more cost effective than individual policies generally.  When add a spouse or children, this is even more efficient than term policies. Also, there are opportunities to exchange one contract for another, called a 1035-exchange, where you don’t have to pay taxes.  Fixed contracts can be moved to variable contracts or indexed products, and still unitize built-up gains, and not pay taxes on those gains at the time of the exchange. Lastly, someone wishing to do some structured estate planning can direct an option of a specified amount of income to heirs over time to protect the heirs from poor management or the spending of the principal, in haste.

While there are no perfect investments or insurance products for everyone, there are highly viable solutions from years past that have been enhanced or improved by either current conditions or industry changes.  Life Insurance as an asset class is worthy of taking another review.  And, even if you are not healthy, you can still buy insurance on others that you have a vested interest in, such as a child, spouse, parent or business partner. These all provide  monetary protection in the case of unexpected losses that life insurance as an asset class can best provide for you and your family.

You probably do NOT need Long-Term Care Protection if one or more the following apply:

No Assets you need or want to protect.

No need to protect the Retirement Income of a Spouse.

No need or care to protect Assets for Children or Grandchildren.

You are already on Medicaid.

You often have trouble now paying for utilities, food, medicine or other basic essentials.

Do you have a process or methods to open up the space to have a meaningful conversation?  Have you used tools like “values cards” or well, thought-out questions about the donor’s life story, to determine how they like to give?

2) If we listen attentively to each donor’s story, we can discover they they give.

Philanthropy coach and guru, Jay Steenhuysen, has studied and researched the 8 “Why’s” of donors’ givings for decades. The 8 levels of motivation Jay has identified are as follows: charitable intent, values, leverage, role model, family, expert, legacy, significance.  Additionally, there are 6 ways in which a donor “engages” these motivations: obligation, gratitude, relationship, mission, program, passion.  Obviously, we want to see more than simple obligation in giving and at work in a donor’s passion.  These engagements can be fostered and enhanced with the proper guidance.  Are we just too busy to really listen … trying to pack too much into our day.  The late Jim Rohn was big on the saying, “wherever you are, be there.” This is wise counsel to apply in all areas of our lives.

3) Once we understand the “why” of a donor’s giving, it’s relatively easy to then direct the “how”.

“How” is not simple fill-in-the-box forms, or doing things as we have always done in the past. To best seek the “how to give” means coming to the table, being on the same side of the table as the donor, and then helping guide the donor into seeking a meaningful, and well thought-out process.  Understanding the “Why” brings clarity. The “why” must then remain as the focal point to lead to the “how” of the planning process.

4) Sometimes the story “about” the gift … is more valuable than the gift itself.

Often, “the story” brings heirs and others together encouraging and inspiring them to be, or to become, “thoughtful” and intentional givers. It brings a sense of intentional stewardship to those that hear the story. Consider how you might capture the story. One suggestion is to record an audio of such a priceless legacy conversation, or chat. Utilize well, thought-out questions in the process, and really have fun being there with others in their story.

The outcome: ALL will be blessed, both today and in the future.

The year 2004 and my boys had come home from preschool and each had planted seeds and seen a small plant emerge and they were not impressed.  For some reason this bothered me that the miracle of life did not excite them with a sense of wonder and what is possible. I decided to purchase mammoth sun flower seeds, a tray and some top soil for sowing. We planted 36 seeds only 33 germinated and 3 did not look like the package.  Couple of lessons here: not everything is productive and sometimes the results are not what we expect.  About 10 days latter we transplanted them in the ground.  And within the next 3 months we had plants towering from 6 feet high to 12 feet high.  While that was exciting to the boys there is more to the story.  We harvested some 72,000 seeds from those 30 mammoth flowers.  Next, I asked of myself and the boys what would be possible if we did the math to determine the potential of 12 months of sunflower seeds being planted again two more times?  The numbers came back at 28,800,000 seeds in one year. Wow! Think about it.  Are we not seeing what is possible? Are we so focused on current circumstances we do not see the potential of planting the seeds of the plant we already have in front of us.  Or have we tried and failed and now question even trying again.

What does the abundance look like around us each day?  In the artist world it’s writing, painting, singing to create something from almost nothing.  So canvas and paints costs $25 and could sell for hundreds or thousands.  In the business world it’s taking idea of goods and services and bringing them to the marketplace and selling them for a profit.  In the consultant’s world it’s finding problems in organizations to fix for a fee or potential opportunities yielding results not seen. Often times we are told that it is not possible or you can’t do that, or it will not work.  This mental construct of “can’t” shows up more than we will admit.  Just like the sun flowers need nutrients, sunshine and rain and some weeding and care.  We can hope and pray for big results on the seeds planted and sometimes the harvest is great and other times not so. There are always attacks on our garden and to think differently is naïve.  Knowing we will have to weed and water and care we still should plant and take risks and think about what might be possible.  The “can’t” tell you or your nonprofit board to not try anything new or focus on the current problems and not about vision, mission and values.  What is possible when our boards are relieved of solving daily operational issue and focus on what is possible for the community?  Not how are we going to help the sick but rather what is possible to reduce or eliminate the illness?  Rotary took on the Polio vaccine raised money and teamed up with World Health Organization to deliver vaccines globally.  One man took up the cause and asked what if we could eradicate polio forever?  We are very close to seeing this accomplished in the next couple of years.

Another weed in the garden of possibility is negative thoughts of board members or council or elders thinking they are only volunteers.  Or the culture that says this is a non-profit what can we do?  I am not wealthy individual what can I do? According to Hildy Gottlieb maybe organizations should think in terms of what they really do and rename non-profits “community benefit organizations”.  Yeah I like the sound of that.  Focus not on weeds or daily problems as you form a vision statement of what is possible.  Think about the future impact as a visionary. Plan towards inspiring goal rather than fixing something broken.  See what our world and communities would look like if focused on building healthy vibrant communities.  What if we took the seeds harvested and shared and planted and sowed them abundantly.  What if our leaders could focus on the positive impact both now and future rather than chase operational issues that tear away energy.  If this sounds too much like mumbo jumbo and you love for your board to act as operations director or human resources director then turn this stuff off.  If on the other hand you know deep inside there is more that can be done in your community benefit organization then tune in again as we take an amazing journey together.

The Philanthropic Advisors Council of Central Florida’s mission is to increase the quality and quantity of charitable planned and major giving in the Central Florida community by providing a forum for education, training and networking among various professional disciplines involved in charitable planning, in accordance with The Model Standards of Practice for Charitable Gift Planners. The Model Standards of Practice for Charitable Gift Planners.

I am the current President of PACCF and you can find us at www.paccf.com 

We meet five times a year as a group, and monthly as a board.  We serve Brevard, Lake, Marion, Orange, Osceola, Polk, Seminole, Sumter and Volusia counties.  If you are a nonprofit organization in any of these counties, you have a wonderful resource available to you and your people.  If you are a professional advisor such as a trust officer, attorney, accountant, financial professional or consultant, you should come check out PACCF.  PACCF was previous called the Planned Giving Council of Central Florida and is now part of a national group, Partners in Philanthropic Planning or PPP.

Below you will find The Model Standards of Practice for Charitable Gift Planner:

PREAMBLE
The purpose of this statement is to encourage responsible gift planning by urging the adoption of the following Standards of Practice by all individuals who work in the charitable gift planning process, gift planning officers, fund raising consultants, attorneys, accountants, financial planners, life insurance agents and other financial services professionals (collectively referred to hereafter as “Gift Planners”), and by the institutions that these persons represent.
This statement recognizes that the solicitation, planning and administration of a charitable gift is a complex process involving philanthropic, personal, financial, and tax considerations, and as such often involves professionals from various disciplines whose goals should include working together to structure a gift that achieves a fair and proper balance between the interests of the donor and the purposes of the charitable institution.

I. PRIMACY OF PHILANTHROPIC MOTIVATION
The principal basis for making a charitable gift should be a desire on the part of the donor to support the work of charitable institutions.

II. EXPLANATION OF TAX IMPLICATIONS
Congress has provided tax incentives for charitable giving, and the emphasis in this statement on philanthropic motivation in no way minimizes the necessity and appropriateness of a full and accurate explanation by the Gift Planner of those incentives and their implications.

III. FULL DISCLOSURE
It is essential to the gift planning process that the role and relationships of all parties involved, including how and by whom each is compensated, be fully disclosed to the donor. A Gift Planner shall not act or purport to act as a representative of any charity without the express knowledge and approval of the charity, and shall not, while employed by the charity, act or purport to act as a representative of the donor, without the express consent of both the charity and the donor.

IV. COMPENSATION
Compensation paid to Gift Planners shall be reasonable and proportionate to the services provided. Payment of finders fees, commissions or other fees by a donee organization to an independent Gift Planner as a condition for the delivery of a gift are never appropriate. Such payments lead to abusive practices and may violate certain state and federal regulations. Likewise, commission-based compensation for Gift Planners who are employed by a charitable institution is never appropriate.

V. COMPETENCE AND PROFESSIONALISM
The Gift Planner should strive to achieve and maintain a high degree of competence in his or her chosen area, and shall advise donors only in areas in which he or she is professionally qualified. It is a hallmark of professionalism for Gift Planners that they realize when they have reached the limits of their knowledge and expertise, and as a result, should include other professionals in the process. Such relationships should be characterized by courtesy, tact and mutual respect.

VI. CONSULTATION WITH INDEPENDENT ADVISORS
A Gift Planner acting on behalf of a charity shall in all cases strongly encourage the donor to discuss the proposed gift with competent independent legal and tax advisors of the donor’s choice.

VII. CONSULTATION WITH CHARITIES
Although Gift Planners frequently and properly counsel donors concerning specific charitable gifts without the prior knowledge or approval of the donee organization, the Gift Planners, in order to insure that the gift will accomplish the donor’s objectives, should encourage the donor, early in the gift planning process, to discuss the proposed gift with the charity to whom the gift is to be made. In cases where the donor desires anonymity, the Gift Planners shall endeavor, on behalf of the undisclosed donor, to obtain the charity’s input in the gift planning process.

VIII. DESCRIPTION AND REPRESENTATION OF GIFT
The Gift Planner shall make every effort to assure that the donor receives a full description and an accurate representation of all aspects of any proposed charitable gift plan. The consequences for the charity, the donor and, where applicable, the donor’s family, should be apparent, and the assumptions underlying any financial illustrations should be realistic.

IX. FULL COMPLIANCE
A Gift Planner shall fully comply with and shall encourage other parties in the gift planning process to fully comply with both the letter and spirit of all applicable federal and state laws and regulations.

X. PUBLIC TRUST
Gift Planners shall, in all dealings with donors, institutions and other professionals, act with fairness, honesty, integrity and openness. Except for compensation received for services, the terms of which have been disclosed to the donor, they shall have no vested interest that could result in personal gain.

Adopted and subscribed to by the National Committee on Planned Giving and the American Council on Gift Annuities, May 7, 1991. Revised April 1999.

1) First, we know that frequent flyer miles are not free. We have to purchase or sign up and give something in return for the miles.  Long-term care insurance policies cost real money; not just inconvenience transactions.

2) Like Frequent Flyer miles or credits, there are rules in order to collect on them and details to which you must comply.  Some rules are easier than others to comply with in order to collect on the policy.  The easy ones require no documentation, and you must only qualify for 2 out of the 5 Activities of Daily Living, and you’re set. ADLs (Activities of Daily Living): The things we normally do in daily living include any daily activities we perform for self-care (such as feeding, bathing, dressing, and grooming ourselves), work, homemaking, and leisure. The ability or inability to perform ADLs can be used as a very practical measure of ability or disability in many health-related disorders.

3) Even if you qualify for the ADLs listed above or have doctor’s recommendations for a Long-Term Care (LTC) facility, that is not all of the story.  Many of these LTC facilities fill up and/or have limited openings.  So, while you may have the points to fly, the airline may not have the capacity for you to collect at the time and location desired (basic supply and demand concept at work here).

4) You may not need long-term care or the benefits a policy could provide, or pass away before using it.  Frequent flyer points today often have expiration or reset dates, or limitations and could go unused due to various factors.

So how would one potentially get more out of both their long-term care (LTC) benefits and frequent flyer benefits?  Both require a little intentional work and advanced planning. While we do not know when and if we will use long-term care benefits, it would be beneficial if there were a provision to refund or get back some or all of the payments into such a plan so perhaps a little less painful. In this case, application of a Hybrid method would be helpful; look at policy riders on annuity and life insurance products that provide some form of long-term care or accelerated death benefit option.  Today, there are more options for this type of protection than ever before as the Pension Protection Act 2006 has expanded the definition of death.  Talk to your financial advisor or insurance agent to see if this could be beneficial for you and your family.

Example: Millie and Otis are seeking to retire and both are 66 and life expectancy for Millie is much greater than Otis life expectancy.  Otis benefits are  greater and he would like to increase his base benefit especially to provide for his spouse when he is gone.  One option is he could file a “restricted” and collect on Millie under the spousal while Millie collects on her own benefit.  By doing this Otis get to increase his base amount by 8% each year until age 70 and all the while collects his 1/2 of Millie benefit under the restricted spousal option.  Millie draw all of her benefit and they file later for the large base on his perhaps at age 68,69 or 70?  Depends on his Life Expectancy as to when to switch over to his own and yet still maximize it for Millie.  Do not expect the Social Security Office to come up with this option for you as it clearly spells out on www.ssa.gov site does not allow financial planning rather to provide you with number crunching and forms to do what you wish to do.  We have a special calculator that is free and very useful for those wishing to find out “what is at stake?” It is on the right side of the home page of www.stewardshipmatters.net and getting experienced help can mean getting on the right side of your retirement cash flow.

What could be the worst assets to leave to charities?  Depends on who you talk to on this one.  Some could argue for mortgaged real estate, and others say collectibles that are not going to be used by the charity, such as high end artwork sold immediately for cash at charity.  Still others may argue it would be cash, since cash is cash and did not leverage the opportunities to take other potential assets that would be taxed and under a gift not be taxed.

Example of leaving Individual Retirement Account to Children vs. leaving to charity:  $100,000 IRA left to child (assume adult, and employed) – what happens most is the lump sum distribution is made to this heir and adds taxable income on top of current income often pushing them into higher, if not the highest tax bracket.  So, someone in 15% or 25% bracket gets pushed for one year into 35% bracket (scheduled to go to 38.5% Federal alone).  So, the net received would be about $65,000 if no State Income Taxes.  On the other hand, charities would receive 100% of the otherwise taxable funds. So IRAs are great for charities, but not so great for family and others. For those of you over 70 1/2 taking Required Minimum Distributions RMD’s you can opt for payment while living direct from your IRA to your charity- talk to tax adviser to see if this would benefit you.

Can you see that if the will or trust spelled out to give “cash” to charity at death and not other taxable assets how it potentially harms your heirs?  Something to think about and plan for as you work through your own estate planning process.

- Social Security Administration

I wonder if Boston College or other Universities doing financial studies on SSA have looked into the costs of same sex marriages, and the stress it might impose on Social Security Retirement Benefits and funding?  If any of you know of a study I would love to hear about it.  This would make for interesting conversations on talk radio.

I recently read this guideline and found it useful to share.

Grade school ages 6 to 12

Discuss caring for possessions.

Structure an allowance: Most experts suggest a modest amount for being part of the family and doing certain basic household chores.

Provide jobs for pay. Do not over look lemon aid stands, washing cars, yard work, babysitting and pet sitting as money makers.

Encourage longer-term savings: consider matching any money they save for over a year.

Set limit around money, for example, not buying everything they want when you go shopping.

Introduce giving and philanthropy.  Instruct them and take them to visit a person of place that benefits.

Teen years 13 to 18

Insist on summer employment or holiday breaks to fund their own ROTH IRA.

Guide them through their budget and a 1040 tax return.

Advocate smart consumerism: for example, discuss the messages in advertising and the impact of advertising on their purchases.

Discuss the intelligent use of credit cards and checking accounts.  Be sure they open an account. Look at credit unions.

Explore investments on the internet.

Engage them in philanthropy: Encourage site visit and include them in evaluating gift decisions.

Teach them about giving and what motivates you to give.  Share how different people give for various reasons as and it is alright to give for another reason than your reasons.

College years, age 18 and over

Work with them on a college spending budget.

Insist on some employment-summer to fund ROTH IRA.

Set up adviser-facilitated learning about investments.

Provide money for them to manage.

Explain the roles of trustee and beneficiary, if trust are used in your family.

Engage them in philanthropy: add them to your board of your philanthropy fund. Get them familiar with donor advised fund or community foundation concept from online resources.  Is there a Philanthropy summit in your area to consider going to and learn.

Early on simple things like explain the home economics of buying stuff to make at home verses going out to get it prepared.  Perhaps doing a home project and then discussing the economics of it. When the plumber comes to the house it is fine to discuss that costs with your kids.  When I have done this it opens up several other conversations about various occupations and the opportunities for the future.

If you are nonprofit fundraiser, major gifts officer or planned giving officer do you get the “balance sheet” on the table when you make recommendations? If not, do you engage those that do know the balance sheet and discuss what is appropriate? Look back can you see how important it is to do so?

Is it apparent that both sides need each other?  Is there training to bring both sides together and place the donor or individual’s wishes at the center of the process?  Yes there is and the most respected materials are offered by the American College program called Chartered Advisor in Philanthropy or CAP.  Indiana University School of Philanthropy also acknowledges these three graduate level courses in their curriculum as well as other universities.  Both the “why and “how” are important.  Putting it together matters.

Here is what the American College website shares:

Become a Trusted Philanthropic Advisor to Donors and Clients

The Chartered Advisor in Philanthropy^® (CAP^®) provides you with the knowledge and skills needed to help clients and donors achieve their highest aspirations for self, family, and society. This credential helps to:

• Position you as a confidante to clients and donors as they plan for a better life in a better world.
• Integrate gift planning with estate planning, business succession planning, and investment advisory services.
• Integrate gift planning with a nonprofit’s major gift
  and planned gift programs.
• Emerge in your community as a leader whose legacy — via clients and donors — will live for generations

These are graduate-level courses, and, in the process, you can earn credit toward a Master of Science in Financial Services degree.

The CAP^® program is designed for self-study, leading to an objective exam in a local exam center. All courses include pre-recorded lectures in which the professor who created the course, Phil Cubeta, guides you through the material step by step. It is like having your own private tutor. And, you can review these lectures at your convenience, any time day or night.  There maybe a local study group as well.

GS 839 Planning For Impact in Context of Family Wealth

Focuses on how clients and donors can use financial planning, estate planning, and gift planning to advance their personal financial goals while also having a positive impact on their heirs and on their community

GS849 Charitable Strategies

Focuses on the tools and techniques of charitable planning in a financial, tax, and legal context.

GS859 Planning in Nonprofit Context

Focuses on what nonprofits call “planned giving.” The course is designed to help board leaders, advisors and nonprofits collaborate to create, count, and steward significant gifts.

Who Takes the CAP?

Over 500 professionals from many disciplines have taken CAP^®. The interdisciplinary diversity of our group is intentional. We are a growing network across the professions to help bring our respective “bodies of knowledge” into a practical synthesis for the benefit of those we serve. These professionals include:

• Attorneys
• CPAs
• Development officers
• Planned giving officers
• Financial planners/wealth advisors
• Insurance professionals
• Philanthropic advisors in family offices
• Philanthropic advisors working with wealthy families on strategic grant-making

You will be glad you engaged into this unique training.  Let me also suggest you follow through on all the recommended reading outside of the main course materials as well- do it for what it will make of you.

It matters to you and your community.

Here’s a question that was raised this week: “If I first claimed my Social Security benefits at age 62, and I’m now age 66 and working at new job, what can I expect or do about what has already been done?”

Full Retirement Age (FRA) is currently age 66 for those thinking about filing benefits.  There is an option to “Suspend” payments at age 66 currently, and then receive 8% increase each year you delay claiming your benefits for each of the next 4 years through age 70.  For example, if you’re age 66 and already receiving benefits, then you could stop receiving Social Security payments and lock in an 8% increase in benefits per year up to age 70 maximum, or receive a total of 32% more total benefits for the rest of your life.  If you believe your life expectancy age to be low, this would not make sense of course. However if you believe your life expectancy age is higher than average given your family history and/or the status of your current health, you should seek advice and consider this option.  If you were eligible to receive, say, a $1,000 of monthly Social Security benefits beginning at age 66, and then suspend receiving those benefits for the next 4 years through age 70, this would then increase your benefits to $1,320/month (or $320 more per month), which would be a 32% increase in benefit dollars annualized than if you began collecting your retirement benefits at age 66.

If you are married, and either you or your spouse has not yet filed, then perhaps focusing on maximizing your collective Social Security retirement benefits would be your best option so neither of you leave money on the table.  We have a calculator on our website which allows you and/or your advisors to calculate the benefits of working through these 9 Social Security strategies, with specific emphasis on the 2 major switch strategies. When you click on this calculator link here, or on the right side of the home page of Stewardship Matters (see website link address below and click on “Social Security Timing”), select “no thanks” for help and click on what is at stake at the end of your inputs to see that … “it does really matter!”

We also have some other articles posted on our website that you may wish to check out as well. Come visit us @ our website: www.stewardshipmatters.net.

Category of legacy in the blog section- does not require any memberships or special logins. Have a terrific day.

1. What is your experience with investing?

2. What professional certifications do you hold?

3. How are you compensated? Fees? Commissions? A combination of fees and commissions?

4. What is your investment philosophy?

5. Once you have invested client assets, how do you monitor investment performance?

6. How do you integrate a biblical world-view into your investment philosophy?

7. How do you determine whether or not a client should be investing, and what is your process for selecting the most appropriate investment options?

8. How often do your clients get statements of their investment holdings?

9. Where are your clients’ investments held? A brokerage firm? A mutual fund? Which one?

10. If your clients’ investments are held by a brokerage firm or mutual fund, does the brokerage firm or fund charge separate fees for this?

11. How often do you report performance to your clients?

12. What type of investments do you use for your clients? Load or no-load mutual funds? Stocks? Bonds? Annuities? Other?

13. Do you consider the impact of income taxes on investments choices made for a client?

14. How often do you communicate with your clients? How do you communicate? By phone? Meetings? Mail? Email? Newsletters?

15. Do you provide other financial services in addition to investment advice/management? What are those services?

Here are additional questions if they tell you they do financial planning.

Do you do comprehensive financial planning?

Comprehensive planning should include: review of insurances (life, health, auto, homeowners, disability, LTC, etc.), investments, cash flow analysis, tax analysis, estate planning, elimination of debt. Consideration should also be given to a person’s age, career status, family situation, and financial experience.

Do you work for an insurance company, investment company, or a broker-dealer that manufactures insurance or investment products?

Some planners are required to either recommend only proprietary products or are given incentives to do the same that may affect their level of objectivity.

Are you paid by fees, commissions or both?

If fee, do you charge a flat fee or an hourly rate? If commission, does that offset the fees, if any? Generally, when you pay someone a fee, you are paying for their advice. Since you are paying for their time they can assist you in the many areas of planning that do not lead to a product sale. When someone is paid commissions only, although they may do comprehensive planning, they would only be compensated on the specific financial transactions, such as insurance or investments, and those commissions could be many times higher the first year than subsequent years.

What is your process and how many times will we meet?

Generally there will be a series of meetings that may include factfinding, presentation of the plan, a series of implementation meetings, and on going reviews. After the initial year, reviews may be offered once or twice annually, and may be in person or by phone.

How many clients do you have?

Generally people that do comprehensive financial planning will have 50 to 100 clients. If they have fewer, it may be due to either being new to the business or they limit their practice to a small number of high net worth clients. If they have more, especially if it is in the hundreds, they may be more transactional in nature and may provide a more basic planning service or provide a lesser amount of ongoing service and review.

What percentage of your compensation is from fees and from commissions?

This will show you their preferred approach to doing business. If they are transitioning from commissions to fees it may be helpful to see how the current breakdown compares with 2 to 3 years ago.

Do you think it is good to pay off my house by retirement?

Sound financial planning should be prepared for the worst case scenarios. These would include natural disaster, national crisis, economic disaster, loss of job, declining health, premature death etc. When one or more of these things happen, owning your house free and clear can add some stability to your financial situation and increase your peace of mind. A planner that recommends you borrow from the equity in your home to make financial investments may receive compensation for that advice. That compensation may affect their recommendations when it comes to what is in your best interest and could reduce your peace of mind.

When one chooses a financial advisor of any discipline, they are looking for several things, most importantly that their advisor is interested in their needs first and foremost. They want someone who is competent, performs their work with excellence, and has humility and integrity. Many advisors, Christian and non-Christian, can meet these requirements. So, what is the difference? I believe that there are at least four primary differences between any advisor and a Qualified Kingdom Advisor.

First of all, God’s word says “The mind of man plans his way but the Lord directs his steps,” Proverbs 16:3. Additionally it says that “The fear of the Lord is the beginning of wisdom,” Psalm 111:10. Ultimately you should expect and desire your advisor to give advice that is consistent with God’s word. There is a higher standard for a Christian than for a non-Christian in making their financial decisions because they are handling God’s resources. It is interesting that God’s word says that the fear of the Lord is the beginning of wisdom. Scripture has over 2,000 verses dealing with money and money management. His principles and truth transcend time, income levels, cultures, experiences, tax law changes, market ups and downs, etc. God’s word is a light that should guide every area of our lives and very significantly the financial area of our lives. You should expect from a Qualified Kingdom Advisor that they are prayerfully seeking God’s wisdom to share with you as they make any recommendations relative to your financial situation. A non-Christian advisor can never bring true light to your situation. This in no way impugns the quality of the advice that a non-Christian advisor gives, but a higher standard is biblical wisdom and only a Christian financial advisor can bring that.

Second, a Qualified Kingdom Advisor is going to have a worldview or a perspective that is different from the non-Christian. It is eternal in its nature and consequently for the client it helps him or her to actually be stewards of God’s resources. The advisor facilitates helping a client make financial decisions that have eternal consequences. The Christian advisor is not necessarily better but he is different.

The third reason is that the character of a believer in Jesus Christ should be of a higher standard than a non-believer. As you read scripture and see what God’s standards are the character qualities of that advisor should reflect scripture. Again, we are not saying that a non-Christian does not have character but what we are saying is that the Christian person has a character that is being constantly developed by the Holy Spirit and it is right to expect the character of the believer to be different than the non-believer.

Last, as you review the requirements to become a Qualified Kingdom Advisor you need to know that only few attain to this level. The standards are very rigorous, including training over nine months as well as someone who personally practices stewardship in his or her life.

We believe that you have a right to expect, in dealing with a Qualified Kingdom Advisor, someone who is a disciple of Christ, has been equipped, and is motivated to assist others to grow in their relationship with our Savior. These are men and women who, in all humility, have committed their lives to serving the Lord Jesus for kingdom purposes. They find their fulfillment in their calling to be of service to you. They understand that they are dealing with the resources that God has entrusted to you, the goals that God has given to you, and the desire that you have to be a good steward with all that God has entrusted to you.

You can access Kingdom Advisors at www.kingdomadvisors.org

A Christian financial professional should first and foremost acknowledge God as his/her ultimate authority and the Bible as his infallible word given to mankind to guide and direct all behavior. In so doing, the professional should operate within a higher standard established by God and should adhere to Biblical principles. A Christian financial professional should seek to incorporate and practice biblical principles and wisdom into the advice they give to their clients.

Emphasis on Stewardship

A Christian financial professional should understand that God owns everything and that we are only managers. (Psalm 24:1). He/She should see that every spending decision is a spiritual decision. The financial professional should also see themselves as a steward over the relationship they have with the client.

Eternal Perspective on Money

The professional should have an eternal perspective on life and the use of money. A Christian financial professional should help the client set a Biblical world-view of their financial future as opposed to a “secular” worldview-funding God’s Kingdom as a focal point instead of accumulating money for the client’s use only. A Biblical world-view focuses on preservation and steady growth (Proverbs 28:20) instead of “get rich quick programs.”

Responsible Spending

A Christian financial professional should see the need to set long-term financial goals (Proverbs 16:9)– seeing time as a tool not an enemy (Proverbs 6:6-8). This includes focusing on avoiding a consumptive lifestyle by living within one’s means, spending less than one earns (Proverbs 13:11), saving and investing (Ecclesiastes 5:10). The professional should view the use of debt as something that should be avoided whenever possible. (Proverbs 22:7).

Integrity

A Christian financial professional should maintain the highest level of professional integrity by maintaining confidential relationships with their clients and by having a firm commitment to operate within the law. The professional should use all the legal tools available to serve the client and help the client be the best stewards possible of the resources entrusted to them by God.

A Christian financial professional should demonstrate objectiveness when working with the client. This includes the ability to listen carefully to the client as the professional seeks to discern the person’s objectives. When dealing with a married couple, the professional should weigh both people’s goals and interests equally. The professional should also put the client’s best interest above their own.

Professional Competency

A Christian Financial Professional should have obtained the proper education, training and or designation to prepare him or her to perform comprehensive financial services for his or her client while always striving to improve his competence to practice. The professional should also have experience in handling the issues that the client needs.

A Good Reputation

The professional should work honestly with clients, other associated professionals and government officials. Proverbs tells us that, “a good name is more desirable than great riches,” and “to be esteemed is better than silver or gold.” A Christian financial professional should be held in high regard by his/her peers and clients, and he/she should be considered a leader in the community and church in which they belong.

You can find Kingdom Advisors on the web at www.kingdomadvisors.org

When I spoke about Social Security planning at the NTSAA 403(b) Advisor Summit in Las Vegas last
month, much of the discussion centered on the Government Pension Offset (GPO) and Windfall
Elimination Provision (WEP) in Social Security. If you’re an advisor who works with teachers, police
officers, firefighters, government employees or the spouses of those workers, you need to be aware of
these provisions and how they affect your clients.
While the GPO and WEP differ in who they affect and how they impact benefits, both are aimed at
reducing Social Security benefits for people who receive a pension from work in which they did not
pay into the Social Security system.

Government Pension Offset Explained
The GPO reduces a government employee’s Social Security spousal and survivor benefits by two‐thirds
of their government pension. Normally, the Social Security spousal benefit is equal up to 50% of the
retired or disabled worker’s benefit and up to 100% of the deceased worker’s benefit. GPO reduces the
spousal and survivor benefit for spouses who also qualify for a government pension by two‐thirds of the
pension amount. If the pension from non‐covered work is sufficiently large in comparison to the Social
Security spousal benefit, GPO may eliminate the entire spousal or survivor benefit.
For example, Cindy worked in non‐covered jobs her entire career and has a $3,000 a month pension. Her
husband Bruce worked enough in Social Security‐covered employment and is eligible for a $2,500 per
month Social Security Benefit if he elects at age 66. Cindy is, therefore, eligible for a spousal benefit of
up to $1,250 under Bruce’s work history. However, under GPO Cindy’s spousal benefit is reduced to $0
because two‐thirds of her pension ($2,000) is greater than her spousal benefit ($1,250).
Upon Bruce’s death, she would still get a survivor’s benefit, but it would be only $500, rather than the
$2,500 (at her full retirement age) she would get if the GPO did not apply.

GPO Example Bruce Cindy
Social Security Worker Benefit $2,500 $0
Monthly Pension amount $0 $3,000
Maximum Spousal Benefit $0 $1,250
GPO Reduction ($3,000 x .66) $0 $2,000
Actual Spousal Benefit ($2,000 ‐ $1,250 = $0) $0 $0
Survivor Benefit (What Cindy gets if Bruce Dies) $0 $500

Windfall Elimination Provision Explained
The WEP reduces the Social Security benefits of people who qualify both a Social Security benefit and
a government pension based on their own earnings. In order to understand how WEP affects benefits,
you first need to understand the basics of how Social Security benefits are calculated. In general, a
worker’s monthly Social Security benefit is based on his or her 35 highest‐paid years in Social Securitycovered
employment. The worker’s earnings are indexed to wage growth to bring earlier years up to a
current basis, then divided by 35 years, and divided again by 12 months per year to determine the
Average Indexed Monthly Earnings (AIME). Once a worker’s AIME is established, the Social Security
Benefit Formula is applied to arrive at their Primary Insurance Amount (PIA).

Social Security Benefit Formula
Factor Average Indexed Monthly Earnings (AIME)
90% Of the first $767
32% Of earnings over 767 and through 4,624 plus
15% Of earnings over $4,624

As you can see, the formula is progressive, which means workers with low average lifetime earnings will
receive a larger proportion of their earnings as a Social Security benefit.
For someone who worked in the private sector for 10 years then changed careers to become a public
employee who didn’t pay Social Security taxes, their AIME would be relatively low because their 10
years of income would be averaged over 35 years. Therefore, the benefit formula would replace more of
their earnings at 90% than someone who spent his or her full 35‐year carrier in covered employment.
This is known as a windfall. Under the WEP, instead of 90% of their first $767, this worker would only get
40%. Let’s look at an example of someone with an AIME of $1,500.

Regular Benefit Formula Windfall Elimination Formula
90% of first $761 $684.90 40% of first $761 $304.40
32% of earnings over $761 and
through $4,586 $236.48 32% of earnings over $761 and
through $4,586 $236.48
15% over $4,586 $0.00 15% over $4,586 $0.00
Total PIA $921.38 Total PIA $540.88
The WEP reduced this worker’s earnings by $380.50 per month. A worker’s WEP reduction cannot
exceed more than half of his or her pension. And workers who have 30 or more years of Social‐Securitycovered
employment are exempt from WEP.
For each year over 20 of “Substantial Earnings” a worker receives a 5% addition to the percentage in the
first bend point. For example, a worker with 22 years of Substantial Earnings would have a 50% factor,
rather than 40% of the first $767.

How Many are Affected?
According to the Social Security Administration1, GPO and WEP affect a relatively small portion of the
population. In December 2009, the SSA reported that nearly 522,000 Social Security beneficiaries, or
about 1.6% of all retired worker beneficiaries, had spousal benefits reduced by the GPO and 1.2 million
Social Security beneficiaries were affected by the WEP (about 3.3% of retired workers). Of those 1.2
million, only 8% were spouses and children of affected workers. I would propose that the numbers are
actually considerably larger (particularly spouses and children). If spouses were aware of the “restricted
application” and it was a more common technique, a considerably larger portion would end up
subjected to the WEP.
Take the example of Jim and Susan. Susan was a teacher who did tutoring on the side throughout her
career. Jim was the higher earner. Under normal circumstances, which is all the SSA’s numbers above
account for, Susan would be affected by WEP and Jim would fall into the 92% of spouses that SSA claims
are unaffected. However, Jim and Susan’s advisor runs their numbers through Social Security Timing®
and the software recommends that Jim file a restricted application, i.e. file for a spousal benefit under
Susan’s record at age 66, then switch to his own benefit at age 70. In this scenario, which the above
stats do not account for, Jim’s spousal benefit would be impacted because Susan’s total benefit has
been reduced by WEP.

What’s at Stake?
The point of all this is to raise awareness of two issues: First, GPO and WEP affect a lot more people than
even the government realizes. Second, there are ways to get more benefits for your clients by
understanding these results and having a process like Social Security Timing® in place to identify optimal
claiming strategies.
Let’s go back to the first example outlined in the explanation of the Government Pension offset
explanation. Cindy’s entire spousal benefit was eliminated by GPO and after Bruce’s death she would
only have received about $300 as a survivor benefit. A simple analysis by their advisor would have
revealed that if Bruce were to delay his benefit to 70, the survivor benefit to Cindy would be $1,300.
That could easily make the difference between whether Bruce should elect at full retirement age or
delay. In short, we are happy to now be able to provide a process that incorporates both the WEP and
GPO.
As an advisor who works with government employees, you need to not only be aware of how these
provisions work and who they affect, you also need to understand that your clients are beginning to
expect this kind of advice when it comes to Social Security. According to research conducted in 2012,
57% of married couples age 60‐66 now expect Social Security advice from their financial planner.
Another 56% said they would actually look for a new advisor if their current one didn’t offer this kind of
advice. In other words, when it comes to Social Security planning, your clients aren’t the only ones who
have something at stake.

1Social Security Administration, Office of Research, Evaluation and Statistics, January 2010
2Social Security Timing, Social Security Planning: A Cornerstone of Your Financial Practice?, 2011

So, let us ask ourselves this question — how would you feel about handing your hard-earned money over to your teen’s enemy? Listen … there are enemies lurking in the shadows waiting to prey on our teens, and whether we like to think about it or not, this is reality today.  Our teen’s enemies are … the school bully, the drug dealer, the prostitute, and many, many more who cleverly disguise their wolf-like motives in sheep’s clothing to our kids of all ages, not just teens.  We all can be unknowingly contributing funds to these “enemies” when we just hand over some cash in the moment.

We also do this same type of thing potentially unknowingly when we invest, and don’t ask enough questions.  We hand over our hard-earned money and provide capital and loans to businesses that are in it for profits at any and all costs.  Contemplate for a moment what values are most important to you and your family.  Are they environmental, social and faith-related values?

So, how does mishandling of our hard-earned money occur? Okay, it may not be necessarily “mishandling” of our money as the investments still make money, right? But, at what expense to our world, our culture, our children and our children’s children?  Well, we’ve been trained to hand over our hard-earned money to mutual fund managers, believing they will invest it “wisely” (but, what does “wisely” mean to them?).  However, many managers also entrust money to corporations they don’t know the values of and unknowingly hand over our money to provide financing and market support both directly and indirectly to … who exactly? Are we all just to blindly trust that these big corporations value what we value — I’m sure that’s what they’re banking on.  Now, in some cases, investment managers are confronted directly with their choices.  For example, Goldman Sachs recently was made aware of a corporation that indirectly made significant revenues from child slavery.  A company named Village City runs a weekly “social newspaper,” and out of the vast amount of classified ads, most of these ads target our teens.  Anti-slavery advocates have discovered and uncovered activities supported by this “social newspaper” to openly facilitate teen prostitution, illegal drugs and many other illegal activities.

You may be thinking now … well, what can I do to make a difference?  I am only one person, and one person’s choices can’t change how a large corporation chooses to operate and what activities they choose to finance, market or support. That, my friend, is so NOT true!  Every day we “vote” with how, what and where we choose to spend (which is “investing” in the products we buy), or invest our hard-earned money.  And, while one person’s intentional choices to stand up for their values may not place a noticeable dent in the corporate giants’ mentality today, it can and will over time when believers join forces by asking questions and holding our money managers accountable for how, where and with whom they invest our hard-earned money.

When we all take this stand with regards to investing, we collectively cast our “votes” for what we value, and if large corporate giants don’t yield and change their direction, then they won’t get the money from us! It’s that simple, and this is the one thing that will get their attention.  This rule of thumb also applies to our teenagers as we are their first line of defense to teach them how their “votes” count, too, by how they spend or invest their money, and help them to accept responsibility when making their own wise AND unwise choices.  The best time for our kids and our teens to learn these valuable life lessons is while they are still under our watch and residing in our care (NIV/Proverbs 22:6: Start children off on the way they should go, and even when they are old they will not turn from it.”).  Once they are on their own, if they don’t learn these important lessons from us now, then the world will take advantage of them every chance it gets and take them for everything they have now and in their futures.

Thankfully though, God is in control! And, He IS the owner of it ALL!  So, as faithful stewards of the money with which we’ve each been blessed, doesn’t it make sense that we cast “votes” on our watch with God’s money in ways He wants it invested?!  Since He is in control and He is The “I AM,” He will bless its harvest in “whatever is true, whatever is noble, whatever is right, whatever is pure, whatever is lovely, whatever is admirable” (Phil 4:8 NIV).  And, God’s truth of what will happen when we vote His way is stated clearly in the next verse (Phil 4:9 NIV) … “Whatever you have learned or received or heard from me, or seen in me–put it into practice.  And the God of peace will be with you.”

So, while there will always be enemies in the world seeking to prey on us, our families and our financial resources, we as believers are promised in His Word — “the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus” (Phil 4:7 NIV).  With Christ in mind, we can stand united against the bullies of this world, “and my God will meet all your needs according to the riches of his glory in Christ Jesus” (Phil 4:19 NIV).  How we invest DOES matter to GOD so let’s “vote” with His money the values that would please and serve to glorify Him.

For those of you that just want to think about this in a practical way, consider this question. Does a father give his son a snake when the son asks for some bread? We want to give good gifts, so give the gift of intentional living.  As a friend of mine says, owe no debt but love.

Money is a tool and it can be used for good or evil.  Money is not evil, in fact money elevates communities, and makes room for human flourishing.  Money may be a test for you as it has been for me.

Giving can be formal or informal.  Giving can be intentional or responsive to a need. Giving is choice to sacrifice in one area to provide to someone or a cause.  Giving is powerful part of the money process and it has the power to change a person.

Living is food, shelter, healthcare, transportation and other basic needs plus entertainment.  I would caution to clearly think about the total costs of ownership of cars, boats, homes and other things purchased.  It is not just the upfront costs or the monthly payment.

Margin is what is left over in the budget or what is intentionally planned in the case of savings and retirement funding.  Margin is necessary over the long haul to be successful and prosper. What will you do with margin says a lot about your values.

Debt is both home mortgage and other consumer debt such as vacations, cars, boats and unexpected crisis loaded up on credit cards.  Debt will reduce other opportunities to give and live.

Taxes can be planned and paid as not to create a crisis.  Young business owners often get caught in a tax trap of “catch up” as they start making money and not properly deducting and submitting payment to the US Treasury. Get help from accountants, and other advisors.

If you are having difficulty in one or more areas consider getting coached to get accountable, cleaned up or motivated to deal with the issue properly.  Life coaching or financial coaching is growing and with busy lives we all need perspective and wisdom.

Biblical Stewardship is the use of God-given resources (time, talent, treasure, truth, relationships, influence) for the accomplishment of God-given goals or objectives.

Here are a few verses to look up that relate to stewardship context in the Bible. Chronicles 29:11-12; Matthew 25:14-30; Matthew 6:19-21; Luke 12:42-48.

Kingdom Advisors states the implications of Biblical Stewardship is three fold:” 1)Stewardship is the only area of the Christian life that can not be faked. 2) Every spending decision is a spiritual decision. 3) God can take whatever He wants whenever He wants.”

There is something to the statement show me your checkbook and calendar and I will tell you what are your priorities.

Investment Committee

1. Draft an investment policy detailing the objectives of the investment portfolio, guidelines on the asset allocation of the portfolio based on a predetermined level of risk tolerance, authorizations for executing transactions, disposition of earned income, etc.  Did you know that nonprofits should or may be required to comply with Uniform Prudent Management of Institutional Funds Act ( UPMIFA)?
2. Review and test that  provisions of the policy are followed. Know what it says about your duties and what is allowed and not allowed.
3. Review the policy at least annually and update if necessary.  If your Investment Policy Statement (IPS) is a canned one from a retail investment house, it will likely not comply with rules for nonprofits nor be suited for individual investors or institutions.  So, update it soon.
4. Hire and evaluate the investment managers/advisors.  Are there special considerations (such as environmental or social issues, or faith values that should be screened and addressed to best align with the nonprofit and its investments)?
5. Realize that you are a steward of the nonprofit’s resources and will be held to ethical and professional standards when making selections.  It does matter what you do, and how you invest and protect the funds with professional management.
6. Avoid conflicts of interest or the appearance of conflicts of interest and thereby establish standards above reproach.  For example, even if one’s integrity is intact and accountability is in place, how would it appear if the Chair’s spouse is the investment advisor for the organization?

Even if an organization does not have enough cash to support a full blown investment portfolio, it should manage its cash to optimize its flow of earned revenues. If an organization has excess operating cash, then the Finance committee along with the staff administrative leader’s input may consider drafting guidelines for putting the excess cash in low–risk, short-term investment vehicles.

In Florida, there is now potential going forward that if you are an accountant, and vote on items you should know about, then it may create a liability to your clients as a professional.  Likewise, legal and financial advisors, as well as others with highly specialized skills, must understand that they may be held liable in the near future under the FUPMIFA law that takes effect July 1, 2012.  Update your investment policy statement to comply with these changes, and consider getting an outside review of risks, costs and values that may fight with the mission statement and purpose of your nonprofit.

There is a good book by Silk & Lintott, “Creating a Private Foundation” and it was revised last year for updates.  Before reading this book I had attended a few conferences and meetings addressing setting up a Private Foundation and all of them seem to create more questions than answers. The book is a good resource I recommend getting if your considering setting up a Private Foundation.

One of the biggest complaints of Foundations is getting the administration outsourced and having experts review it and keep it running properly.  Foundation Source is the largest of the outsourcing groups and one I have had the pleasure to deal with and watch their well run machine help wealthy families give and be on purpose.  Click here for White Paper 10 Ways Outsourcing Can Help You Build a Better Foundation.

www.foundationsource.com is the site and expect to find several other white papers that could be helpful to you in understanding Foundations.

What to expect is that these people are professional and not the cheapest nor the most expensive.  They are fair in pricing and deliver a robust amount of resources and have some highly talented people that get things done.  They are not paying me I just find that if you need their services and use them it is worth the price and then some.  It is good stewardship to know what works and what does not work.

You can now access Social security statements online at www.SocialSecurity.gov/mystatement , which means no more going to the Social Security office to request this in person.  The ability to access statements online will save a lot of time and a lot of headaches.

To get your personalized statement you first have to create a “My Social Security” account at www.socialsecurity.gov/mystatement . You will be asked to provide basic information like name, date of birth and SSN as well as verify your identity by answering questions which the SSA checks against your credit history.  Try it for yourself it take s about 5 minutes.

Here is the SSA announcement for more information.

In honor of National Volunteer Month

by Debra J. Berg

America is polarized over the Economic Stimulus package, health care, presidential candidates and what is and isn’t politically correct. But there’s hope for unity long-term thanks to an army called volunteers. How so? A new breed of volunteer has been fueling an emerging and growing movement for over two decades now and it’s transforming the nation’s cities and neighborhoods with a new twist. As individuals, they represent a myriad of political viewpoints but, collectively, they’re unified on the value of alleviating human suffering. Some, much like Bruce Wayne of Batman fame, swoop in and rescue the less fortunate with grassroots solutions they’ve invented to address chronic poverty, housing shortages, crime, youth issues, or other social ills. In the process, they engage volunteers of other races, ethnicities, and religions. The shining result is a united citizenry rallying against the “bad guys” by coming up with social cures that are confounding the experts!

Why the lack of a celebration? Partly, there’s low-level acclaim for these efforts because grassroots innovations have only recently received serious review by academia and the government. It’s also because these humble heroes tend to avoid the media spotlight and focus on those they serve. But grassroots solutions or any social cure for that matter, seldom draws mass media attention like social crises do. This is highly unfortunate because all of this new citizen creativity is unprecedented in American history and sparks real hope for our country’s destiny and unity.

Who are these innovative superheroes? Five of them founded the nationwide Amber Alert child abduction prevention program in 1996, which replicated nationwide in only seven years without one piece of government paperwork. Hundreds of children have been rescued and lives saved. A businessman and a pastor designed a jobs-training program on a napkin during lunch one day. That 9-month program, Jobs for Life, is now operating in over 240 cities and touts an 85%,
1-year job retention rate for the previously unemployable. Yet another heroin, Brenda Eheart, has engineered Generations of Hope, a unique community comprised of unrelated “grandparents”, kids, and parents (built on a retired military base) that boasts an unheard-of 89% adoption rate of difficult-to-place special needs foster children. These three social inventions represent just a fraction of the many dazzling examples invented by everyday citizens. Individually, they can engage thousands of volunteers of all ages, races, and. persuasions. Collectively, they’re transforming the nation’s civic landscape.

This trend, I call the “New Civic America”, shines ever brighter because citizen cures are now replicating into hundreds of towns and cities, even other countries. Spurred on even more by the troubled economy, it’s a trend that has brought Americans out of the woodwork to go well beyond volunteering motivating them to sacrifice personal lives, 401ks, and six-figure incomes to rescue those they don’t even know. And it has thousands more tweeting ideas informally on social media as to what’s working and what isn’t. Other democracies even benefit as they hear about these new tried and tested, highly compassionate solutions. All the while, the humble civic superhero remains oblivious to their larger impact. They haven’t fully grasped how they’re breathing new life into what some consider a floundering democracy and civic culture while they unite people of otherwise disparate views and backgrounds. One might think of their efforts as “civic glue” for the nation.

In what is predicted to be a brutal battle for the presidency this fall, the pundits surmise that the U.S. will remain divided into red and blue states for decades, but maybe not. This new confederation of volunteers, a colorful political mix of heroes shouldn’t be underestimated as to their long-term impact. Years of both formal and informal interviews with them tell me that they rally on topics of helping others over their political opinions. The underlying message to policymakers is that American citizens are simply unwilling to hang-on forever for politicians and big institutions to hash out their trivial differences over fundamental needs. The process is too slow when there are lives at stake. As Mother Theresa so succinctly put it, “Don’t wait for leaders. Do is person to person.” Yet, isn’t that what democracy is all about?

The bonus to each of us is twofold; real answers for those struggling with self-reliance and a healing balm to advance national unity and democracy. The new volunteers are challenging us to participate, to rally around what’s really important; bringing self-reliance to those who are struggling once-and-for-all. As they grow the bridge of volunteerism, they lay the groundwork of hope for agreement in more areas. Scandals, trials, and politics divide us in everyday conversation. But during National Volunteer Month we’re challenged to emulate the example of the new volunteer and wave the white flag for those less fortunate. Thanks to many nameless citizen-heroes, volunteerism remains the one institution of American culture where we can, for good reason, still all agree.

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Debra J. Berg, M.P.A., is the author of The Power of One: The Unsung Everyday Heroes Rescuing America’s Cities and co-author of Living in Abundance, a BarnesandNoble.com bestseller. She holds several nonprofit certifications in addition to Volunteer Management and is a nonprofit coach and trainer with the National Development Institute. She is also the founder of the National Institute for Civic Enterprise (NICE), a nonprofit project which “cause-partners” human service initiatives with business. NICE also fosters the replication of successful citizen innovations. Access her book and subscribe to Debra’s monthly newsletter, HEROES, at www.NICENetwork.org.

Could it be that we, as consumers, are so disconnected to our purchases/investments that we could be in fact funding and earning a large portion of earnings inside of industries that fight against our core values?

What attributes or values should be present for human flourishing or thriving to take place in your world?  Pause reading this and write down the answers that come to mind.  Are you doing all that is possible to bring flourishing to your community, household or yourself?  What does that look like? Again write it down it will be useful later.

What would be some activities that are not useful for thriving and human flourishing?  Allow me to give you a few items to consider and by all means add more to this short list: usury or the charging of high interest rates, pornography, and other depictions of degrading women and their important roles in life, violent gaming or intense violent interactive media, gambling-the exchange of something valuable for high risk venture to win or lose it all.  Write down what you find as the most negative pull on your world or your favorite nonprofits world of thriving.  If you are an executive director or chair of finance perhaps it would be helpful to lists what you fight against the most in society and then have an assessment to see if your organization is actually aligned with your mission investments or are your investments more aligned in funding and providing more resources to the harms you so hate and worked hard to overcome?

My dentist tells me that you should only floss the teeth you want to keep.  Likewise we should only address the values we really value and let the others decay and fall to the wayside. Getting clear about what we are doing in terms of our purchasing power and investing does matter to you and your board, your community and your world.  Get this: You Matter!

My optometrist  tells me that getting my eyes checked and fitted for glasses is not a one time lifetime event, rather, the health of my eyes demands a review every two to three years.  Disease of the eyes or other complications can affect our vision.  Over time, we forget that we once could see the flags on the golf course and recently they appear faded or blurred.  Perhaps a checkup and corrective lens or surgery would be appropriate? This happened to me when my friends shouted “dude get to the doctor and get your vision checked.”

Lastly, human flourishing or thriving is not a common idea on television sitcoms.  Why do we love the underdog raising to the occasion in American Idol or someone overcoming an inadequate hand dealt to them and then they thrive and succeed and win over others? In our hearts we love restoration, reconciled family, health renewed, and relationship enhanced and thriving.  Look at what you have and do and ask for help- get coached, get exams, get assessments, get tested and know you are not alone in this journey.  Do not overlook getting your investments screened for your core values and get them cleaned up.  It is easier than you think. However many in the industry will tell you it is not worth it or worse they may even say it will harm your finances- all myths.  See our blogs and videos on the 5 Myths. One way to find these videos is to do a search in You Tube “stewardship matters”.

This can be accomplished in several ways.  An advocacy approach can be applied through governance of proxy voting, or through the writing of corporate resolutions.  Many advocacy groups have been highly effective and successful in effecting policy changes without a corporate resolution simply by engaging into conversation over an issue. It relies on using shareholder rights and effecting real change.  Seeking to effect social, environmental or ethical issues is not new and seems to be growing exponentially in the past few years.  Social Investment Forum has a tremendous amount of stats to back this up. Advocacy can take place without any positive or negative screening. And, here are a few examples of advocacy issues: executive compensation, climate change and bribery. One example of a proxy service is Egan-Jones and here is their website for reference http://www.ejproxy.com.

Another part of the engagement or advocacy process would be to vote for impact investing or ethical investments.  These take on many forms of investments from Program Related Investment (PRI) to Community Notes to Microfinance to loan funds or mutual funds investing into loan funds.  Some are providing cash flow in the form of loan interest and others in the form of equity investments. Researching online search for impact investing or ethical investments will yield an overwhelming bounty of information.  So, if you are looking for some help in this process, we can help you address various options on this important topic in future writings … because how we invest our resources does matter.

Many of the individual disability policies that are sold to professionals today do not offset for social security disability benefits. If one applies for disability benefits through social security and is granted payments, these payments are made in addition to individual disability insurance benefits. On the other hand, social security benefits are generally reduced group long-term disability (LTD) monthly payments.

Some individual disability insurance policies do reduce monthly benefits if social security is paid. These policies include social security offset riders and are typically sold to managerial and blue-collar occupations.  This is another good reason to have these group policies reviewed.  At the same time, review your beneficiaries both primary and secondary to update what you want.

If you are unhealthy, or what the industry calls a rated case, and you currently have a disability contract then there is something else you may wish to explore.  See if your contract has a conversion to Long Term Care without medical underwriting.  Generally, we see this before age 62 or 65.  This could be viewed as an extension of benefits during retirement years or pre-retirement and could be a significant advantage to your family in preserving your assets.  If you are healthy, there are now some creative alternatives to traditional long term care and many are able to function as investments, life insurance accelerated benefits as a long term care alternative funding.  Some will not require medical underwriting as they are attached to annuities.  Why are these new contract riders just now popping up? The Pension Protection Act of 2006 changed the rules and it took most of the insurance industry and legal industry a few years to figure it out and get it approved in most of the States.

Many people are unaware that a will is a one-way ticket to probate court. Many think that if you have a will, your personal representative can just give your assets away. That is simply not true. The statistics are staggering. As many as 71% of our population die without ever having made a will or a trust. The result of such lack of planning can be both time consuming and very costly for your family.

Probate is the process by which your estate is transferred from yourself to your beneficiaries. Its primary purpose is to assure that your creditors are all satisfied in some manner prior to distributing your assets to your beneficiaries. On the average, probate takes 9-24 months, assuming that everything goes smoothly. Any contest or litigation can result in extending that time many more years. In addition to your estate being tied up in the legal process, probate is very costly. Probate can cost a total of 5-10% of all of your assets, with much of that money going to attorneys.

AlthoughFloridadoes not have a state estate tax, Federal estate taxes can be quite punitive for larger estates.  For larger estates, federal tax begins at 37% and caps out at 55%. Imagine over one-half of everything you own going to the Federal Government instead of your family or charity of your choice.

A properly drafted Revocable Living Trust can and should be used to address the above issues. Planning ahead is always the least expensive choice for all concerned. It is possible to avoid or at least greatly minimize probate and estate taxes with the proper documents and usually for a fraction of the cost of probate. Other advantages of a Living Trust is that it remains private, is quickly managed upon your death, can also financially prepare for incapacity and best of all, can be done in a way that keeps you in complete control of all of your assets.

It is not always comfortable planning for a day when you will not be here or when you will be unable to manage your own affairs, however, wise advanced planning can save time, money and aggravation both for you and your family. For many people a Living Trust has proven to be a valuable tool for making such plans.

Here is the short take:

1) Giving of appreciated assets= stocks, real estate etc.

2) Gift Annuities= make a gift and then receive income back.

3) Charitable Remainder Trust-avoids the taxes for now and utilizes tax money to help provide income-delayed taxes

4) Charitable Remainder Trust/Wealth Replacement Trust combination-wealth replacement provides to your heirs money tax free

5) Charitable Lead Trust- income to charities and then principal to heirs later.

6) Enhanced Income Trust/Accelerated Inheritance Trust Combination

7) Charitable Lead Trust-deferred

8) Charitable Life Estate Agreement- generally your home allows you to live there and then gift to others

9) Family Foundations (7 types) Operating,non-operating, pass through, Types 1,2,3 and Donor Advised Fund

10) Testamentary Bequests. Will, Trust, or other documents established ex. beneficiary provision.

The most simple and popular is the Bequest.

One of the better assets to leave charities are qualified assets or IRA’s and 401K as they create special taxes, and charities are exempt from these special taxes. Win-Win.

A group of advisors around the country that are really serious about learning advanced materials and how to properly come along side donors and nonprofits is represented by Chartered Advisor in Philanthropy or CAP through the American College graduate level program.  The planned giving council in your area should also be a good reliable choice in helping you make such decisions. http://www.pppnet.org/

In the faith world, either there is or is not acknowledgment that God is the owner of everything.  In Psalm 24:1, King David exclaims God owns it all.  When we believe God’s Word to be true, then it changes how we think about  our resources and influences what we do with our resources to positively impact our world and make a difference.  Solomon, the wisest of the wise, stated it is good to leave an inheritance to thy children’s children.  When money is due to the government, then pay it; and when there is an opportunity to reduce costs and expenses or taxes, then do so.  Be intentional both in living and in giving.

So what does it means to get your house in order from a biblical perspective?  First, we should seek excellence in our planning, take care not to squander our resources and only render to government what is properly due.  Did you know estate taxes and most of the probate fees are optional?  Optional in the sense we have choices that through proper planning can reduce or eliminate taxes and fees.

Through the biblical lens, we would seek to look at how you dispose or send off assets when you pass from this earth.  And, more importantly, to consider how will it affect those we leave money to and the “values” we leave as a legacy as well.  Think back for a minute.  What would happen if you received a large lump sum of money when you turned age 18?  How might your life have been changed positively or negatively?  If we are honest about this, a large sum of money at age 18 for most people would not have been a good thing if left to our management alone.  Would a grandparent be pleased if their grandchild just sat on a beach and snorted drugs all day and partied all night due to a lack of good moral values and legacy incentives?  Such a scary alternate reality portraying the opposite of what we want for our children and grandchildren’s growth would instead potentially enable them to becoming emotionally stunted and crippled adults, and unmotivated “to be all they can be” in the prime of their lives. Through proper planning though, the inheritance of a large sum of money can be individually tailored to each person to help greatly reduce or eliminate this possibility so that your children and grandchildren can carry on a great legacy for many generation to come of what you have worked so hard to provide to them. This is why praying and asking such tough questions now are at the core of stewardship estate planning.

If you could find money that you did not know existed, would you be willing to give more to Kingdom work now?  Many estate planning professionals are misguided in their pursuits to simply prepare documents that transfer assets and money, and protect you as their client.  Some are so focused on tax savings and proving their fees that they often overlook asking many important questions as relates to aligning the transfer of your assets to your personal and moral values, and your long-term wishes for your family’s legacy.  One wise adviser told me his definition of a successful estate plan is one in which all the family members still love and hug each other 1 year after your death. Building this type of family unity is a journey; no magical document can do this, but rather a process which requires intentional forethought, actions and communications. Few advisers have the wisdom and forethought to ask you these type of right questions. And, even fewer will challenge you to be bold enough to take the initiative to work through this process so you can implement a tailored estate plan that takes into account not just the financial well being of your family, but also what is truly best for the spiritual and relational needs as well of your family and your family’s legacy.

Scriptures tell us that it is good to leave an inheritance to one’s children’s children.  We should not be thinking of only the next generation but rather beyond to future generations as well to strengthen and build the character of our family line and to encourage lasting eternal values be passed on.  Another wise man told me that you should love your children and grandchildren equally, but treat them uniquely.  After all, each child and grandchild is uniquely gifted, and has passions that need to be fostered and mentored for living their lives.  So, with this in mind, have you considered this … What are appropriate constraints or bumpers you desire to include as a part of your estate plan that will foster the best interests of those who will receive your gifts of wealth?  We have seen provisions written into legal estate documents requiring educational pursuits or the taking of certain courses as prerequisites before inheritance is gifted and received (courses such as Crown Ministries classes, Compass materials, Peace University and other books to be read and reported back to Trustee). Such provisions have the wise intent to foster, educate and encourage better judgement and stewardship in heirs, and to pass on wisdom of your legacy so that many future generations will enjoy the fruits of your labor.

Many Christians have never been asked by their estate planning people to consider making a tithe on their estate when they pass away.  The question for you to consider here is … do you think your heirs would likely give to Kingdom building work and their churches if left to give it on their own?  Another observation by us and other planned giving professionals is that when we set up giving upon our demise well in advance, we also begin to be more mindful of giving more to the causes closest to our hearts now as well.  We are more invested into the process and the legacy of what we believe and deem important today, as well as after we are gone.  Additionally, if you properly draft this now, you could change how monies are directed later, or even have your successor trustee re-direct your givings within boundaries or without boundaries. For example, you may wish to provide funding for widows and orphans within a certain community or within a specific context, and then allow those acting as stewards of carrying out your wishes within boundaries to take an active role in designating the specific estate tithing recipients. This not only serves to honor your final wishes, but also helps your heirs to participate in the giving process so they can experience firsthand the joy of giving to others.

Here is another question few consider if they are inclined to be very generous or have a very large estate … could the nonprofit charity you favor properly steward such wealth of resource, or would they possibly squander it and buy things not necessary to sustain the great programs and resources you were so fond of supporting?  This is one of the reasons large gifts are often given to College and University Foundations as they are often successful stewards because they build into all their communications and processes what they do to properly steward the money left to them.  Governance and ruling boards are there to oversee proper use and implementation of funds entrusted to them.  Some donors have the wish to provide a permanent funding to provide a forever sum of annual support, while others alternately seek to have more short-term impact (like 3-10 years) in order to provide funds to programs to meet more immediate needs.  There is not a right or wrong way here, but it does matter to consider the impact and potential pitfalls of either approach.  If you are looking to conduct your estate planning through a biblical lens, you might want to go to www.kingdomadvisors.org and see if there are any financial advisors near you to consider helping you and your family.  There are also Qualified Kingdom Advisors (QKA) who have been screened, have completed excellent core training programs and are in good standing.  It is one thing to be a Christian and be an advisor, and it is something different entirely to be a Christian and be purposeful in applying a biblical process and filters to help others spiritually steward properly.  I have heard it said that to pass money without wisdom is a sure path to disaster, and passing value without like-minded values is but foolish squandering of one’s resources and blessings entrusted to them.

One of the most overlooked aspects of estate planning we have noticed recently is that of gifting the wrong assets to charity, to family and others.  This is less about gifting which assets to whom, and more about how the gifting of assets to the wrong parties can create tax consequences and therefore less financial resources being actually gifted to each party as a result. IRD stands for “Income with Respect to the Decedent,” or in short order, all the taxes on qualified money (like 401Ks and IRAs) that will be subjected to taxes if left to family and others.  These are great assets to bequest to charities because charities don’t have to pay these ordinary income tax rates (often 33-40+%) on the proceeds.  This requires a little extra planning and thought, but generally delivers a big result in “found money.” Choosing to leave taxable assets to a non-taxed entity such as a nonprofit is a great leveraging technique.  Leaving non-taxable assets and assets that have “stepped up basis” is also smart planning so more goes to your heirs and less to taxes. Planned gifting to some worthy charities makes more sense most times than leaving it all to loves ones who are not yet prepared for such responsibilities. Hoping for the best in others (especially when “others” are minors) is extremely risky when you know they won’t be ready for such a huge responsibility of receiving a full payout at age 18.  So, take time to consider what is possible, and then pray and seek wise godly counsel where you can be coached, questioned and mentored rather than just be sold a form document.  Such planning will serve you well in preserving the integrity of passing your wealth on to future generations.

Eventually also may come the question of how much is too much to leave to children and family?  I have heard several people say … they want to leave enough money and assets so that heirs could do anything, but not too much so that they do nothing.  Again, this type of planning requires some wisdom in addressing this issue uniquely for each individual heir.  It may also be prudent and wise to have a method in place to control the funds and have access to the funds.  Perhaps you do not wish to see your ex-son in law get half of the proceeds you leave for your daughter.  Perhaps you have an adult child who does not wisely discern the handling of their money, or has a gambling or shopping problem, or other type of addiction or dependency that would cause them to make unwise financial decisions. In these cases, it may be prudent to leave your young, dependent children with one family member, and then entrust a different family member to manage and oversee the money for the benefit of your children.  Or, it may be wise to set up a corporate trustee for your estate in order to reduce family friction, fighting and conflicts, and instead helps promote peace and united front within the family.

Here are some additional questions you may want to consider when planning your current estate plan. Is your faith integrated into your legal documents? Does your plan promote peace and unity in your family? Does your current plan prepare your heirs to be wise stewards? Is it a tax-wise “Zero Estate & IRD Tax” plan? Will your children still be hugging each other six months after you die? Was your plan created through the lens of Biblical Stewardship? Have you included the Lord’s work in your plan?

With all this said, so what does Stewardship Estate Planning seek to accomplish? First and foremost, the purpose of Stewardship Estate Planning is to honor the Lord and others in the inheritance process, provide for you and your spouse and any other dependents, and bless your children and grandchildren by preparing them for their inheritance. Promoting peace within your family is the most important goal as people are more important than dollars.  Through the Stewardship Estate Planning process, you can demonstrate and role model generosity out of your gratefulness. And, then live out and leave behind a purposeful legacy to those you care about.

Try our blog filter and check out “Giving and Children” blog or “Giving Resources” or the many other blogs under biblical stewardship.  You matter, and what you do with your life and money matters, too, because we are not the “owners” of what we will leave behind, but mere temporary stewards of the resources God gifted and blessed us with in this journey we call “life.” So, finish well, good and faithful servant!

If you are single or divorced (was married less than 10 years) the planning on claiming is very straightforward.  Layout your options of taking at 62, 66 or 70 and then plug in your life expectancy and see what makes sense for cross over or break even analysis.  Usually around age range 75-79 depending on several factors is the break even analysis.  So if you believe you will live longer than that time it may serve you well get informed and for many Full Retirement Age or FRA is 66 for those retiring today or soon.

If your married or divorced (married greater than 10 years) then you have potentially 9 different options that should be considered.  The difference between your worst option and best option could easily be over $100,000 difference.  If your highly compensated the numbers are more likely to be greater than $200,000 difference.  Most advisors are not educated on these options and how they could benefit you and your family.  Check out this simple and straightforward calculator for what is at stake?  Social Security Timing Calculator is powerful tool here to help you gain perspective and education.

Lastly, there is not a one sized fits all answer when you are educated about the options.  If your not informed and clearly understand what is at stake then how does advice benefit your family? Could the incentives of waiting really benefit you?  A huge amount depends on your life expectancy and differences in your benefits to your spouses benefits.  We have several other blogs on these matters and you could gain more knowledge and only you can make this choice.  Most people that approach their accountants and advisors will in fact find a common conclusion take it at 62 if not working and take at 66 is common advice.  Today I know differently and see many still choose based on ignorance and ill advice without proper understanding of the options.  Find out what is at stake and get clear on YOUR OPTIONS.  It does matter and your choice will impact you and your family for decades.

The Campaign was extremely effective as it made a war lord Joseph Kony famous, but is it going to bring about the right kind of change?  This points to a bigger issue within our society: Many people are not fully aware of how organizations in which they donate or invest are utilizing their resources.  We need to do our own research to give or invest responsibly and wisely.

Should we invest solely as an emotional response to an issue? This is typically not wise.  We should feel convicted about injustices, but we should also take measures to ensure that our actions are bringing about change and not causing more potential harm.  Some of the resources to help you be informed in your giving are Charity Navigator, Guidestar, Better Business Bureau , local community foundation or advisors working in philanthropy.

I would like to challenge you to research information and know what your money is supporting and where it is going.  Let’s hold investments and donations accountable for their spending, support and use as stewards of our gifts entrusted to them.  When you invest money in mutual funds or stocks you can learn from what activities they earn their gains and if you are opposed to such activities, then do something about it.  Make changes, and do less harm.  One site that looks at activities of environmental, social issues asks “Know What You Own”.  Do some self research or get help so you can align your money with your values.  Sort out what is just or unjust, clean or dirty and it does make a difference.  I want this for you.  Experience more love, power and contentment as you are aligned with your values.  You matter, and what you do matters.  What you give or invest into matters too.

If you had mostly Qualified Plan Distributions (IRA, 401K, Defined Benefit, SEP IRA) for say $50,000 a year plus $20,000 of Social Security what would that look like compared to Social Security of $50,000 and $20,000 of Qualified Plan distributions.  We are not addressing State Income Taxes in this example.

Adjusted Gross Income (bottom of page 1 of 1040 Form).  Go to page two and apply your standard or itemized deductions to determine taxable income on line 61 of page 2.  After that there still may be earned credits and other payments applied before determining what is owed.

Now let’s consider what is different in Social Security making up $50,000 of the gross $70,000 of income.  Follow this from the Publication 915. Line 20a deals with modified adjusted income and you take all the income from FORM SSA-1099 from box 5 and enter it under the Provisional #2. #3 is the IRA income.

Knowing this makes a big difference in taxes and helps avoid the fear monger tactics of many in the “insurance and investment and banking” as they tell you to buy their solution.  So the taxable benefits are only $6850 and page two deductions may reduce any taxes to zero.

Bruno and Jane would pay zero taxes instead of being scared into believing that 85% of the their Social Security Income would be taxable due to the threshold of $44,000.  So the next time someone tells you your Social Security Retirement is taxable they are likely misinformed.

What might the advantage be here? The other way with $50K IRA and $20K SS income would make the taxable portion 186% greater amount than if SS was $50K and IRA was $20K.  $19,600 instead of $6,850 for taxable benefits.  Again if the write off on page two of the 1040 form were significant enough it could be zero tax. Would it be easier to find write offs to zero out $6,850 of taxable benefits or on $19,600 of benefits? Social Security benefits for married couples is a significant benefit often over looked and rarely appreciated by financial advisers, bankers or others.

Another reminder that this is a unique social insurance program with real benefits.  How you earn or receive income matters when paying taxes.  Check out our other blogs on Social Security and it’s unique benefits.  Also go to Social Security site for Publication 915.

Ps 24:1 says “The earth is the Lord’s and everything in it, the world, and all who live in it.”  We are told to also love one another- are we doing that when we pollute the environment especially if it makes the poor or ill more in danger?  I have a few friends with respiratory issues and they struggle when traveling to areas of smog or smoke or intense pollen.  Would it help to think of our pollution contributions not properly disposed of as dandruff on God’s shoulders?  I was challenged by this question from John Tolson and Larry Kreider in their writings “Caring for the Earth”.

A book that maybe helpful is “How to Rescue the Earth without Worshiping Nature” by Christian socialist Tony Campolo.  One interesting observation he makes is that nature worships the Creator and he draws form Ps. 148.  I recommend you go read it now.

Were you aware that the founder of the Sierra Club John Muir wrote a lot about God Almighty and nature. He stated that “The forest of America, however slighted by man must have been a great delight to God, for they were the best he ever planted.”

In high school I was asked to him a quote as my legacy.  I thought for a moment and being the nature lover that I always have been declared for print the following: “For nature is as deep as the oceans therefore we must save the whales”.  I said half in fun and half in seriousness as I reflected on that quote.  My early childhood memories are of planting garden, taking hikes in the woods, camping at some Florida spring or river.  These were the earliest and most adventurous times for me growing up.  I suggest we need to disengage from technology and the world of comforts and get outdoors more.  Enjoy a sunrise or sunset.  Go hiking and look for unusual birds.  Did you know birding is the number one leisure sport activity in the world? Reduce consumption, reuse stuff and recycle.  These habits are learned and caught and now go help others learn.

Lasting if you are looking for web source for environment as a believer in God then consider visiting Creation Care.

One conservative choice that fits well for many retirees right now are getting Fixed Annuity with flexibility to change in the next few years. The rates on these deferred fixed annuities are between 1.75% and 3+% depending on several factors.  The way this would work for now is not to lock in income at this time rather to take “income only” at this time while rates are so low and later when rates increase as many expect then lock in the rates for life income or period certain income.

For example Mary has $100,000 and she is 71 year old.  She could earn 2.5% or $2500 a year in interest and not touch the principal or do anything to harm her on the downside of the bond markets.  The 2.5% would be a locked in rate not to get reduced for the life of the contract.  Let’s say 4 years from now when she is 75 and assume rates are higher she could convert the annuity to either a cash flow for a number of years like 10 years or she could set up a lifetime income.  A few years ago many retirees age 75 were electing life incomes and getting lifetime cash flow over 10% and most of that was tax free under the provision called exclusion ratio.  Today with rates lower that is not currently possible but could be in the next few years.

I like to ask this question of retirees or those getting ready to retire why they set aside money into the 401K or IRA or other investments earmarked for retirement?  The top reason is to have cash flow and security in later years when I no longer work.  So do not be afraid of taking income and even getting it guaranteed for life if that is appropriate for your situation.  Turning on the cash flow utilizing an annuity is like having a portion of your funds in your own private pension account.

While all of this may sound good there are important disclosures to consider.  Get clear on potential liquidity loss or costs that need to be carefully discussed.  I recommend you sleep on any decision over night and not to rush into any of these important decisions.

Generous Giving (www.GenerousGiving.org)
The Gathering (www.TheGathering.com)

Community Foundations

National Christian Foundation (www.NationalChristian.com)
Waterstone (www.LivingDefined.org)

Giving Consultants

Excellence in Giving (www.ExcellenceinGiving.com)
Calvin Edwards & Company (www.CalvinEdwardsCompany.com)

You could check to see if there is a local “Planned Giving Council”  http://www.pppnet.org/

Another group that trains many advisors around the country is Kingdom Advisors

If you are curious about faith in corporate world and how some unique advocates are working in this organization ICCR

There is a Stewardship Bible published by Zondervan and I have really enjoyed the questions and daily devotions and other resources on the subject of Stewardship.

Trustee training will change as well.  In order to justify the more expensive mutual fund option or separately managed account there a need to prove other features of risk management.  Some other newer processes to manage risk such as behavioral finance, predictive modeling, mathematical optimization, or deeper screening.  Screening for executive compensation and incentives, hiring and firing practices, industry involvements with potential risks of environmental, regulations, or moral issues.  Many of the largest nonprofits screen for these risks or try to align more of the investments with the mission and purpose of the nonprofit.  European boards are encouraged to screen for values and required to include screening in the governmental sectors to screen for clean water, waste and clean energy.  Over $3 trillion in the US is screened already as of 2010 and those numbers are up 50% over the previous 6 years.

Question for you to answer. Suppose you had invested into a mutual fund and now there is ETF mirror account for half the costs.  Would you opt for the new lower costs?  Why or why not?  Would your decision be any different if you were a trustee for a large pension?

Large financial services investment companies have a lot at stake here.  First, their is the issue of 12B1 fees in which Mary Shipiro reported to Congress that over $13 Billion was received by brokerage firm in 2010 estimates.  Next, there is the matter of how money is managed and transaction costs are hidden inside of mutual funds.  If your curious about this go visit www.personalfund.com . Lastly, trading in ETF are more efficient in both cost and taxes.  Capital gains on ETF’s occur not while holding rather when the owner decides to sell and realize the gains/loss.

This is a great time to re-evaluate what you have and what could make it more efficient.  Ask your current investment committee or trustee if they are open to greater impact by investments aligned with core values?  If your mission is about helping young girls be more empowered then you might wish to screen for some of the following: pornography, usury, alcohol, gambling. If your mission is about clean outdoors then you might wish to avoid big oil or strip mining or known polluters. How you invest does matter.

Guest blogger Jay Link

Interesting question, isn’t it?  The  answer you would get to this question definitely depends on who you ask.  For example, if you were to ask this question to the IRS, they would tell you,
“A gift is a gift on the day the post office postmarks the envelope containing your check to a nonprofit.”  If you were to ask a ministry this question, they would answer, “A gift is a gift when the gift actually becomes available for us to use.”  If you were to ask a starving child in Haiti this question, he might answer, “A gift is a gift when I can actually put it in my mouth, eat it and for a moment, at least, not be hungry.”  If you were to ask an older couple this question, they might respond, “A gift is a gift when we sign our new wills giving millions away to Kingdom causes when we eternally “relocate”.  These answers on the surface may not all seem that different, but let me assure you, they are substantially different.  But let us get practical.  How would you answer this question?  Think carefully.  How you answer this question will have a huge effect on your “giving”.

James I. Mahaney and Peter C. Carlson wrote a significant work on Social Security and their chapter 7 was titled “Rethinking Social Security Claiming in a 401(k) World”.  I will only quote their conclusion of Chapter 7 .  ”Our research shows that individuals should not just look at the traditional break-even points when evaluating when to begin Social Security retirement benefits. Instead, optimizing their potential Social Security payments over the next several decades can provide retirees with significant financial peace of mind.”

More is written on the unique nature of how it is tax advantaged and often overlooked as well. That delaying strategies can provide for much greater opportunities for the survivor spouse.  To elect early is potentially harmful.  Think of Social Security as another bucket to plan and utilize.

If you find this an interesting read and want more consider going to read “Unusual Social Security Claiming Strategies: Costs and Distributional Effects” written by Alicia H. Munnell, Steven A. Sass, Alex Golub-Sass and Nadia Karamcheva.  They wrote this for the Center for Retirement Research at Boston College.  They share their estimates of costs to the system and some reason for file and suspend as one of the effective strategies that has a large opportunity for retirees. This report in 2009 is very well done.  One of the strategies they mention is now gone in 2012 it was called the “Free Loan” strategy and now limited to revoke or change in the first 12 months instead of the previous free loan period potential of 9 years.

The COLA adjustment for Jan 2012 is 3.6%.  COLA’s matter and they matter a lot more the longer the period considered.  While COLA is not guaranteed it is still a good idea to run a break even with COLA included.  How? Plug into an excel spreadsheet and use the formula’s tab and grow the cash flow annually is one way.  Another is to call on your financial friends to run the numbers.  We have a more intensive calculator dealing with the Timing Strategies and how it affects you and your spouse in the following clink Social Security Timing.

Kiva is an online community and you can seek out people online but rarely get the feedback and confidence that having others you know are doing the follow up work and have a highly successful process. Kiva has the ability to get others engaged into a project you may be heading up and wonderful way to utilize the technology and get greater support. Micro lending could be several individuals putting in only $25 each and it will change a family’s life and their ability to get capital and provide for themselves.  Grameen Bank story is amazing and I high recommend to you if you like these ideas to learn more about it. Getting access to capital in developing countries is more than a struggle.  Rates changed to borrow funds are off the charts and create slavery.  It would not be uncommon to find an opportunistic lender in a village charging 50% to borrow $25 for a week or 100% for two weeks.

Another way to get involved may be if you or your organization would like to invest into CDFI or Community Development Finance Institutions as their are about 500+ of these in the United States and growing.  Most of these are to help provide housing for low income.  Banking institutions also invest into these CDFI programs as part of diversified investment strategy as well as being a good neighbor. There are mutual funds and foundations that invest into several of these perhaps hundreds of these.  It is possible if you look for either community notes or mutual funds that invest your money into community notes and impact.  One of the big advantages of a package of community notes is professional risk assessment and diversification. This is not about getting the best returns rather it is about the good and the impact and it should manage risks so the funds are there in the future and keep growing and providing opportunities for at risk groups. There are several Credit Unions across the country that are active in making a big impact.

A friend of mine has invested into a community loan fund as part of the way he sees a proactive way to fight current and future crime.  He goes on to explain it as give others a fair opportunity to learn and live and not be taken advantage of due to education or financial status.  Over the past few years he tells me that his returns in this bucket is better than his stock market investments. He is quick to point out that when interest rates were much higher that his CDFI or impact investments were earning less than the bank and market buckets.

Eventually, you will hear more about this area as more institutions are engaging into these investments. According to 2010 report from Social Investment Forum there were over $41 billion in Community Development Finance Institutional funding. And only 5 years earlier the numbers were less than half.  Would it not be a wonderful thing to find risk managed buckets addressing various social needs and still providing returns to investors and doing good while doing well?

If you were married for at least 10 years and then got divorced then you may be able to claim benefits based on the ex spouse.  We have to assume you did not go back out and get married again or at least you did not before age 60 + one day.

What might this look like?  Bob and Mary are the same age and get divorced and Mary has not remarried and is 62.  Mary could claim “spousal” benefits at 62 and it would be “deemed” as her election for all years.  Or she could wait until FRA or Full Retirement Age and let’s call that for her age 66.  She could claim on his benefit under spousal (even if he remarried multiple times) and then received “credits of 8% per year on her own benefits until age 70 and then turns that on for potentially much higher benefit.  It would not be an under statement that many divorced people have not considered this option and their advisors are not even aware of it.   What would you do with found money of extra $500 a month for life?  Would it make a difference in your planning?  How much money would you need to invest in order to cash flow you an extra $500 a month?  Tens of thousands is the answer. Most professionals are relying on SSA agents to explain their options and have little knowledge about claiming benefits.  I know that when I got introduced to these ideas a couple of years ago it was very strange and complex.  I was afraid that I would make mistakes in the advice. So I then sought out other experts in the field and learned it and gladly share these found money concepts.

If you are advising those getting ready to retiree would it not be good stewardship to get wise council on these very important issues.  If you would like to run some “what if” numbers on a very well done calculator then check out this link.  If you are a do it yourself person or just curious simply click “no thanks” when asked if you would like help. What is at stake in not doing prudent planning? Social Security Timing is not a governmental site. If you are a nonprofit donor relations person realize this that more guaranteed cash flow may help your donors capacity and who brought the idea to them.  Consider working with experts in this claiming area and know this that found money often seeks to be generous to others.

We track and record only what is important.  We keep score. We evaluate and look over what is important and deserves our attention.  What seemed important 10 years ago may not be important today as we change  priorities. My dentist says “only floss the teeth you want to keep”.

We have the same time everyone else has the and making more of time to accomplish what is highest on our priorities? What is your most valuable assets? Many of you would say it money or possessions.  Here is what highly successful businessman and consultant Bob Bufford says…“It seems insane to me that a person would be willing to trade what he has a shortage of—time—in order to gain more of what he already has a surplus of—wealth.”

We do not know what tomorrow brings.  Carve out time to do behaviors that add to your quality of life, health and wealth.  Build time for family and friends and reflection to think through the challenges and opportunities. Look for ways to connect in your community: serve others will do wonderful things for you. There is a book I would like to recommend to you if you wish to read medical studies and great stories on helping others- The Hidden Gifts of Helping by Stephen G. Post. The subtitle is”How the Power of Giving, Compassion, and Hope Can Get Us Through Hard Times.”

Invest time into charities that are aligned with your passions and that touch you deeply.  Don’t have one? Then may I suggest you give to a nonprofit that makes you feel good some money.  Did it feel good?  If not, perhaps the wrong one for you or perhaps you should go invest some time and do a tour and see if there is a way to give your time and energy and money to fully engage your spirit. Recently I invited some friend to go out and glean corn with an organization that feeds the hungry and arranges transportation of fruits and vegetables to food banks and other nonprofits feeding the hungry.  Everyone finished the day refreshed knowing that many would be filled and grateful for a couple of hours given in love.

Sales people are taught to periodically do an calendar assessment on the time and where it was invested.  What were the activities and sort your activities into categories. Maybe you might want to color code them to stand out more.  The Microsoft Outlook calendar function can do this for you.

It is wonderful to talk with retirees that are active and busy filling up their day doing wonderful things for friends, family, community and others.  They are purposeful sometimes and other times they get swayed by groups or family wanting someone to help them with.

Invest or steward time to improve skills and talents.  Here is a paraphrase from Proverbs 18:16 some 2500 years ago.  A person works on there talent or gift and it makes room for them and brings them before great men and kings.  Last week I was visited a friend in town for the Heckerling Institute annual conference and great to see thousands of estate planning professionals sharping their skills.  What could you do this week or month to sharpen your skills for the task and mission you wish to accomplish?  What are little ways to give you more influence and authority in leading others in your quest?  Are you reading and listening to good materials that build your talents?  If not then why?  Utilize your local library and seek out resources through associations you have.  If you sense too many limitations then ask of others that are leaders how they learned and where they received the most beneficial education in recent years?  Little steps add up.  Old Chinese proverb says, “the best time to plant a tree is 30 years ago.”  Stewardship of time today makes a difference.  Maybe for now and more likely for the future so invest your time wisely.  Stewardship does matter.

Jack Marrion also stated in the article “ The good news is it’s hard to bash something that you’re doing too, so there will be an increasing number of media stories about how good index annuities are and consumer demand will shoot up. ”

I would encourage you to go Google “Indexed Annuities” and discover lots of title of articles that have slammed these products hard for a long time. With new articles turning the corner to positive side we should see wire houses and banks and other groups jumping into the marketing of these products.  Good news for consumers is that more access and more education for consumers and agents.

The general benefit or value proposition for indexed annuities is this: guaranteed to never go down in value and to participate in the upside of the market (usually S&P 500 Index- could be others).  How do insurance carriers provide such guarantees? They buy maybe 80% into US Treasuries and invest about 10% roughly into options for the index and use roughly 10% towards costs, marketing and other expenses.  The small print on these products comes with participation limits and rules and restrictions.  Some have guarantees riders to insure an increase annually in either the deposited funds or the death benefit. For the agents the variations of these often confuse and overwhelm even seasoned agents.

At the end of the day, it more about getting your objectives clearly served and not some hype of who has the highest guarantee crediting or bonus plan.  Be sure to read the company materials on fees, participation rates and other disclosures as they are there to help you decide.  Be careful as there are fancy presentations with big print promises that fail to deliver.  These products are drawing huge sums of money and good indication that the public is less trusting in the markets and wants a safety net.

It is estimated that as much as 50% of all funds in 401K, 457, 403b have a provision for what is called either “brokerage window option” or “self-directed option”.  How does it work?  Why would you want to consider it?  First, we have to understand why it is being offered in the first place and will likely be encouraged over the next decade more so than in the past.

PPA 2006 was some 900+ pages and this new law put some new twist on employers, vendors and sponsors.  The twist was much greater liability in something called “Fiduciary Accountability”. The PPA went on to say that to reduce or nearly eliminate the liabilities the follow should take place: More Investment Options, Access to Investment Advice, Risk Managed Portfolios offered, Broker Window options, Self-Directed Option.

More Investment Options-various types of equities, fixed income, hybrids and international as well as different risk options.  If this was Europe we would see the regulations requiring “green investment” option and if associated with government then mandatory bias towards clean energy, waste, and water.

Access to Investment Advice- Not cubical discussions or managers within the company saying I have done this with my money.  Not about the vendor or sponsor representative giving the generic advice of the past.  Access is mostly being driven in two areas- internet portals designed to provide greater level of advice and education regarding the investment options and how it may fit into that employees situation.  The other would be custom higher end advice for a fee through that portal or through the brokerage window portals.  To not offer this would increase liability and now we see about 50% of all retirement plans opening a portal with outside brokerage window or the self-directed option.

Risk Managed Portfolios- on the simplistic side would be “target date retirement funds” and on more specific application there would be customized  hedged or risk adjusted portfolios that actively manage risk.

Brokerage Window- opened for the first time in 1992 by State Street for their own retirement for their employees it has spread and is becoming one of the ways employers and vendors are shifting liability away from the employers.  Do not be surprised if by 2017 this is where a majority of the trillions of retirement dollars are heading.  Billions are already there and growing.  The money never leaves the custodian. The brokerage window provides the ability to engage fee only advisers with expertise to educate and provide solutions in a custom format. Another option is self-directed one with education and general advice and the employee chooses. Sometimes it is not practical for 401K providers to offer up the specific investment needs or demands.  Suppose you wanted to have your investment screened for your values like your specific faith, for environmental or social issues you do not wish to partake of with the options in the plan. Under the broker window you could do this.

Experts I have heard this week tell me this will change the 401K world radically over the next decade.  Employees no longer are relegated to a few investment choices and along with this they will have the ability to get advice for custom solutions by people that know their specific situation.  The do it yourself person will also find the options to select fund families they know and trust will be available through these brokerage windows.  Employers and sponsor will love that the target of liability is not on their backs. Employers do not have to send checks to thousands of different investment choices it is still inside the custodian account.  The money does not leave the plan rather the professional advice and investment options enter in the new window.  That brokerage window opens up light and fresh air to ideas not typically available inside a plan due to complexity or specific needs that are not main stream.

Would you like to have an opportunity to speak with real people that understand planning and your custom needs?  Are there investment choices you really like and would like to have more of them inside your 401K?  So stop with the water cooler banter on the lame options within the 401K plan and consider taking control or getting custom advice and solutions as unique as you.

Kirsten Bullock of Growing Your Donors

So your Board has lost that loving feeling. There’s a mood of reluctance and apathy in its place. And you still have things that need to get done. Projects that need attention and people in need of help.

So, what do you do? Fire everyone and start over? Throw a tantrum? Raise up your hands in frustration?

Before you do that, I have a few better ideas.

There’s an old saying that you’ll get what you expect. So, if you enter the room thinking that no one wants to do anything, they’ll most likely live up to your expectations. So what to do instead? I prefer to go through life with the expectation that people, deep down, really want to make the world a better place. We just have different ways of accomplishing that. And just because your way is different than mine doesn’t mean that yours (or mine) is any less valid. So my first core recommendation is to change your mindset first and expect great (and unexpected) things to happen.

This second mindset shift may seem like a no-brainer. Let people do what they’re there for – and let it be meaningful to them. Whatever you do, if someone is doing something differently than you would do – don’t step in to do it your way instead. That’s one of the quickest ways to discourage involvement and engagement. I mean really, why they should do anything if you’re just going to do it anyway. And if they don’t know what they’re there for, perhaps it’s time for a strategic planning retreat.

One of the best ways to get board members engaged is to revisit the mission of the organization on a regular basis. I often recommend have a ‘moment for mission’ at the beginning of each board meeting to help people be inspired all over again.

Sometimes though, something more drastic needs to be done. In those cases, consider starting a committee or other subgroup to work on the issue that is most pressing for your organization. Often times, the excitement from that activity will help inspire the rest of the board to become more inspired. Sometimes it just takes a spark to get the fire going.

Finally, sometimes it could be that the chapter of involvement with the board member has come to its natural close. Not all volunteers will be involved for life, and that has to be okay too. Seeing that as the natural progression of the volunteer lifecycle, rather than a terrible parting of ways, can be helpful. Celebrate their time with you, wish them well, and by all means keep them on your donor prospect list.

reach Kirsten Bullock at kirsten@growingyourdonors.com or http://www.growingyourdonors.com

Why would someone be willing to pay taxes now on something tax deferred? Unknown tax liabilities in the future and the ability to create potentially wiser tax strategy.  Mary has $300,000 in an IRA and mix of High Yielding Bonds, Real Estate Investment Trust Stocks and other higher dividend stocks and various bonds.  Her cash flow is 5+% in 2012 and she is drawing out 5% of her IRA currently taxable 28% or net return after tax is 3.6% or $10,800 net. If she converts to ROTH IRA and pays the taxes upfront what would the effective net cash flow would essentially be the same net $10,800 or 5% on $216,000.  However if she increases the risk of the bonds and holdings for greater dividends and cash flow to 7% the ROTH become more valuable as all proceeds are tax free earnings and cash flow in her pocket. Bottom line the more income that could be generated the more valuable the conversion to the ROTH IRA.  I know of guy earning 12% on rental real estate inside his self directed IRA and he got excited to convert it to ROTH so he can now accumulate like before and when time to take cash he will be better off.

When would converting to ROTH IRA be considered a tactical tax move? Perhaps you have alternative minimum tax credits or unused charitable contribution carryovers? Maybe you have Net Operating Loss carryovers or current year ordinary losses that need to be offset? By convert to ROTH it may in fact allow you to use these loans to the U S Treasury and actual use them up.  In fact it’s possible that you may not have to pay taxes if you have enough carryover.

One strategy is the opportunistic conversion.  Let say you have three individual stocks and you believe there is strong chance 1 or 2 of the 3 positions could do extremely well in the next year.  Trouble is you don’t know which one.  Go and create three separate ROTH’s one for each asset.  If one of the assets performs greatly realize that all the gains would be tax free.  If let say two of the three do not perform or lose money then you simply re characterize the low or non performing and save on the tax costs. If there are private assets that could win big and provide a huge windfall then would you not want those inside of a ROTH IRA tax free forever? You could look up self directed IRA and there are a handful of custodians most you would never have heard of doing private stock and real estate and other assets inside of IRA and ROTH IRA’s.  Some even do currency speculation and trading.  Do not expect to see the big names in the financial world engaged in these transactions or at least not for their retail clients.

Bankrate site has a good basic calculator for ROTH IRA conversion.

Another question before doing a conversion to ROTH IRA is looking at your current cash flow needs and your future cash flow needs.  Compare you current marginal tax rate to your projected marginal tax rate. As the government works hard to find additional revenues they know all those who saved hard for a long period of time have significant savings in IRA’s and other qualified money and it’s taxable and in fact the rules of RMD or Required Minimum Distribution makes sure you do not let your IRA continue to grow and it forces distributions at a greater percentage each year you get older and it starts when you turn 70 1/2 years of age.  Did you know the penalty for not taking your RMD is 50% tax on the amount you should have taken?  Guess what the ROTH IRA does not have RMD or it’s taxes or penalties.  Tax stewardship is not discussed in the most media for main street investors, however it is discussed as wealthy individuals meet with their well informed advisers.

Their advisor suggested that Mrs. Jones take her own benefit today and Mr. Jones postpone his benefit until age 70.  Not a bad plan but there are other options.  So this may not be their best option.

There are several switch strategies available to this couple. 1) File and Suspend Strategy. 2) Restricted Application Strategy. 3) File and Suspend with Restricted Application. 4) And if they were 62 and considering this decision, there would be yet another strategy, solo to spousal switch.

If they take their advisors recommendation, they are leaving over $26,000 on the table.

Its important to run the numbers and consider the options by doing the calculations- vary few ever run the numbers on the various strategies.  Can you see how shooting from the hip and guessing could be expensive choice?  There are more variable that can make such a decision much more complex.  Age difference, Life Expectancy difference, earning record difference, Cost of Living Assumptions and discount rate assumptions all make for more complex work.  All of these can and should be run to optimize your benefits.

Some consultants or advisers simply do a break-even analysis and this may work on single but not for married couples.  The difference between the best and worst election can be well over $100,000 in today’s dollars! Great case for planning as wise stewardship again.

For married couples there are 81 possible combinations of election years considering whole years only. There are 9 potential election strategies including “switch” options.  Do you think the Social Security Office is going to runs these for you?  Think again.  Even if you asked for all the possible combinations they still would not be allowed to give you advice.  There are some other important considerations such as other assets and their taxable footprint.  Personal health and family history are critical to making good decision as well.

If you have recently elected there is still good news for you.  Form 521 can revoke your choice and allow you a do over in the planning process.  Check out my blog post on Form 521.  This is an option the Social Security Administration has now limited this to change during the first 12 months after filing.

If you would like to do some planning on your own and utilize an online calculator to run all of these numbers quickly and easy then utilize this link to Social Security Timing and if you wish not to get help simply click “no thanks” when asked if you want help.  Timing does matter.

Consumerism expert, William T. Cavanaugh elaborates on this mentality and writes that, “In order to make our lives easier as consumers we disconnect our purchases with what is going on behind them”. As consumers, we desire easier investments and therefore choose a product called a mutual fund where a manager disguises all the purchasing/selling. The SEC mandate does not disclose all this, further protecting the manager’s research choices.  Cavanaugh goes on to say we are legally part-owners, and as such, are taking a position in various companies through stock or bond purchases making us business partners.  We earn and lose money with the companies collectively as a portfolio but also as stakeholders.  This gives us the right for proxy voting in order to approve or remove directors and to vote on some issues like incentive pay and stock options.

If you are disgusted by the current Wall Street scandals and media rants about huge bonuses for poor money managers then could we be like these “Mafia Wives” by not acting?  Are we culpable to these injustices if we do not vote or stand up for them? Are we intellectually discounted as well?  Do we as consumers have a responsibility to do what little we can where we can? What rights are given as investors?  Have other investors found a way to influence accountable actions in their investments?  I have friends that have proposed corporate resolutions and passed them as simple shareholders and by doing so, they leverage more direct influence than some boycott or protest activity.

Are you asking yourself “something might not be right here”? If so you can do something significant and empowering.  First, take a step to know what you own.  Know what your mutual fund managers or annuity sub account managers are holding.  Next, are there resources to assess those holdings for specific values important to you? Maybe you are like the “Mafia Wife” and no one cared enough to ask you questions about “how” you earn your dividends, gains and interest?  Does it even matter how you make your money and who your business partners are?  If so, then consider this the beginning of your journey to empowerment and love expressed.  Some industry money managers would try to shame you with excuses that I have boiled down to 5 Common Myths.  You can read about these 5 Myths and also watch a quick video regarding this very same topic on YouTube here. My hope is that this will serve as a primer and for a better understanding of what the financial services industry teaches.  I “was”of the mafia wife mentality as a result of my education within the industry.  Seeing the light for me was a transformational experience and I would love to share with you how you too can get there. Stewardship does matter.

Not all boards are created for the same purpose and to think it is one size fits all is mistake according to experts like: John Carver, Candace Widmer, Susan Hochin, Kevin Johnson, Kathryn Miree, Elizabeth Schmid and Linda Lysakowski.

Four Hats of Boards are: Governance, Implementation, Volunteer, Benefactor.

Three main responsibilities are: Mission, Money and Management.

The most practical book I have read on board governance is titled; “The Art of Trusteeship: The Nonprofit Board Member’s Guide to Effective Governance.”  On LinkedIn you can connect to Board Source a wonderful resource as well. One of the most practical webinars was by Linda Lysakowski, ACFRE on board development. If you want highly detail technical aspects of boards then get John Carver’s materials- caution I found his material too advanced for smaller sized nonprofits and not in tune with real needs of small boards. If you work with smaller organizations less than $10 million a year revenue consider Kevin Johnson’s wonderful book “The Power of Legacy and Planned Gifts.” Sub title how nonprofits and donors work together to change the world.

If you wish to dig deeper into your the gift planning side of your nonprofit let me suggest a course from the American College Richard D. Irwin Graduate School.  GS 859 Gift Planning in a Nonprofit Context is excellent course and similar course is offered at Indiana University and Pepperdine University.  Choosing a board wisely and providing ongoing vision and direction to the board is good stewardship.  It matters to you and your donors how your board performs.

Lots of places to get this such as Barnes and Noble, Amazon and at Patrick’s ministry Man In The Mirror or www.maninthemirror.org or call 800-929-2536.  They also have bulk pricing if you wish to buy several copies and share with others.

Did you Know? According to Life Insurance Research Marketing Association the average American household with Life Insurance has on 3.6 years of income.  And beneficiaries have only 64% of their income replaced in the event of death of the primary breadwinner. 67% of the people LIMRA studied said that their loved ones would struggle financially should they die prematurely.

How much are taxes going up if Medicare is to get properly funded?  According to National Center for Policy Analysis at www.ncpa.org they show taxes will need to increase for those currently in the 10% bracket to 26% tax rate and those in 25% bracket to 66% and those in the 35% bracket will need to rise to 92%.  With national debt approaching $15 Trillion the estimation is tax adjustment would need to increase to these levels.

There was a significant white paper or executive summary by Ernst & Young in July 2008 titled “Retirement vulnerability of new retirees: The likelihood of outliving their assets.”  There are numerous charts and facts laid out spelling out that three out of five middle-class new retirees can expect to outlive their financial assets if they attempt to maintain their current pre-retirement standard of living.  To avoid outliving their assets, middle class retirees will have to reduce their standard of living by 24 percent. This 22 page report is worth a look.

Gap in coverage:  In the LIMRA publication Trillion dollar baby.  According to this report 3 in 10 US households have no life insurance at all, and even those with life insurance coverage, 43 % believe they need additional coverage.  The gap measure was a need of 4.2 years of income or about $300,000 of additional coverage needed.

Did you know some of the first insurance policies were instituted by the Vikings?  As they went off to war on the high seas the village people would pull together and create a pool of funds to take care of the families that lost their head of house.  So if a bunch of sea faring war mongers and uneducated villagers can care enough for their families and taking care of those left behind why are we procrastinating the purchase of life insurance? Reviewing what you have with a professional does matter. Love to hear your thoughts on the Vikings?

Treasuries or Certificate of Deposits: both have provided returns in the 3-7% in the past and today are often less than 1% short term and don’t expect much more unless you push out longer term like 10 years.

Fixed Annuities:  Currently most crediting rates in new contracts today are around 2%.  If you have an policy that is a few years old it will likely have minimum crediting rate of 3-5% range.  Find out if you can add additional and be sure to find out if there are surrender charges or costs associated with additional funding.

Governmental Bonds and Agencies: Freddie Mac, Ginnie Mae or Treasury notes and bonds are one of the main go to places for insurance companies and banks for decades.  What might you expect for 5 year note in terms of cash flow in early 2012? Check out Bloomberg bond rates.

Corporate Bonds: Returns for corporate bonds can be all over the place as the risk and ratings change rapidly.  BBB, A-, AA, to AAA+ are ratings associated with more financial solvent companies and are wildly held by mutual funds, banks, insurance companies, Foundations and individuals. The range of returns are from 0% to 5% and of course could be higher with higher risks.  Here are a couple of resources to consider Standard and Poor’s and Moody’s ratings.

Higher Yielding or Junk Bonds: These are corporate bonds with lower or no ratings at all.  Note if a bond does not have a rating does not automatically place it in a junk status rather it may be a small issue and not feasible to obtain a rating.  Again the range of returns can be great from 3% short term to longer term higher risk easily over 10%.  Many investment mandates preclude banks and insurance companies from holding these or limiting them to small percentage of portfolio.  Good idea as these bonds need a very watchful eye and quick response as a company news changes quickly.

Municipal Bonds or Muni’s: Look for ratings and if holding individual bonds either get on top of these or hire out professional management.

Real Estate Investment Trust or REIT: Again several varieties of these securities. From small private to large public to index of REIT’s to ETF of REIT’s to Mutual Fund of REIT’s. Some are designed for leveraged growth and most are designed for income.  Some are industry specific and others are type of property specific.  All cash professional offices and apartments are popular for cash flow with 5-8% being common range.  NAREIT is organization that has lots of education on the industry and potential and their site is REIT.com .

Leasing: Again these can be small private or large public companies trading on exchanges. If in the private world their may be some special tax advantages for depreciation.  Container shipping has been a major part of the leasing world to investors.  This is less about dividend or interest and more about cash flow and funds from operations.  Rates vary too much to comment on these.

Life Insurance as asset class: You will see and hear lots of agents claiming life insurance as SUPER ROTH IRA or Ultimate Income Machine.  Reality is most contract in existence are crediting like 4%-5% and the newer contract out right now are less in the 2-3% range.  It takes some staying power and commitment to long term perspective and over fund the contract to the most allowed by the laws in order to get a strong result.  There are things called “interest free loans or wash loans” and they provide a way to tap into policy values at retirement and again these policy work best when funded heavy and in place for several years before you take any of the cash values.

Realize this how you allocate and invest does matter.  Good stewardship of income sources is wise for both you and your loved ones. Realize this we did not address tax strategies here and each one will have a different affect so please consult your professional or learn the differences in each strategy and it’s affects on your taxes.

Well a lot of people I talk to are expecting and relying on Social Security to be there for them and usually 20-40% of their retirement income. So that makes it really important.

What we do not hear enough about is how unique Social Security really is in a retirement income portfolio.  For many social security is the only income stream that is inflation adjusted, lasts as long as you do, is tax advantaged, and back by a governmental promise.

Think about it.  Can you think of another retirement income stream that has not just one or two of these but all four of these unique characteristics? As a friend of mine so often reminds me “it’s all good” and it is good.

Inflation adjusted: Each year a Cost of Living Adjustment is applied and the administration is not to blame for the rate that is determined by the Consumer Price Index or CPA.   In 1975 if you had $1 of Social Security Benefits that benefit is now closer to $4.25.  Said another way if you were taking $2,000 withdrawal in 1975 then you need to be taking $8500 in today’s dollars to keep up with the increases in social security benefits.  In 2009 and 2010 were the first time in history that we had no increase.  2012 was recently announced at 3.6% and this takes effect for January 2012.

Tax-Advantaged: The Adjusted Gross Income Plus Tax exempt Income + half of Social Security benefit is the combined income test.

• If your combined income is below $25,000 ($32,000 if married filing jointly), none of your Social Security benefits will be taxed.
• For every dollar of combined income above that level, $0.50 of benefits will become taxable until you reach $34,000 of combined income ($44,000 if married filing jointly) For every dollar of combined income above $34,000 ($44,000 if married filing jointly), $0.85 of Social Security benefits will become taxable–all the way up to the point at which 85% of your Social Security benefits are taxable.*
• Important note: To say that 85% of your Social Security benefits are taxable doesnot mean that 85% of your benefits will disappear to taxes. Rather, it means that 85% of your benefits will be taxed according to your tax rate.

How you apply for the benefits matters.  Get informed responsible education and how to get the timing of Social Security matters.  You matter. Your retirement income stream matters to you and your family.  Consider calculating when is your optimal time to elect and how you elect then check out Social Security Timing by Joe Elsasser a leader in the field of Social Security Planning.

Very Important this is only for the first 12 months in which you filed (changed from last years rules).   Form SSA-521

If your interested to learn more about this region and the ongoing importance consider looking at the site from Applied Research Institute .  Every morning as I fill the coffee maker with water I pause and think about how nearly on fourth of the world does not have good clean drinking water at the turn of a handle.  Another forth of the world pays a larger portion of their budget on clean water than we do here in the United States.  Be thankful if you have access to clean water and if your not aware of the global challenges then get educated as it does matter.  Help someone else get educated as well.

What are Switch Strategies?  Few people including advisors know the following options exist.  Even fewer know when to use them, and how to use them to increase your Social Security check.  These are called “Switch Strategies” because they entail electing a limited benefit for a period of time, then “Switching” to a higher benefit at some point in the future.  These strategies alone regularly add $20,000 or more directly to your bottom line.

Switch 1 is called “Deeming Provision”.  If you file prior to full retirement age, you are “deemed” to have filed for all benefits you are eligible for at the time of filing. Prior to full retirement age there are few opportunities to use switches.  After full retirement age, you have the ability to selectively file.  You can choose to take only one benefit while continuing to get delayed credits on a different benefit, then switch to the higher benefit at some point in the future. The name for this enabler is “File and Suspend”.

Switch 2 is under the name “restricted application”.  Let’s say that Mrs. has already elected her own benefit- and that it’s $1,000/month and the Mr. is planning on delaying his benefit to age 70 to get the most of his delayed credits.  Remember the delay from 66 to 70 increased monthly benefit by 32% for life! Mr. can actually file a restricted application for only his spousal benefit under the Mrs. record and collect $500 per month until he turns 70.  Doing this will not affect his age 70 benefits at all. If he doesn’t file the restricted application, he is simply forfeiting his right to that $24,000.  Ouch! you heard me gone forever $24,000 in benefits.

If this is interesting to you then you may want to check out a white paper from the Center for Retirement Research at Boston College titled;UNUSUAL SOCIAL SECURITY CLAIMING STRATEGIES: COSTS AND DISTRIBUTIONAL EFFECTS.  Alicia H. Munnell, Steven A. Sass, Alex Golub-Sass and Nadia Karamcheva.  This report came out August 2009 and provides amazing details to the strategies and estimated costs to the government for each of the strategies.  Impressive work and intensive read should you want more than the necessary information to make a wise decision.

There are obviously several things to consider here and the more you read on this subject the more in might make sense to test the numbers and get some help with such a huge decision.  If your single then realize this a simple break even analysis is all that would be necessary for you.  If your married and want to try out what is considered by many as the best calculator on Social Security Timing Planning for married couple couples then click the link for online help- say no thanks to proceed on your own.  Planning does matter and it’s just good stewardship.

Did you know women control now an estimated $22 trillion, which represent 60% of the wealth in the United States?

Why is this a positive thing for the local and global community?  Because research shows women influence and give and create impact by investing more socially responsible and give more generously. Women think hard about outcomes and desired results of using money as a tool of change.  Do not be surprised to hear of huge grants and gifts in the near future as it relates to causes being funded better than ever before in history.  84% of all philanthropic giving is by women.  Since 1996 more than $15 billion annually is given by women according to Sondra Hardy-Shaw author as well as other sources like Center on Philanthropy in Indianpolis , IN.

What else might we expect to see as women are carrying the influence and the actual assets?  Women invest more time to understand issues that are important to women.  Men may make a decision faster however are less loyal than women so research shows.  Men are faster to disconnect making money with social or ethical decisions.  Men can silo their lives easier than women and therefore women often make decisions that consider longer term social and moral impact.  Women are more likely to be “green” investors than men at least research from Social Investment Forum indicates so.

Just like when the Surrogates of the early 1900′s were empower with new voice so will the newer philanthropist of 21 Century (women) will find their voice and power to change the world.  I for one welcome the change and love the values women bring to the financial world including more accountable actions.  Are we enabling Wall Street and Corporations to scam us?  If there are not more pressures by shareholders or stakeholders then perhaps we are.  To rely on governmental regulations is not a prudent answer to the woes today. Let me know if you agree or disagree with me?

If this is interesting to you let me recommend some other authors as well.  Paul Schervish, Margaret May Damen, Peter Karoff, Holly Hall, Tracy Gary, and Thomas J. Stanley.  My children would say “it’s all good.”

Another resources specific to women of faith and giving is www.womendoingwell.org and they have a study of more than 7000+ women and their giving patterns.  Pam Pugh and Sharon Epps have really created some wonderful resources.

The rational I hear the most as it relates to giving on the demise or testamentary is that children will get something planned and charities and causes will get something so my children will fight less over the stuff and money.  

Do you feel better when you give and see the gift being either enjoyed or used to make impact?  My friend raises a good question as he explains to me that I do not wish to die therefore I am being involuntarily separated from my money.  Another thought to correct this if you are not connecting to your planned gifts is maybe do you giving while your living so your knowing where its going.  I would love to hear your thoughts or questions as it relates to current and future giving.  

Example:  Jerry gets $2,000 a month for life from the ABC Corporation and when Jerry turns 62 his SS benefits are $1200 a month and now instead of getting $3,200 a month he is still getting $2,000 a month and the ABC pension provides now $800 a month and SS provides $1200 for total of $2,000 a month.

This is not always the case.  Better to plan and know than to be surprised at some pre-retirees training meeting .  If you are married and go to draw Social Security there are some very generous benefits and some unusual options including switch strategies you will greatly enhance your monthly income with some planning.  If you wish to learn more consider utilizing the free online help at Social Security Timing. You could choose to run your own illustration on this site or you could get help sorting it out and getting clear on money often left of the table.  We see this planning as another way we exercise our rights and responsibilities to our family and our self.

Here is what Ron Blue says about giving and family.

• Experience of financial freedom – people of various income and net worth ranges are plagued by a scarcity mentality. In fact, the irony of wealth is the more your clients accumulate, the more fearful they become of loss. Giving helps break them of this mentality by focusing them on the ultimate Owner and Provider of all wealth – their heavenly Father. As I said earlier, only giving turns fear into faith.

• More effective spousal communication – Giving fosters deeper relationships between husbands and wives. A husband and wife must work together as a team to practice God-honoring giving. It takes open communication and understanding.

• A lasting heritage with your children – Children see God’s grace demonstrated in the lives of their parents through sacrificial giving.  It may actually be a poor decision for your clients to leave their children great wealth. It is always an excellent decision to leave your children the wisdom manifested through grace-centered generosity.

Here is something I did that could help your cash flow this year especially if you live in Florida. Getting your home inspected for wind mitigation costs about $100. The payoff is likely to be many times that on home insurance savings. I saved more than $400 the first year alone doing this simple task. If you are in Florida talk to your insurance agent and see if it makes sense for you. At first I did not believe my agent and delayed doing it almost a year.

Maybe it is all of the above for you and you don’t know where to start or what you can do to find a trusting voice?  Ask others for referrals and when you do ask if are happy with their advisers?  Consider talking to a fee only advisor not just someone that offers some fee only products but makes most of the compensation on commission products.  Consider getting a fully disclosed assessment or paying for a fee plan and let them know you are seeking objective advice not transaction. Maybe you are watching a lot of the news lately about occupy Wall Street and other protesters and wondering what can you do to send a message to corporate America about your concerns. Go to You Tube and type in Stewardship Matters and look at the 5 Myths videos. This is an educational resource to help you sort out your thoughts on harm and doing good and influence.

I few years back I went to the eye doctor and found out my vision was off slightly.  Trying to see leaves on trees or reading signs at long distance or driving for a long time seemed to bring on headaches. I was surprised that I could actual recognize faces across and large room or see the flag on the golf course.  Getting clear on your values and then getting fitted for alignment is similar experience when investing.  Things you have not noticed before all of a sudden are visible and more meaningful. You know when you buy a red car and then you start to notice all the other red cars or whatever the color is on the road like yours?

The online resources today are growing and the noise level is getting louder too.  Be sure that you avoid what I call the “lipstick on a pig” and get clear about your values and not some marketing group pushing out product for product feel good sake. There are resources in nonprofit or association groups that can help you get some education on environmental, social, moral values.

Before you meet with an advisor check them out ask them for ADV form which is a full disclosure document and spells out their history, education and if they have pending issues.  Maybe checking them out on LinkedIn Profile is another good place to see what they do and their background and focus. Just because a person is convenient to you is not a good reason to do business or if you happen to see them on a regular basis is not going to guarantee or promote better advice or service.

Maybe getting coached upfront on what to look for from someone else that is a good decision maker with successful pattern of decisions is a good resource.  If you are look for designations do you know what the various letters stand for and what might be a best fit for your needs in planning or insurance or investment help?  Don’t worry most do not know this but the internet is a good place to get some additional information.  The American College is the most well know institution for designations including: CAP, ChFC, CFP, MSFS, CLU and many others.

Just taking action in at least one small step does make a difference.  Eat less junk, walk more, read more good stuff, reflect more, listen less to fear producing news reports, give more, call a friend and visit others and listen more.  What is your action plan today? What is your next right step financially and overall? You do make a difference when you make good choices in managing risk and seeking advice on the decisions facing you and your family. What is a next right thing for you?

A charitable gift annuity is a contractual arrangement  between a donor and a charity. The donor makes an irrevocable gift in exchange for fixed payments for life. The charity issues the gift annuity agreement and places the donated funds into a separate account on behalf of the named annuitant. The charity can then either self-insure or re-insure its payout obligation while making the stipulated payments to the annuitant for life.

If charity takes on the administration and liability then you should make certain you are comfortable with the charities financials and experience.  Many of the very large older charities do this a do it well.  Many of the small and mid sized charities opt to re insure instead of self-insure.

Reinsurance:

The purchase of a single premium immediate annuity contract by a charity from an insurance company. The insurance company guarantees that the lifetime payments which the charity has obligated itself to through a gift   annuity agreement will be paid directly to the charity on the same periodic basis as the payout obligation which the charity has made to the named annuitant. The remainder, the amount donated less the reinsurance premium, is available to the charity immediately.

What it can mean for you?  High cash flow usually monthly unless you elect otherwise.  Tax Deduction is based on age or joint age.  Income is partially tax free and depending on age again it could be mostly tax free.  Lastly, if you have desire to help your favorite charity these are wonderful way to give and not feel the pain.  If your favorite charity does not offer or is small then realize there still may be a way to get a re-insured policy with your charity with creative help.  If you have questions or comments I would welcome the conversation.

One of the major carriers I was interviewing for this article told me in Florida they are seeing 2/3 of all of the life policies this year including this rider of long term care benefits.  So you buy a policy with this rider a portion of the total death benefit is paid out monthly while you are alive.  Living Benefits coming to you are a beautiful thing.  These new creative approaches to providing Long Term Care (LTC) is a result of changes made in the definition of death by the Pension Protection Act.  One online resource you may wish to visit is American Association for Long Term Care Insurance.

With rates rising on Long Term Care Policies and often at double digits there needs to be more fresh ideas to address protection to cover expenses while we are alive.  Here are some common benefits for you:

Tax Free Cash Flow While Living

Getting Multiple Needs Met With Same Dollar

Do Not Underwrite Based On Health Insurance Rules Rather On Life Insurance Rules

So where seems to be the best fit here?  Those age 45 to 65 with a desire to have both benefits for self and family.  Those that do not wish to tie up large sums of money into an annuity product with similar benefits.  Those that have older policies and could review them for costs and sustainability.  If you have been paying for a policy for 20 years and it is highly likely to crash when do you want to find out? Policy reviews are one of the most over looked personal financial decisions.  This may in fact benefit you and your family the more than any other decision you make financially this year.  One more incentive to review is that mortality costs have dropped significantly over the years and that means the cost of insurance has dropped.  Not reviewing this can cost you and your family.  Proper review should address the quality of coverage and newer benefits not offered only a few year ago.  Stewardship does matter.

There are additional reasons to consider one over the other and some of those reason include: Program Related Investments, Community Micro Loans, Giving Circles, coaching the next generation of your family or creating ways to keep your giving a secret.  Maybe there is a need to have a conversation with an expert such as Chartered Advisors in Philanthropy, or other experienced planned giving experts?

Here are the main benefits of both Community Foundations and Donor Advised Funds:

• Contributions to the fund are fully tax deductible in the year they are made.
• Appreciated assets can be donated without incurring capital gains tax liability, and clients realize their full fair market value as a charitable contribution deduction.
• The fund eliminates the pressure of having to select charities by year end ^__ grants to charities can be made later.
• There are also logistical reason to consolidate and incorporate other giving and other individuals in your giving.

On a very practical basis you and I can ask about where things are made and today more than ever before find out about the companies we do business with online and through watch dog groups, governmental agencies and for profit businesses catering to screen and educate us.  If this seems too much then consider joining others with similar interest and invest into exchange traded funds or mutual funds or private investment managers that screen.  A decade ago there were maybe 5 exchange traded funds that screened for values and today their are over 300 different funds.

You will hear me say this over and over because it’s true that stewardship is more than giving, it is all of life.  How we spend, save, invest, give, think and act are all part of the responsible calling of stewardship.  It does matter.  How will you vote today?

The state of Florida believes so strongly in the ethical transaction of insurance that it has codified as law certain consumer and policyowner rights. These rights, set forth in Section 626.9641 of the state’s insurance code, serve as standards by which the state’s regulatory agencies, offices, and individuals are to exercise their duties, write and enforce rules, and dispense administrative interpretations of the law. These rights are as follows:

• Policyholders shall have the right to competitive pricing practices and marketing methods that enable them to determine the best value among comparable policies.
• Policyholders shall have the right to obtain comprehensive coverage.
• Policyholders shall have the right to insurance advertising and other selling approaches that provide accurate and balanced information on the benefits and limitations of a policy.
• Policyholders shall have a right to an insurance company that is financially stable.
• Policyholders shall have the right to be serviced by a competent, honest insurance agent or broker.
• Policyholders shall have the right to a readable policy.
• Policyholders shall have the right to an insurance company that provides an economic delivery of coverage and that tries to prevent losses.
• Policyholders shall have the right to a balanced and positive regulation by the department, commission, and office.

Some considerations before doing this is what are the closing costs and fees and do you plan on living there for a few years?  Other questions include: do you have equity in the home and income to help you qualify for better rates and is your credit score excellent?  If so, then acting on these historically super low rates could do one of a couple of things for you.  1) improve your current cash flow situation or 2) allow you to pay down or pay off your current mortgage much faster.

It is popular to hear get a grip on your debts and deal with them.  This is not advice to tell you what to do only that there are better options today than their were 2-3 years ago.  Check with your current lender and see if they have a no or low costs refinance option and then test it against another mortgage professionals advice.  In the above $200,000 balance if you had 5.25% and went to 3.25% it could reduce your term from 360 payments to 250 payments.  That is 110 payments and the Principle and Interest are estimated at about $1100 a month or $121K taken off the back side of the mortgage. Sound like something to at least look into reviewing?  There are more considerations than what I have laid out here such as family growth or job relocation or school district changes and other options for investments and tax and credit considerations.

Work is not a result of the fall. Work is a part of God’s created order for humanity (Genesis 2:5, 15). Jesus accomplished the works of His Father ( John 4:34; 5:15; 5:36). The Father gives us work to accomplish during our earthly sojourn (Ephesians 2:10).  God has appointed us over the works of His hands (Genesis 1:27-28; Hebrews 2:7). We are called to please God by bearing fruit in every good work  (Colossians 1:10).  Our work will be tested and proved by God (1 Corinthians 3:13-15).  Scripture rebukes idleness and sloth and affirms that work has genuine value (Ecclesiastes 2:24; 3:12-13; 5:18). All honest professions are honorable, and there is dignity in manual as well as mental work, as is evident from the occupations of the characters of the Bible. When we seek to glorify God in Whatever we do , we will pursue excellence in our work, whether others notice or not.

If you are discouraged by those in authority over your work then consider Paul’s message to workers in Colossians 3:23-24 “Whatever you do, work at it with all your heart, as working for the Lord, not for human masters, since you know that you will receive an inheritance from the Lord as a reward.”  Another word for with all your heart here is “heartily or with great zeal”.  Imagine if everyone did this what a difference it would make in serving each other and creating peace?

Another helpful verse that everyone I have shared this has said that is a good thing is this…Act justly, love mercy and walk humbly.  This comes from Micah 6:8.

They are additions to benefits if retirement is delayed beyond full retirement age. Delayed credits may accrue up to age 70. The Delayed Retirement Credit provisions allow for any month for which a worker was at least full retirement age, was insured for retirement benefits, and did not receive retirement benefits. The amount of the delayed retirement credit depends on when you where born, currently anyone born after 1-1-1943, receive a monthly credit of 2/3% or .0066667. That’s equates to a yearly credit of 8%.

Yearly credit of 8%!  That is found money assuming you life a long life and the plan doesn’t change.  If you do have family history of long life expectancy and your in good health then delaying could be very significant boost to your retirement plan.  There are several strategies and do not expect to get numbers run at the Social Security Office as they are not allowed to provide you planning just information you request.  If you do not know how to ask and what you are trying to accomplish then you will be like the ship at sea without a route or port of call then let the wind push you where it is going.  What would you do with an extra $200 or more per month?  Live more, give more, or simply feel less pressure?

Are retirement benefits guaranteed to keep up with the cost of inflation?

Yes, Congress enacted the cost of living adjustment or COLA provision in 1972. This provision provided for automatic cost of living adjustments if there was an increase in the Consumer Price Index for Workers of at least 3%. In 1986, Congress eliminated the three percent requirement due to waning inflation. Currently there is a cost of living adjustment if there is an increase in the average consumer price index for workers. If however, the increase is by less than .05 percent or there is a decrease there will not be an adjustment for that year.

Here the definition of inflation is of course different than what you will experience at the gas pump or next time you fill a prescription.  Why in 1994 the President adjusted the basket of goods and services to reflect less of energy and medical and more on housing.  What has happened to your energy costs and medical bills over the last 17 years?  Compare those costs to housing and you can better understand COLA is not in touch with reality.  What do you think about this?  Guess what in 2000 there was announced a surplus of $1 Trillion in Social Security calculations as a result of the lower COLA over the previous 8 years.  Good for the system and bad for the retirees cash flow.  If you wanted to run some calculations on your own where would you go?  Here is a site that you may find helpful for both calculations and educational materials Social Security Timing.

Survivor benefits are benefits that are payable to a spouse of a deceased worker. The spouse is eligible for survivor benefits after reaching age 62 and they are not entitled to a retirement benefit that meets or exceeds the survivor benefit. These benefits can be received as early as age 60 unless disabled then as early as age 50. Taking survivors benefits before full retirement age will result in a reduction of benefits. A divorced spouse is also able to file for these benefits if they were married to the worker for more than 10 years.

What if I do not have enough work credits, can I still qualify for retirement benefits?

No, if you do not have enough work credits you are not fully insured and therefore do not qualify to receive retirement benefits based on your own earnings. However, if you are married, widowed, or divorced in certain situations you may qualify for spousal or survivors benefits which would be based on a qualifying spouse.

Does a spouse still qualify for survivor benefits if the worker passes on before electing Social Security benefits?

Yes, a spouse will qualify for widow’s benefits assuming that the deceased spouse is fully insured and the widow qualifies for benefits. The spouse must have been married to the worker not less than 9 months immediately prior to the day of death, has attained age 60, or is in the care of a child under the age of 16. (There are many exceptions to these basic requirements.)

The surviving spouse’s age will determine the benefit amount. If the widow is of full retirement age, 100% of the deceased spouse’s benefit will be available to the surviving spouse. Any age less than full retirement age will reduce the benefit based on the age or situation.

Visit the Social Security official site at www.socialsecurity.gov

If you are inclined to read and learn and run some numbers there is a good resource called Social Security Timing Calculator and free to use online by respected non governmental group.

• One-half of the net benefits received during the taxable year, or
• One-half of the sum derived by subtracting a base amount from the taxpayers modified adjusted gross income plus one-half of the social security benefit received.

This applies to any earnings in excess of income limits determined by the IRS.

Am I able to work while receiving Social Security Retirement benefits?

Yes, you can work while receiving retirement benefits. However, Social Security Retirement benefits are meant to replace, in part, earnings lost to an individual due to retirement. So, under the law, those benefits could be reduced if earnings exceed certain amounts. These amounts are listed on the Social Security website.

For beneficiaries who are younger than FRA, deduct $1 from benefits for each $2 earned over the annual exempt amount (2011 – $14,160). In the year in which full retirement age is attained, deduct $1 from benefits for each $3 earned over the full annual exempt amount in the months prior to FRA (2011 – $37,680). This is referred to as the earnings test.

Could this explain why I see so many early 60′s out doing cash money jobs in Central Florida? I do not know however it does seem odd that when a service repair trade needs extra help the guys who show up all seem to be either 20 year of age or 60 something.

Knowing if you will earn money before normal retirement age is very important.  If your life expectancy is very short then still could be the best choice to take it at 62.  If you are single a simple break even analysis will help you pick when to take benefits.  If you are married you might wish to run some numbers as there are hundreds of options and choice would cost tens of thousands.  Check out this resource for Social Security Timing.

If you elect your retirement benefits early they will be reduced by 5/9 of 1% for the first 36 months prior to full retirement age. Any month in excess of 36 months will be reduced by 20%, which is the total reduction for the first 36, plus 5/12 of 1% for each month in excess. For example, if full retirement age is 66 and you elect benefits at 62 then your benefits will be reduced by 20% for the first 36 months and 5% for the 12 month after, for a 25% reduction for electing early. Once you elect reduced benefits you will receive a reduced benefit for the entire time you collect Social Security.

How are spousal benefits calculated in the event of early election?

Social Security benefits are reduced by a certain percentage for every month they are elected early. Spousal benefit reductions work the same way–though the factor by which the benefits are reduced is different. Below are the percentages used to calculate spousal benefit and retirement benefit reductions.

Two Spousal Benefit Scenarios

1. First let’s look at a case where the spouse does not have a retirement benefit of his or her own and the primary worker qualifies for $2,000 in retirement benefits. If the spouse waited until 66, he or she would be eligible for 50% of the primary worker’s benefit, so in this case $1,000. However, if the spouse elects at 62 instead of 66, the spousal benefit would be reduced by 30%, making it only $700 instead of $1,000. Here’s how it works:

*$1,000 is reduced by 25/36 of 1% per month for the first 36 months and 5/12 of 1% for each additional month.

2. Now let’s look at a case where the spouse is eligible for his or her own retirement benefit of $500 if taken at age 66. Assuming the primary worker still qualifies for $2,000, the spouse would be eligible to receive his or her own benefit, plus a $500 spousal excess, which is the difference between the spouse’s retirement benefit and 50% of the primary worker’s benefit. ($2,000 x 50%) – $500 = $500 spousal excess.

But what happens if the spouse elects at 62? The spouse’s $500 retirement benefit would be reduced by approximately 25% and the $500 spousal excess would be reduced by approximately 30%. Here’s how it works:

*$500 is reduced by 5/9 of 1% per month for the first 36 months and 5/12 of 1% for each additional month.

*$500 is reduced by 25/36 of 1% per month for the first 36 months and 5/12 of 1% for each additional month.

Here are a couple of helpful links.  Social Security official site and Social Security Timing a private planning site to help.

Let us know if this is helpful and what other retirement questions you might have about Social Security? If the calculations are confusing to my friends that are really good with numbers then I would suspect they are to you as well.  There are some things to keep in mind as you address these issues.  You life expectancy and your spouse’s.  The level on earnings credited and the difference in the two benefits brings up additional planning opportunities for you and your family.

Spousal benefits are benefits that a workers’ spouse may be eligible for based on the workers’ record. In order to qualify for spousal benefits the spouse must be at least age 62 or have a qualifying child and has been married to the worker for at least one year prior to filing for benefits. Under these circumstances the spouse can receive as much as half of the workers primary insurance amount depending on the age in which they file for benefits or if they have a qualified child in their care. The spouse is not eligible for spousal benefits if they are entitled to a retirement benefit that meets or exceeds one-half of the primary insurance amount of the worker.

Can the higher earning spouse receive benefits on the lower earning spouse’s benefit?

Yes, assuming that the lower earning spouse qualifies and has filed for benefits. If the higher earner files a standard application, he will not qualify for spousal benefits because his benefit would be higher than his spousal benefit. However, if he files a “restricted application” he can access a spousal benefit while still accumulating delayed retirement credits on his own record.  What might this look like? Widow or widower may consider taking the spousal benefit and later elect their own at full benefits or delayed benefits to increase cash flow about 8% a year for each year.  This can be worth hundreds of dollars per month.  Planning is important here.

Can I receive retirement benefits for myself and a benefit under my spouse?

No, when you receive a spousal benefits you will receive half of the primary insurance amount of your spouse. What this means is that if you have a primary insurance amount of $500 and your spouse has a primary insurance amount of $2000, you are entitled to $1000 worth of benefits. You will receive the $500 under your own benefit and $500 under your spouse’s benefit which is equal one half of your spouse’s benefit. If your benefit is equal to or greater than the spousal benefit you do not qualify for spousal benefits. You will not receive your own benefits and half of your spouses benefit. (Example assumes full retirement age.)

Question I received this week: Will it benefit me to delay beyond age 66 for spousal benefits?  The answer is no.  Spousal benefits max out at age 66 and do not accrue delayed retirement credits.  Do not miss this as it will cost you real money.

Here is a site that you you might find helpful as you look at timing and planning of your Social Security decisions by Social Security Timing.

If your research is more about sustainable practices then consider looking into CSR.org  and BSR.org or Governance Metrics International GMI is a leader in research and they have lots of resources for corporate America and for investors to consider.  They are more than screening on what has happened as they also have some unique predictors on sustainability and risk associated.  Some of the larger money management firms have hired GMI to look for ways to reduce risk that the typical fundamental analysis has failed to reveal.  Many of the articles I read in the industry are saying that traditional methods of determining risk need improvement.  In my opinion GMI is one of those unique stories of non traditional risk management worth a look.

What does faith have to do with Corporate Responsible behavior?  Possibly a lot more than you and I will ever know and certainly more than can be proven in my opinion.  Why can I say such a remark? Stories I have heard about executives that were guided by moral compass and their faith and their actions showed high integrity and commitment to do the right thing even when no one was watching.  Let me ask you this question? If the sole purpose of the board and top executives where only about the results of the next quarters earnings would that mantra drive the best decisions for the organization?  Would such a drive encourage top talent to possibly cook the books or take on risks in order to reach the profits at the costs of long term goals of sustainable business.  What do you think of faith and corporate responsibility?

Obviously there is a cap to anything like this and all good things to encourage such activity can get some donors that have never given to step up and do so for the first time.  Sounds better than the book or DVD give away for making the contribution.  I have been told by a few industry consultants to nonprofits that they have seen great success for little unique gifts of thanks.  Think about the match as a double, triple or quadriple or money given is 100% to 300% return on the gift upfront.  My gut tells this will work well and the organization will raise significant money and meet its goal quickly because they are such a worthy organization.

Question: could having donors that put up matching dollars potential harm the giving to the organization in the future if donors are looking for this next year?  I suspect there will be a few new donors may be disappointed if communication is unclear as this one time opportunity.  What do you think will happen next?

Why is planning necessary?  For married couples there are hundreds of combinations and strategies where as the individual plan is very straightforward and plain.  There maybe a caveat here for the single if widowed  then there are other options that should be considered and asking those questions earlier rather than later can make a big difference.  Social Security website has lots of helpful information and generally asked questions and explains benefits but do not expect to see calculations for the various options afforded to married couples.  If age 62 is early and 70 is late on claiming your benefits then consider this 9 years times two for each potential age at which a couple elects to draw SS income then 81 combinations.  To further complicate matters there are at least three major strategies to overlay.  The results is need to explore several hundred options to find the best or optimal result.  If you are single the experts state that a simple break even analysis is all you need to look over to make a decision.

While it is easy to point fingers over this complication of strategies or to complain about the economy or investment results or bank cd yields it may be more of the more important decisions for you and your spouse to consider the proper planning of taking Social Security and the timing of those payments.  Look for more on this subject in future blog posts and videos.  Social Security Timing has according to CBS article above the best calculators for understanding the need to get this important decision correct.  Timing is everything.

Total household debt in the US was $13.3 trillion as of 6/30/11, 88% of the size of our $15 trillion economy. The debt-to- economy ratio was 62% in 1990 according to Federal Reserve.

Growth is being held back by debt and if interest rates were to rise then growth would likely be reduced by even greater pressures to service the debt.  It really is pretty simple to understand when you apply the Rule of 72.  Rule of 72 states that the required number of years to double your money would be 72 divided by say 10% then it would take 7.2 year to double. Rule of 72 can work against you as well.  Paying 18% on credit card and take 72 and divide by 18% and it takes four years to double the amount originally owed on a debt- ouch!  So $5,000 at 18% paying the minimums is going to cost you an additional $5,000 over the next 4 years!

Now let look at 2% on accumulation and see how long it takes for money to double. $5,000 at 2% will take 36 years to double in value!  No wonder Albert Einstein is noted to say that compound interest is the greatest invention of the 20th century.

Guess how long to double your money at .5% return? That’s right only 144 years.

Compensation experts are quick to point out faults of various types of incentive pay structures and having the “why” understood upfront helps all parities to perform and not overlook important issues.  One money manager told me about a group of business leaders that met to share tricks of juicing up earnings and ways to get more money to the bottom line strategies regardless of risk and mission.  A new type of risk evaluation is being applied to stocks that looks at sustainable practices and has ratings applied by outside parities like GMI.  Governance Metrics International has some very cool ways of addressing risk and risk often overlooked by traditional methods.  Some mutual fund companies utilize GMI as an added feature to contain or even predict risk in a stock.  Even some the mainstream companies as addressing ESG as part of the appropriate incentives for corporations and it’s pay structure.  Like the frustrated mother working to apply incentives for their children so we could all use help to get the right incentives for the right result.  A properly aligned incentive is good for all.  Do not be surprised as you read a lot more on incentive pay and bonus based on sustainable practices.  Maybe if the post office had this in place decades ago we would have surpluses each year instead of current system? Maybe if we would actually hold boards responsible for actions then maybe the boards would do more to hold corporate leaders responsible.

These are some of the questions I have encountered and I can say the answers are not always black and white clear.  The process for screening is newer and it takes skill, energy, patience and special understanding of personal values and process for applying a screen properly.  Ok are you ready to give up and accept your current investments are fine if they pollute, rape, kill, mame or destroy the things you cherish the most in this world? If you are passionate about your favorite sports team are you likely to leave the game early? Well not unless something else is more important usually.  Do you like the sense that when you and others cheer on the team that it really gives a boast to the outcome and could actually be the game changer.  No wonder stats show home team advantage really does work as an advantage.  What if you could see and learn the impact of your screened investments?  It’s possible and many are seeking more and more ways to do just that- make impact with their purchases and investments.  You determine what you want for your life and what values you deem important.  Intentional Investing is growing and expected to continue as more investors find out the 5 Myths are in fact Myths of morally, socially and environmentally screened investments.

Ask us about our free assessment and to see if you or your nonprofit is a good fit for intentional investing.  We will address the questions raised over time and invite you to come back and ask your questions so we may better address your concerns and challenges as it relates to screened investments.

Here in Florida water is a precious resource that is being threaten and potentially compromised with rising population and increased demands.  If we keep doing business as usual and not taking intentional steps to secure our water sources better we will pay dearly.  So how would a membership in US Green Chamber or other groups concerned for environment help you? Education, Better Choices, Actions to take and make a difference.  Being around others that share values and gaining their perspective is valuable to process and confirm or reject ideas.  What you do with your life matters.  With whom you spend time with matters.  If you love learning about both positive and negative affects on the environment then consider checking out US Green Chamber as one of your options.

If you are not near a Green Chamber but would like to engage into some advocacy conversations.  Simply some research and structure and suggestions to impact corporations and governmental rules.  Wilburforce the great Parliament force to help end human slave trade and animal right advocate of 18th century had it right.  He wrote to leaders in other countries and educated and influenced them to not support slave traders actions with money or investment.  Lots of associations have advocacy leaders you can tap into their knowledge and connections and you do not have to start a movement (unless you want to and feel called to do so) but utilize the structures and people in place already doing great work.  Green America is one environmental group I would suggest you check out www.greenamerica.org they are impressive group led by Alisa Gravitz.

Why is that?  Sloppy books, underpaid workers, not a check and balance system, too much trust on one or a few, unchecked process for banking and deposits.

According to a 2006 Report to the Nation on Occupational Fraud & Abuse, ACFE: “The medium loss for a business with fewer than 100 employees was $190,000 per fraud scheme.”  The report goes on to say tha an estimated 5% of annual revenues are lost to fraud. This report was not specific to nonprofits rather to all businesses.

According to my CPA friends almost all of these loses can be prevented and should going a few things.

1) Set the tone at the top.

2) Create anonymous fraud hotline and publicly emphasize to your staff how important it is for everyone to join the fight against fraud.  Assure employees that the hotline is anonymous and that they will be protected from retaliation.

3) Communicate your intentions to strengthen internal controls (then do it and get expert help).

4) Host fraud training sessions to emphasize that fraud will not be tolerated and that the consequences of fraud impact everyone.

5) Be the first person to open bank statements. Scan the transactions that have cleared the bank and review the enclosed check for unusual activity.

6) Consider personally signing all checks or having a cosigner for checks above a determined threshold.

7) Take note of what is happening both inside the office and outside. Look for odd work schedules, staying late or coming in early where there may be opportunities where no one else around and access to mail, credit cards or banking information.  Is someone experiencing significant stress like divorce or spouse’s job loss or serious medical problems?

These seven steps can and should help greatly reduce the potential for fraud within your organization.  If you suspect any of this it is much better to deal with it quickly and get help.  My CPA friend tell me that few are punished and are usually let go only to go do it to another company or nonprofit and do it again.  Do not expect to hear about the billions of dollars lost each year due to lack of controls and misuse by a few in both nonprofits and for profits. I have seen in it in lots of different types of businesses it happens wherever the opportunity presents itself with poor stewardship principles.  Stewardship for your own financial security as well as stewardship of the donors for the trust put in you and your organization.  If you have had experience with this and would like to add comments please share with us.

If your organization has cash receipts received in mail or collected that is 90%+ of the fraud according to ACFE. While most of it is small stuff it add up to be big dollars.  Work to avoid cash or at the least have two or more handle it together for accountability and then secure it quickly in drop box with time lock like the convenience stores do.  My CPA friends tell me that having outside pair of eye balls on receivables to look for odd changes or odd write offs may be good place to start.  Misplaced stock or other certificates of investments are common for small nonprofits and it would easy to create a statement to look like an investment was that wasn’t.  Investment committees should verify with custodians outside of the statement provided by the bookkeeper or admin person.

One of the larger groups in this space is Calvert Foundations notes program launched in 1995.  It invest into hundreds of nonprofits and micro finance projects.  Several mutual fund companies and foundations have also entered into this space. The primary objective is to impact the community and families represented .  There are resources on community or impact investing.   There are credit unions that also offer an opportunity to invest into the community and some specialize in such offerings. Some Community Foundations offer training and guidance on working with these types of investments. Another resource is book Impact Investing:Transforming How We Make Money While Making a Difference.  There is a professional rating service on how community investment program doing and how well or poorly they are meeting the mission of the organization.  www.carsratingsystem.net and the annual cost is about $1500 to use the service.  Expect to see and hear more on this unique place to engage change with money.  This is less about the financial returns and more about making an impact locally.  Other terms you may hear about are L3C low profit LLC or B Labs partnership of for profits and nonprofits.

My purpose is not to convince you to invest here rather as general information about what is community or impact investing.  I get only about one call a month regarding making impact over the past year and 3 years ago I never got a single call.  The trend is rising and community advocates are often finding this as one way to give back and preserve assets.  If you have general or specific questions in regards to community investing I would happy to help you gain perspective and seek out a next right step.  It matters.

So we are to be intentional and have proper perspective.  Money is a tool and it is a test.  How we handle it speaks volumes about us and our beliefs. Money is not a measure of self-worth.  Money does not guarantee contentment- don’t we all know someone rich and unhappy?

The issues of life : World, Church, Family, Work, Government and you and God and how that is positioned in your head and heart make a huge difference in sorting out the issues.  From work we derive income and from there have lots of choices to balance: Giving, Taxes, Living and Debt.  Beyond that is the margin for now and future to manage.  In the end of our lives we have Financial Capital, Social Capital and Spiritual Capital to distribute.  Roy Williams author and consultant once told me that to give financial capital without values training it is all in vain.  Teach your heirs and have conversations with them and train them in proper decision making.  Roy should know a thing about this as he as studied for decades post estate planning for wealthy families  3000+ family extensive survey and follow up interviews.

The results of purposeful planning according to Ron Blue are the following: Make financial capital a non-issue so focus on the eternal. Context for decision making giving greater balance. Importance of investing not only in financial instrument but also social and spiritual capital. Simplify life. Helps with accountability, which leads to peace of mind.

Apostle Paul in Phil chapter 1 says this “I pray that your love may abound still more and more in knowledge and all discernment, that you may approve the things that are excellent…”

Proverbs 18:16 is a wonderful verse on self development. “A man’s gift makes room for him And brings him before great men.” My take way is become more to be more for others in your life. Do not wish for life to be easy rather work to be better able to handle the stress and challenges.

Consider getting some coaching and get accountable to someone in regards to your life and financial planning.

1) More money managers are doing investment screening for values.

2) Letter writing to help affect change.

3) Advocacy or proxy voting put real pressure on corporate management.

4) Do not harm.

I have heard financial advisors bad mouth social, moral or ethical investing a lot over the years.  A friend of mine called yesterday and asked what I was doing at Stewardship Matters and what my story was.  I quickly told him I help individual investors and nonprofits align their money with their values.  There are 17 Core values that I screen for positive and negative screenings. He laughed and and told me that values don’t matter.  To the financial community, as a whole, they look at values investing as another marketing gimmick and they explain this by saying, “any little bit of money does nothing to impact true change.”

I believe Martin Luther was one of the earliest advocates for social and moral investing.  He said there were three conversions: conversion of head, conversion of heart, and conversion of wallet – and the wallet being the toughest. He also went on to say, “what good would it do me if I make a 10% return and yet harmed my neighbor 10 times over.” Think about that for a moment. Does that sound familiar?

William Wilberforce rallied many advocates over his 26 year battle to end human slavery and the trading of African slaves for profit.  He wrote to several country leaders as a member of Parliament asking them not to support nor invest into traders connected with slavery.  Just like past advocates have had an impact in history, you too can affect change on several levels today.  You can align your investments with your core values of environmental, social, ethical, moral or faith matters.  You can also choose passive indexes that screen out the negative or invest into industries or companies that align with your values. There is also another level of shareholder advocacy in terms of getting issues addressed like toxic waste, child labor, or moral issues like porn or abortion.  Letter writing, proxy votes, and money managers that handle millions of dollars in a company can carry significant clout on issues if you align with them properly.

Do no harm may mean doing nothing in medicine, however in the world of investing, you need to determine the items you deem harmful or that go against your core values and then act intentionally and with purpose to address your active funding and participation with such companies and industries.  You have a choice and you can affect change as you and others gather together, demand and advocate such changes be made.

Did you know that, according to Social Investment Forum and Europe Social Investment Forum, in Europe there were over $5 Trillion+ of screened investments in 2010 as compared to over $3 Trillion+ in the United States in screened investments?  In Europe there are now laws in 27 of the States of Europe to meeting environmental laws. Many of the pensions are required now to address social and environmental investing as part of the prudent investment allocation.

Expect to see sustainable investing and business sustainable practices covered in the press more in the next few years.  European Universities often have studies done on sustainability and impact of social and environmental and other screened investment methods as the normal course of financial research. Europe is paying attention to these issues and I expect we will too. Water and waste and energy are the three hot topics in global investing according to PAX World director Ian Simm.  Expect more on water, waste and energy from me soon.

Why do this?  We want you to experience more joy, love and contentment in your life.

While little things do add up let shift to money management and insurance companies fees. There are lots of articles on abusive fees and ways to curb the fees.  Good News there are lower costs alternatives and it could mean a significant amount to you.  NY Times article last week not only discussed the fees but the risk associated with tying your money up.  Prudence would dictate a portion is appropriate for most. PersonalFund.com is a site that stresses fees so much that it seems like the only important factor in selecting investments.  I like PersonalFund for at least pointing out what the industry is not willing to disclose or discuss.  Let me encourage you to seek and find out what are the costs?  Not just the management fee or advisor fees but the total costs including transaction costs and custodian costs.  According to experts noted at PersonalFund when a mutual fund has 100% turnover in a year the transaction costs associated with that will be about 1% extra costs not disclosed.  Not required by regulations to be disclosed.  FINRA has mutual fund calculator on its website to review your expenses as well.

On the variable annuity front there are higher expenses as there are lots of different flavors.  The range of fees is more dramatic here and the selling features or benefits may in fact be worth it to you, then again it may not.  Do a search on “flat fee annuities” and you will discover some interesting facts on costs.  Some site have calculators to determine your annuities costs disclosed. I have personally move my annuity to one of these and also found one with lots of options that included some money mangers that align with my core values and risk.  These annuities are not perfect either as they tend to be a better value for annuities larger than $50,000 and you have to be careful about transaction fees on certain funds and transfers.  In general you could save more than 1% annually and if your planning to leave the money working for next 20 years that is a significant amount of money.  All other factors the same risk and investment and so forth and you have $150,000 working for 20 years at either 8% or 9% compounded based on expenses the difference is amount the same as the original amount or about $140K+ extra in the lower cost of 1%.  Go check these out yourself and again be aware that there is small print and it may not be advantage if you trade and move the funds often or your amount of investment is small.  The larger the better for flat fee is the general rule.

Recently I was on a webinar with live interactive survey on fees charged by many advisors around the country.  First question was what was the average size account? Next, how many years in the business? Lastly, what is the average fee collected for Assets Under Management? For this specific group of 100+ advisors the average size was $275,000 and time on industry 14 years and 1% annual fee.  I got off the call and thought how many investors know what their advisor fee is and do they know if it is in line with advisors around the country? Would it surprise you find a fee of greater than 2% to the advisor as normal in many of the largest financial institutions for the first $250,000 of investments?  A little asking and checking could go a long way in saving you, your heirs and favorite charities a lot of money. Stewardship of expenses matters both now and the future.

“I retired,” LaRoe explained.

Along the way he began reading a book his brother had given him: Let My People Go Surfing, by Yvon Chouinard, founder of Patagonia, a highly successful outdoor clothing and equipment company.

“Chouinard’s philosophical approach to business influenced me greatly,” LaRoe said. “Business can be holistic. In addition to making a profit, business can have a positive impact on society. Chouinard developed a business model which integrated his principles and professional acumen. He was able to experience enduring success without the degree of ethical compromise that often counters the contributions business leadership is capable of making to our environment and culture.”

When LaRoe returned, he decided to put his philosophy to work.

“I have been a committed environmentalist all my life,” LaRoe said. “Efficient, wise use of our resources — conservation — is a fundamental virtue and an economic necessity. The environment is of equal concern to everyone,” he said.

LaRoe returned to Eustis with a new passion: How to put his principles to the test in the banking business.

“I began talking with some of my colleagues and friends and we got very excited,” LaRoe said. “We wanted to create a business that would be both profitable and focus on doing the right thing. Those two concepts aren’t mutually exclusive.”

First Green Bank now has locations in Clermont and Eustis and will open its new headquarters facility in Mount Dora in October, with a third full service branch opening in Volusia County before the end of the year.

The 12,000 square foot First Green Bank headquarters building, under construction on U.S. 441 in Mount Dora was designed by Environmental Dynamics, Inc. Emphasizing energy efficiency and water conservation while utilizing recycled and healthy building materials, both the interior and exterior of the building were meticulously planned to minimize environmental impact during construction as well as over the long term. Even the siting of the building was chosen to minimize costs and maximize efficiency.

“It should exceed the LEED Platinum standard set by the U.S. Green Building Council for energy efficiency, environmental sensitivity and the safety, security and comfort of its customers, workers and the community. The goal was to fuse form and function in the design of our headquarters, and a great deal of time and thought went into achieving that synergy,” LaRoe said.

Visually reminiscent of Frank Lloyd Wright’s mature, organic style, it possesses a stunning and remarkable Butterfly Roof, which funnels collected rainwater to a 75,000 gallon Storm Vault. The stored rainwater provides 100 percent of the water used in irrigating the landscaping, which was sustainably designed to utilize plants native to the Florida ecosystem. An additional 80,000 gallons of HVAC condensate water per year will be captured to a subterranean storage cistern, and used to flush toilets and irrigate interior vegetation systems. The multitude of windows gracing the structure optimize the use of natural sunlight and provide over 90 percent of those working inside with external views, while the efficient fluorescent and LED fixtures provide interior lighting using 62 percent less electricity than a standard lighting scheme.

LaRoe’s environmental principles mesh perfectly with his conservative business principles, he said.

“Our headquarters building will use approximately 66 percent less energy than a traditionally designed building of the same size, and be 79 percent more water efficient. Overall efficiency gains of this size will result in a measureable reduction in operating expenses over time. ” LaRoe said.

First Green Bank supplies its couriers with hybrid Toyota Prius vehicles, and provides a Prius as an employee loaner vehicle for use on local business as well as extended personal trips.

“Reducing our carbon footprint is a critical component of our business model. If we can do business in way that reduces the amount of greenhouse gases produced by burning less fossil fuels for electricity and transportation, we not only save operating costs, we also have less environmental impact. We encourage our customers to do likewise, and support those that do by providing complimentary electrical vehicle charging stations at all of our branch locations,” LaRoe said.

“All of us hope that through education and influence that we can change attitudes,” LaRoe said. “We can show people there is a better way.”

Vershel Communications/First Green Bank Marketing Team

The general guidelines state the following: for funds invested after July 1, 2012

Consider general economic conditions

Inflation or deflation

Tax consequences, if any

The role of each investment in the overall portfolio

Expected total return

Other resources of the charity

Needs of the charity in both short and long haul

If an asset has special relationship to the charity

The role of diversification

All of these are total return concepts in light of the needs of the organization.  These follow after the general guidelines of UPMIFA of 2006.  Your Investment Policy Statement should reflect the guidlelines.  The only thing that surprised me on this one was that there was not a clear message on conflicts of interest.  Spell out a case of conflict for example and then take a next step to load up liability on trustees and investment committees that do not properly comply. Well we still have some time and I would guess more is coming.  Another area the pension marketplace has jumped all over recently is the area of expenses and disclosing expenses and seeking competitive quotes requirement. If your on an investment committee or acting as trustee know this you will have serious regulations for your choices after July 1, 2012.  I would like to hear your thoughts on the State of Florida setting these guidelines on charities.

Here is an add on comment as it relates to impact donor imposed restrictions on the uses or investments of contributions.  Bottom line is that changes can be permitted and lots of rules added.  Gifts from 0 to $100,000 restricted has become “impractical or wasteful, impairs the management, investment, or use of the fund or because of circumstances not anticipated by the donor or modification of a restriction will further the purpose of the fund”.  Lots of room here for impractical or wasteful.  What will happened is mostly likely bad press and that can not be good.  Do we see fines attached to 617.2104(6) ? No.  We think this is a great time to look over the bylaws, clean up the books, re evaluate the investments, banking and cash management procedures.  Educate your board on the basics of compliance and get your gift acceptance rules clear.  Avoid bad press by acting on a few things all nonprofits should be doing now and many are not doing it.

So where do you begin?  To start, we must look for excellence in money management, or at the very least, becoming well diversified with something like the MSCI KLD 400 Index.  If you are considering a new fund look at the past track record of the managers, also consider the risk they may assume or avoid in the process.  Beta is one measure of risk in which services such as Morningstar are swift to report on.  A measure of 1 being the market and .70 beta is 30% less fluctuations than the market or index related as the measure.

I can recall a bad personal experience once when I encountered a couple of “moral or religious” funds that had an outside screen performed on them and later realized that the standard used was very weak if any screening was done.  They had crosses and other symbols on their sales materials and lots of good verbiage that expressed a proper alignment towards changing the world with your investments.  In this case, I reviewed this company for a friend and I immediately told him to stay away from it.  He was shocked to discover the findings from outside screenings had not screened for the industries and moral hazards mentioned in the literature.  Looking back on this I can see that he was not clear on his values and subsequently, I could not assess those values properly so he gave up on the idea of screened investments. Today, I would approach the matter with greater tools for understanding and discernment about these issues and base my screening on his specific concerns/values/issues.  I suspect less than 1% of all financial advisors have any access to these tools.  When I speak at conferences or local groups I encounter maybe 1 out of 100 has actually done some level of screening beyond the labels of marketing.  If you are a professional advisor I would be happy to share with you some of the tools you can use in the marketplace today.

Start with excellence, address the risk and diversification, and then evaluate specific issues based on your further research.  This is not always easy because sometimes, the “lipstick” looks legitimate. If it were, we would probably see a lot more financial companies involved in the process of screening.  At the end of the day, all advisors must face the hurdles of time, expense and experience when dealing with screened investments.

The MSCI KLD 400 Index, formerly the Domini Index, is a social index that started in 1990.  Would it surprise you if you were to compare the S&P 500 index with the KLD 400, the KLD 400 outperformed the S&P 500 through all the years?  MSCI has another index of 400 not screened for social issues that consists of similar size companies and industries. Usually the performance between these two is strikingly similar with few variations.

There are over 300 studies on social, moral, and ethical screening and many of these are done at European Universities where the vast majority show little-to-no difference in the performance of screened investments to non-screened investments.  The Social Investment Forum is a leading organization that compiles information on the screened investment world – especially as it relates to environmental, social and governance issues.  Did you know that 1 out of 8 dollars invested in the United States is screened? 37 of 50 States screen their State Pensions and many of the largest endowments and foundations screen as well. Today, there is over 3 Trillion screened investments in the US.  In Europe, this percentage is even higher.

I encourage you to not merely accept the opinions of an uninformed advisor working within a large organization about performance and screened portfolios. Do your own research and find out the truth for yourself.  While you are conducting research about performance of screened portfolios, you need to consider this: specific industry funds, such as wind energy or solar, will not be relevant when comparing to the S&P 500 or some other broad index.  Your research should include risk and diversification in the process as any investment you consider.  Go Google MSCI KLD 400 and look at the graphs and past performance.

If you have questions and want to learn some ways to getting started then by all means contact me.

In the past, if you wanted socially responsible investments you had to either select from a few mutual funds or, if your were seeking large institutional money, you could hire specialist to screen.  Just 15 years ago, I can recall the selection of morally screened funds limited to only a handful.  As more competition has entered the markets and the funding for such funds has increased, the expenses have become more competitive as well.

For tax purposes you may prefer ETF’s or stock investments, but today we are seeing more choices and better access to screened information for both.  There are more style choices today that ever before.  As pension funds, foundations, endowments, sovereign states, and individuals choose to screen their investments, the selection of screened investments are becoming more diverse to fit their needs.

When the markets bounce and drop would you rather ride it out or have some of the risk managed actively in order to reduce the “bumps”?  There are not right or wrong answers to these questions – only personal choice.  Active management will generally cost more than passive holdings.  I think it’s great we now have some choices rather than a handful of fund managers when I started 25 year ago.  Deciding on which investment to align with your specific values is still tough because the labels given are often misleading and can lead you to believe your values are being addressed.

This is a topic for another day. Let me know what you would like to see addressed in future screening talks?

Another lesson we observed was a very large recreational vehicle or motor home camping near us caught on fire and nearly burned down completely and the reason? Fire extinguishers were empty.  They were cooking breakfast and grease fire broke out and ruined the interior of the RV.  No was hurt but the week of camping came to a dramatic end.  This loss could have been avoided and they could be going on enjoying the week if the fire extinguishers had been check and filled.  If the fire department had not come maybe the whole area would be under fire? Potentially big impact on nature and others.

As we watched the RV burning and black smoke pouring out of all windows and vents we wondered about their week of vacation and the impact of not complying with little things.  If we are honest we all have potential fires and many of the perils we face are avoided with a little preparation.

Here is strange question I like to use when approaching board members of nonprofits:

“Would you invite me over to your house to look through the cushions of your couch and if I find any money would you give that to YOUR favorite charity?”

My responses typically vary from a wrinkled forehead to an occasional “what did you say?”  The point I am trying to make with them is not to invite myself over to search through their houses for cash.  What I am really trying to find out is whether the incentive of finding money can motivate an act of giving. How does my cushion diving example apply to the idea of “found money”?

Found money is money you did not know it existed or it was an expense avoided or reduced or improved cash flow.  Found money is all over the place!  It may be as simple as carrying your own coffee mug to your favorite coffee shop and paying for refill.  Admittedly, I have not formed the habit of recycling coffee mugs but I estimate that when I do, the average savings range from 35-45% !  By saving this small portion each time I am feeding my penny bank but I also am put to ease with the fact that the local landfill is less impacted as I wash my own mug instead of throwing out the paper ones.

Another significant found money example would be that of a Social Security Review. Did you know there are over 500 options in the decision to decide when and which of the methods you will take your cash flow?  Do you think the Social Security office is going to run those and help you plan for the decision?  I have found that performing a Social Security Review is especially great for jointly working couples approaching the decision to draw on Social Security. Would you be comfortable sharing with the government your other assets and how you might be able to delay or switch the drawing process strategy?  Do you really want want to share feedback with them about your family health and finances? We routinely find an extra $200+ a month benefit in these reviews.  Personally, I have experienced found money in an unexpected places. This year I  had a wind inspection done this year for $100 and it saves me $300 a year for the next couple of years in insurance premiums on my home. Does this sound like a smart investment to you?

Painless giving can even take the form of giving after you are dead.  Legacy gift naming charity or other qualified sources like a local city recreation department, donor advised fund, or private foundation.  Did you know many of the costs associated with dying can be avoid with planning ahead?  Do you think it is more politically correct to raise taxes on the deceased or on the living’s wages?  Dead people generally do not vote. Do you see my point here?

Here are a few stats from Center on Wealth and Philanthropy: It is estimated that $41 Trillion will pass inter-generationally over the next 45 years. This means that retired households own 58% more wealth than non-retired households. Donors over the age of 50 could give 2-4 times as much annually by gifting from assets instead of their income or cash flow.  91% of all assets are non cash assets. Where is the big money? Non cash assets.

Having your assets reviewed for  social security, inefficient estate, business, investment property depreciation, life insurance review (for lower mortality costs) will help you begin taking steps towards finding extra money. The simple little things in life have been proven to add up, for good or for worse. We can all improve in many of these areas by finding someone who is passionate about helping you find more money.

Now what comes to your mind as I ask you,  ”Could I look through the cushions of YOUR sofa to find money to help you give more?”

When your fears are all about the world going under and all of us walking our donkey and scraping the ground for food in old clay pots then gold has survival value. One of my friends mentioned to me that those with gold will be surprised by those with guns to take the gold like Robin Hood did to the rich passing through Sherwood Forrest.

The rational side of investors says a small gold hedge may be appropriate however to try and hoard gold or bank on it as your future will likely disappoint as real estate investors have been disappointed these past 3 years. I will not make predictions of where gold will go but I would venture to trust it will go down more than go up from where we are in August 2011 at around $1800.

Let me ask some questions here, what do you want your investments to do for you? Do you have some idea as to how much is enough and what if you passed your finish line with excess? When you think about the label wealthy do you think of some Hollywood star or professional sports star or do you compare to the most successful business tycoons? What makes you happy and when are you most content and felling blessed? If these are intriguing questions you may want to consider getting coached to work through these ideas.

A couple questions have come up on this blog: What if United States currency gets revalued or changed up and should I have some hard assets like gold?  I will not predict or speculate on this occurring, however I do believe it is prudent to have some hard assets like gold, silver, and other assets including real estate.  Everyone should have a few silver coins in case there is a banking change that might shut down banks for say a week and at least you could use silver coins to trade with other in a harsh and temporary setting.

Why not have the individual investor or the nonprofit trustees determine the “core values” and then apply them to align investments with those values?  It may be as simple as a checklist of items from a “menu” that the client deems important.  It may involve a process where experienced professionals help the individual or nonprofit investment committee determine major and minor causes/values to overlay in the investment selection process.  If so desired, there could even be a values retreat for a family or organization to clearly identify and determine the highest priorities in amongst their value assessments.  Their mindset might be to “do no harm” or it may take on active role in order to engage and help change the world.

What is meant by our “values”?  To name a few it may involve animal cruelty, abortion, alcohol, tobacco, gambling, porn, weapons of war, landmines, slave trade and human rights, environmental protection, predatory lending or pork.  These core values and your values are not something your advisor or some advocacy group can shame you to ignore.  There are various levels of screening based on the importance of YOUR VALUES.  It may require what we call a “strict screen” or “best of class screen”.  ”Best of class” is more forgiving to companies as it allows almost 15% of the revenues to come from an activity or industry.

There are thousands of professionals in corporate compliance, and hundreds involved in advocacy groups watching over causes, issues, rights and environmental concerns.  KLD is the largest of the compliance global organizations.  There are for-profit corporations doing screening for moral, ethical, social, environmental and governance issues.  I estimate based on personal interviews at conferences and peers that less than 1% of advisors are even aware of what is going on in this rapidly changing area of investment.  The Social Investment Forum is an excellent resource to review as well as some of the global commissions of Europe.

When I describe to my peers what I do and detail the intensive work it takes, they look at me like I am either crazy, genius, or both.  Usually I get this comment, “I did not know that”, followed by “where do you learn about all this screening and values?” People are interested because it IS important. I’d love to  hear some of your thoughts below. Also, I have included a video version of this blog so that you can share some of these insights with your friends.

Imagine if the secondary market demand for a stock drops.  Demand drops and supply increases putting downward pressure on the stock price and if continues and falls below $5 then stock may be mandated to sell in many portfolios that do not allow for “penny stocks”. Cost of credit at the banks or with current vendors is based on financial ratings and secondary market strength.  Poor performing stocks may be less likely to attract the right employees and management.  Corporations spend big money to build brand and build confidence in the secondary market investor confidence and especially courting institutional money managers and Wallstreet influencers.  Corporations rely and depend on buyers of their stock to help them raise additional capital in the debt or bond markets.

When you buy a stock you become a shareholder or stakeholder in the company and are extended the opportunity to review books and vote and attend annual meetings.  The operations of the company are tied to their earnings and profits and tied to what your business partner does to add value to the community or extract value into the community. When you buy a mutual fund you are buying a portion of several corporations managed for you. You are a part owner even if small owner with each of those corporations.  If you have convictions of social, moral or environmental causes you may wish to have an assessment of your portfolio to determine what you own.  There are website to help you determine what you own.  Calvert has an excellent one screening social and environmental issues called “know what you own.”

If you still disagree with me on the benefits of the secondary markets I would ask you to have a talk with an experienced investment banker or senior human resources officer of a publicly traded company.  If you agree then tell me how this was helpful or how you might explain it differently to make it clearer?

Today in the world of instant information and tweeks we need to stop and get away and enjoy some peaceful tree to clear the brain of the rush and hurry.  I love to hike mountain trails or visit a forest to clear the clutter.  I urge you to give it a try if you have not done it recently.

In another story of the wars in the OT there were strict instructions not to cut down fruit and nut trees and if needing wood for war then cut only what is necessary.  I attended several years back a presentation by major paper company and their approach to replanting and sustainability in pine tree forest.  I remember being very impressed by the intensive amount of management to control fires and watch for harmful bugs and diseases.  Forestry stewardship goes back for decades.

I few year back I was forunate to go visit Joyce Kilmer Woods in NC.  Here is his well known poem “Trees”.

TREES
By Joyce Kilmer  (1886-1918)

I think that I shall never see
A poem lovely as a tree.
A tree whose hungry mouth is pressed
Against the earth’s sweet flowing breast;
A tree that looks at God all day,
And lifts her leafy arms to pray;
A tree that may in Summer wear
A nest of robins in her hair;
Upon whose bosom snow has lain;
Who intimately lives with rain.
Poems are made by people like me,
But only God can make a tree.

Old Chinese Proverb: The best time to plant a tree was 30 years ago.

Consider planting a tree this year where you reside and enjoy the miracle of life.  Good planting to you.  Stewardship does matter.

What should Florida charities do right now? I suggest a reading of HB 599 and FUPMIFA requirements.  Get your Investment Policy Statement in line to include specifically addressing of FUPMIFA.

There is also a new electronic signature section that you will also need to be familiar as it was a part of the UPMIFA.

Expect to hear a lot more on this subject as it will affect investment standards for Florida charities.  This is a big deal and if you or anyone you know is involved in nonprofit in Florida they need to be aware of the issue and where to get the right resources and address the elephant in the room.

The rule states that trustees and investment committees should seek competitive bids and full disclosure of costs.  Pensions have demanded this for many years.  In Europe, they take a step beyond prudent investor rules to encourage ethical values or social values if the non governmental entity has such values it would be prudent for trustees to make changes to reflect an “values alignment”. The Social Investment Forum of the UK suggests making values alignment as part of the investment committee and trustee responsibility as do Eurosif Transparency Guidelines and Charity Investment Ethic Database. It would not surprise me to see these same guidelines and suggestions being brought to mainstream in the States.

What does the Investment Policy Statement or IPS state and has it been updated to reflect the changes to your state rules?  Prudent Investor of UPMIFA drafters decided that diversification should be required unless “special circumstances”. State like AL, TN and SC adopted this however in Georgia their definition was more inclusive beyond special and spelled out ways in which trustees could act more broadly.  Realize this while this is uniform law their are little differences that can and do occur and you should not rely on some internet resource as protection for you and your organization.  Get your state law ans read it and consider hiring an expert to help in the process. This is a great time to update the IPS as it will costs charities not to be in line with UPMIFA.

Again your financial professionals should be able to help you update your Investment Policy Statement.  If they are not familiar with UPMIFA or Prudent Investor Act of you state then take that as a red flag.  Next ask them what they have done to procure others IPS to comply with your state’s rules?  This may be a good time to shop a competitive bid in regards to costs and disclosure of fees.  If your in mutual funds then be sure to ask what is the turnover of the portfolio and get clear on the trading costs is not required to be disclose in mutual funds. Generally if 200 percent turnover then about 2% extra costs not disclosed and if 100% turnover than about 1% extra.  Tell me different I see most large charities doing a pretty good job on these issues and the small and mid sized totally in the dark.

Some of the groups we have spoken with have also opted to get a “values audit or assessment” to see if there are conflicts in the organizations investments that are counter productive to mission and values of the organization.  MADD is Mother’s Against Drunk Drivers if they had alcohol as a holding in their portfolio that would be counterproductive and if news got out could costs them some donors as well.  What you do not want to do is go out and seek investment firms that market no alcohol or certain values.  Better approach is having a broad assessment and details of the current companies in which you may have no idea as to what they earn profits from.  Put in a mandate to seek first excellence in investment managers and experience and then apply risk standards and next apply values screen and then choose wisely.  After all that seek a program that will keep it clean and monitor and if you wish to be more proactive then by all means engage advocacy: letter writing, proxy voting and governance and sustainability reviews.  Those that generally do more of these have more purpose and determination to make change and impact and not hurt others.  If this were easy everybody would be doing it right?

I would like to hear about how your state is adopting these and more specifically how it affects the education of trustees and investment committees?

Question asked today about UPMIFA was are there restrictions on investments in alternative investments such as hedge funds and other private equity?  Alternative are allowed however investor exercises proper level of due diligence and risk evaluation to determine if prudent. Also realize that each state may and likely have different language as to what is prudent or if there are other restrictions.

True or False? UPMIFA prohibits full-time brokers or registered investment advisors on your investment committee from earning fees for investment advice and services they provide?

Corporate giving is very important to some charities and is their only source of funding.  Others simply target corporate gifts for many reasons.  The report on Corporate Giving is found at the link by the Committee Encouraging Corporate Philanthropy  .  The report is free and you may find the CECP a good resource on not only giving but several tools for bench marking your corporation giving.

” CECP’s analysis found that giving fell at 59% of companies in 2009, with 40% of companies decreasing by 10% or more. In contrast, aggregate corporate giving in CECP’s year-over-year matched set of 95 companies rose in 2009 to $9.93 billion, up 7% from 2008 and reaching the highest value in four years. The increase is largely attributable to corporate mergers resulting in combined giving budgets and increased donations of medicine by pharmaceutical companies, responding when millions of Americans lost their health insurance due to unemployment.”

A few years back I was in shock that individuals and bequests were more than 80% of giving total.  We all do make a difference in the hours we give the money we give and the influence we share to make our communities and the world a better place.  Give and it will be given unto you.

Kiva facilitates nearly $5M in loans each month, representing millions of dollars in direct investment to the world’s poorest countries. Kiva, ACCION international, and the Grameen Bank all are institutions designed as an opportunity for entrepreneurs to secure money, helping economies make small steps out of poverty. This process, called microfinance, is not a new economic principle, but it is almost nonexistent in the United States.

In the wake of the most recent economic crash, our economy has been experiencing something of a transition from an industrial based to a service based economy, and the role of the self-employed and small businesses has been steadily increasing. Despite the demand that the growing number of entrepreneurs in the United States places for microloans, especially in cases of limited credit and collateral, there are few people providing equity for those loans and ever fewer institutions to formalize them. Furthermore, those that do exist (such as ACCION USA) focus entirely on business loans, and I think that there is a greater need.

I recently received repayment on a loan that I made to a friend who was moving more or less across the country post-graduation. We’d been friends for 10 years, and, bias aside, he was good for the loan. He had a job set up, a place in his new city, everything that he needed except transportation there. And, of course, the credit history necessary to get a loan to buy a car. He couldn’t even get a credit card.

A person to person loan was really my friend’s only option. Through a website that facilitates person to person loans, we set up what was essentially a microloan. He was able to get the money that he needed that was otherwise inaccessible to him in the traditional banking structure.

This, obviously, was not a small business loan, as typically seen in the microfinance world. However, small personal loans such as these are just as essential in helping someone get back onto their feet and contributing to the economy. Those that are starting their own businesses are not the only ones in need, and probably not those that need a little bit of spare money the most.

Much like Kiva offers investors the opportunity to piece together a full loan in $25 increments, there are a growing number of websites that allow donors to contribute money to a fund whose benefit will benefit will be greater than the sum of its parts. The choice to offer a microloan not only demonstrates a socially beneficial investment on the part of the investor, but provides the chance for a life-changing investment by the recipient.

Amanda Ward

amandahward@gmail.com

twitter.com/a_helenward

Start with prayerful search and with strategic questions.  Know this Galatians 6:6 says to give to local church.  Matthew 28:18-20 Give to organizations meeting the great commission. 1 John 3:17 give to individuals in need.

How much of your income  do you plan to give in the current year?

Where is the Lord leading you to give?

Are there certain areas of the world  that you sense God wants you to focus on besides giving at home?

What percentage of your total giving should be allocated to each choice?

As you evaluate ministries, organizations and projects you may wish to use some questions developed by Pat McMillan from his book ,”Hiring Excellence”.

Are the leaders marked by godly characteristics?

Is the ministry active in God’s “hot spots”?

Is the ministry innovative?

Is the ministry growing and cooperative?

Is the ministry goal-oriented?

Is the ministry accountable?

Is the ministry endorsed by a strong track record?

Allow me to share a personal story in regards to “ministry innovation”.  This year I was ask God how could I be used to influence and make a difference?  I thought I was doing giving my time, talent and treasure to change others.  What I found was in giving these freely I was the one most changed.  I was a weekly mentor and prepared  each week and listened to teachers sharing truths relevant to all.  Not just the group of targeted jobless individuals but everyone in the room including the hospitality people and audio visual people.  I watched as God seemed to show up each week and change all of us from the inside out to care about the right things and to lean into truth.  I received more than I could give as a result of being open and willing to serve others in love.  How do you put that into a giving matrix?  You don’t; you simple thank God for being who He is and his rewards for loving others.  I was attracted to this group for there innovation and real action to meet real needs in loving and dignified manner.  Watching others with little hope turn and trust God for his provision was a witness to me and others.  I was blessed by the experience and developed new friendships in the process.  Go and help others will indeed help you.

What are some other things we choose to own but really do not use or have need of that we could instead rent or trade or purchase as a fractional ownership.  A couple of my friends have partial ownership in boats and it works really well for them.  I utilize my friends boat(s) and find that me taking really good care to clean and bring back in better condition than when I took it out works well for all of us.

My brothers call me for the days use of my truck when they have need of one rather than adjust their lifestyle to being a truck family and the benefits and limitations of having a bed and not an enclosed back cab area.  Why do we all feel the need to own an edger, chain saw, drill or other tools that might be better utilized having a group of others to share and reduce the capital outlay?

Are there things in your business or personal life you could share with others and they with you that could free up some capital and on going expense?  I met a man heading out of town at the airport busy heading off to a 3rd vacation home to deal with damages some renters created.  He missed his holiday with his family on a property that he has not used in years and requires time and energy he does not have.  I was on a rented sailboat 60 footer and very nice for a few hours and the costs for me only $75 for the adventure.  My brother and his friend were there too.  We enjoyed an amazing day with dolphins and birds and beautiful beaches of the gulf coast of Florida for a modest rental.  We talked about holidays and with sadness my brother ‘s friend shared the pain of going to beach house each year to work on repairs all week for his family vacation.  We talked about how nice it would be to rent and not be tied down to the responsibilities of ownership especially stuff that was exposed to salt of the sea like the boat we were enjoying and the wear and tear.  Our captain explained that 10-15% maintenance is normal annual costs plus docking fees and upgrades.

So what planned purchase might you be considering would be better suited as a rental and give you more time with your family and friends and less headaches?  Consider the possibilities of more time and energy for yourself and others as it relates to owning stuff.

Any stories you would like to share to help others?

This great ethical test that Rotary International has utilized for decades is called “The Four-Way Test”.  Many clubs recite this at the end of each meeting.

Of the things we think, say or do

1. Is it the TRUTH?
2. Is it FAIR to all concerned?
3. Will it build GOODWILL and BETTER FRIENDSHIPS?
4. Will it be BENEFICIAL to all concerned?

Here are some trends I have noticed about our culture:

Trend #1 Financial illiteracy is the norm amongst America’s youth. Consumer reports survey found 28% of students did not know credit cards are a form of borrowing and 40% did not know banks charge interest on loans.  The National Center of Education and the Economy survey revealed over 60% of American Adults and students did not know that inflation has a negative impact on the purchasing power of the dollar.

Trend #2 Kids and teens have money and spending influence and ads are directed towards them.  MarketResearch.com reported in 2003 that teens spent $175 Billion which averages to $103 per week!  I have heard recently kid’s today will have seen 360,000 30-second TV ads before they are 20 years of age. That is almost 3,000 hours! The Kaiser Family Foundation has an extensive Study that came out in January 2010 on effects of media on teens.  This is the latest and most comprehensive report I have seen on the effects of media and teens.  http://www.kff.org/entmedia/8010.cfm is the link or go to Kaiser Family Foundation. I found it hard to believe that the Neilson reporting group recently stated the average teen views 31 movies a year in theaters.  So who is has the attention of your children? Hollywood and internet marketers.

Trend #3 Parents expect schools to teach money management and schools expect parents to teach money concepts.  Only 1 in 4 students will have completed a course that includes personal finance before graduating from high school.  Additionally, very few churches teach money management.  Their are some improvements recently in this area.

Trend #4 Whether parents like it or not, kids look to them for financial guidance.  The American Savings Education Council, found 94% of students turn to their parents for financial information. A survey done by Capital One found that 54% of parents rate their teenager’s knowledge about managing money as good or excellent.  The same survey some 78% of teens rated themselves as poor or merely average.

Experts say we must use the following training principles with children:

1) They must experience what is being taught.

2) They must have an opportunity to fail.

3) They must have feedback and instruction.

4) They must have rewards.

5) There are 4 skills to be mastered.

• • Skill #1 Learn to develop a budget or spending plan
• • Skill #2 How to buy wisely
• • Skill #3 How to make financial decisions
• • Skill #4 How to set financial goals

I heard one father share how he tried to sit his children down and tell them about these money management principles.  It did not go so well so he decided to change it up.  ”Teach as you go” is what he told me.  While at the store he simply points out and asks for help from his children in order to discuss price per ounce. Doing so is a simple method of engaging them in the process.  With a big smile on his face, he shared with me that this tactic brought radical change and affected his children in a good way.

Back in April I attended a conference in which one speaker shared over an hour about incentives that teach children how to plan, give, spend and experience joy in helping others.  She stated that too much time focused inward and not enough on serving others has many children today in a state of depression or greed.  This mainstream speaker went on to state her children are expected to do community service not for the college resume or recognition, but rather for what it does for their family.  It instills peace and gratitude.  I achieved a similar result as my boys were fighting me about ruining a Saturday morning participating in a community service project.  It did help that some of my peers brought their children and there was food there to turn the fighting into a pleasant experience.  By the end my children told me, “Dad I want to do that again!”

I’d love to hear some of your success stories about conveying money management to your children in the comments below!

I expect to see more signage promoting recycling and conserving power by turn off the lights when leaving the room- it just smart stewardship.  We should be asking, “what in my industry should be changed to reduce waste?”  You and I are part of the answer.  I recommend we do not wait for the governmental rules or regulations in order to be good managers of the environment.  Another good question, “What is working well in your industry that you could share with others to encourage them to think about and act on inspired stewardship?”

Recently I purchased new tires and found out the old tires are 100% recycled and the guy at the tire store says their are 5 divisions where the recycled materials end up.  Building supplies, playgrounds, and new tires are some of the uses.  I love the creative energy that goes into making new products from the old materials.  Less landfill and sense of hope that we leave less of a mark on the environment.  What is your favorite recycle example?

Click above on the link and check it out. I would love to hear from those of you who have used this site over time to give me your favorite part or least favorite part of the site and why?

It hurts to read about people born into regions without access to clean drinking water.  The children are sentenced to daily walking miles to get water and are unable to get a decent education.  Think back to a time when you may have been without water and really needed it badly.  Maybe a trip to desert or hike on mountain or through a canyon.  Today we have amazing ways to access and carry water and yet there are thousands that today will die of diseases due to lack of clean water or access to any water.

We are blessed beyond measure in this regard.  I would like to challenge you to a couple of things you can do to really make a difference.  1) conserve water in your business and in your home.  My brother Keith is architect and recently earned his LEED designation. We were discussing water in Florida and there are literally over a billion gallons wasted from hoses running, leaking faucets , water running while brushing teeth or waiting for the water to warm up.  Little things do add up.  Maybe you have seen in men’s rest rooms the signs for water less urinals and it is estimated to save 40,000 gallons of water per year per urinal.  2) consider giving some of your charitable dollars to groups committed to saving lives around the world by bringing clean drinking water.  Here are a couple of groups passionate about clean water and saving lives.  www.water.cc , www.worldvision.org , and WaterHealth International .

One of the clearer messages in the World of Coca Cola was the idea of Happiness Factory and it’s five parts or elements.  From the guided tours, to movies, to the customer service people, all seemed to be on one page as it relates these 5 elements: be curious, be in the now, be active, be giving, and be together.

Curiosity about life and others has made a difference in my life.  This said another way, “be a student of life”.  The second element is the state of presence or being in the now.  When I started my professional career I was living 15-30 minutes in the future and more focused on next appointment than I was in the current meeting.  Back in the mid 90′s I heard a speaker Jim Rohn share some powerful and simple insights about being in the present and it has served me well.  Here are some of the things he said:

1. 1) Be active physically can and will help you sleep better at night and it is hard to put a price on a good night’s sleep
2. 2) Don’t give up just because you use to be able to do big things
3. 3) Start where you are and write it down and then just do it
4. 4) Be giving

Yale University has done several studies on the elderly and found that the best medicine includes some form of giving.  Some of the happiest seniors are those that volunteer and give back time, talent, and treasure.  I recommend all three personally.  Being together is not just referring to physical activity, but to be experiencing life together.  Do stuff in life with others.

Once, I hiked the Grand Canyon rim to rim with a couple of acquaintances.  After the journey, we got to know and respect each other a lot more.  Think back to your friendships or fellow teammates as you endured in sports or other activities.  Think about a family vacation that began rough and later, looking back, you realize the struggle had brought you all closer together.  There have been two times I was incredibly scared of storms while on vacation growing up: once in a little boat and another time in small aircraft.  I feared for my life and for good reason.  But there is one thing I realized during this time of fear: my family was there for me and they have been there ever since.

Stewardship is about attitude.  We manage our attitude and how we respond to life events and it does make a difference.  I agreed with the teaching and messages presented by World of Coca Cola this weekend. Stay focused on these 5 elements and you can experience more happiness in your life.

1. 1) Be curious.
2. 2) Be in the now.
3. 3) Be active.
4. 4) Be giving.
5. 5) Be together.

Do you agree with the 5 elements presented by Coke?  Do you agree that “attitude” is part of our personal stewardship?

How might you avoid these negative feelings the next time you visit the movie theater? You might do one of the following before purchasing your tickets:

1) Read reviews from professionals to gain insights on plot and characters.

2) Ask friends with similar values that have seen the film and what is their take on it.

Both of these are not perfect, however they can greatly reduce the chances of being surprised by ideas’s and values that may upset your day.  It’s healthy to be open to others views and to distinguish them as other’s perspectives. Nobody wants to be surprised by dogmatic political or religious views forced on them as judging.

Why Ask ‘Why’?

Asking ‘Why?’ is more important than asking ‘What?’ The talking heads on TV and radio have us focused on the wrong stuff when it comes to most financial conversations.  Even though the ‘what’ is important , the ‘why’ is more important.  Here are some good hypothetical questions:

• • “If you had unlimited financial resources…?”
• • “If you had the financial ability to completely solve one major problem in the world…?”
• • “If a large foundation appointed you to give away $1M,which types of causes or organizations…?”

Another way your advisers could ask would be to use experimental questions:

• • “Is there a particular church, charity or non-profit organization you’ve enjoyed supporting…?”
• • “Have you ever had the opportunity to do volunteer work for…?”
• • “Have you ever made a charitable donation that gave you a feeling of…?”

The next step in understanding your ‘why’ might involve asking simply practical questions:

• • “How many hours could you devout to solving this need…?”
• • ” What steps do you need to take next to move towards solving the issues at hand…?

I have personally witnessed clients and friends that have come to answer the ‘why’ and get clear with core values and the difference it has made.  I have changed my investing habits and methods to reflect my values and it feels good to know that profits and earnings are aligned with my values.  Screening investments to reflect values does not in itself do anything to reduce risk or price fluctuations.  There still needs to be skill and diversification and proper risk management and portfolio construction to address these issues.

A ‘why’ question I have had for myself and other financial professionals is this: Why are so few willing to screen and provide individuals and non-profit endowments with investments in alignment with the individual or organizations values? This year I attended two major conferences and asked the leaders and investment guru’s of both groups why this is not happening?  The number one answer was “too much work or that is inconvenient.” The number two answer was,” my clients are not asking me about screened investments.” The last answer from some very seasoned managers was, “how would one even get started to find out values or how to screen investments for values?”

The Next Steps towards Aligning Your Values…

So if you are a professional advisor, individual investor, or a board member of a non-profit, and values are important, what are you going to do next?

Google it? Search Trade Associations? Ask other experts? Maybe you do all of the above.  Let me share a lesson one of my non-profits learned about several years ago. Begin by being clear on your mission and acceptable values is a good start. Next, ask current advisers if they could tell you about the current holdings as it relates to the avoid list (stuff opposite of your values).  The investment committee needs to get a short list of clear industries that violate the family values that work so hard to build within the local community.  With that list, they are able to go to the current advisor and request that these items not be included in future investments and to seek out when to sell the current violations in the non-profits investment fund.  Do not make this a big public dialogue and ask investment committee members to keep this confidential.

Do not be surprised if the current advisor is going to make an issue your returns may suffer or the expenses will need to increase significantly before considering other options.  One group was asked to sign a waiver that investment returns may suffer if the managers are not able to invest into anti-family values like pornographic internet companies.  This took courage from the trustee and investment committee to educate themselves long before there were articles and blogs on the internet.  They went forward and found greater joy knowing they were making a difference directly and indirectly by not supporting the things they were fighting with daily.  This actually became an asset to the fundraising process as donors heard about the story of their careful stewardship in selecting to avoid the issues of anti-family values in the non-profits investment account.  Board members shook off their fears and proceeded with pride knowing they had made a wise choice.  All it took to start this was to simply ask ‘why’.  Stewardship of money matters does make a difference.

If your ‘why’ is not getting addressed then try bouncing it off of me.  I love the ‘why’ in planning and in investments.

Let the sunshine clearly reveal and burn off the fog of distrust.  May we see leaders willing to be responsible stewards of this great country and encourage right steps without creating harmful regulations that dampen job growth and investment for tomorrow.  May the seeds of distrust wake up investors to be better stewards.  May the practices of oversight and full disclosure be more than fine print disclosures.  Investors must wake up and see the shining light on their business partners and where they are earning money or profits.  We should be afraid of such a fog and willing to seek out the light of understanding.  Understanding your personal life values may or may not be in alignment with your industry investments is part of seeking out the light.  If we continue to invest in the fog of ignorance and the fog of non-disclosure, we will keep getting what we are getting.

How could you shine the light on your personal investments?  Ask your current adviser (if you have one) to provide you with industry disclosure. Expect them to simply point you in the direction of the mounds of disclosures or huge e-mail attachments with annual or semi-annual reports.  Maybe they will send a fact sheet with top holdings and percentages of industries as very broad categories like health care, entertainment, manufacturing or services.  Health care can be controversial in several ways: If you are pro life and several of the investments you hold are earning profits and paying dividends from abortion earnings, what does that say?  If you are against animal testing and yet several of the holdings are drug companies testing on family pets does that bother you to know your earnings are from activities you do not support or condone.  If you align with your core values, and their are about 20 categories in general, you could screen or have screened your holdings to negatively avoid the stuff you wish to avoid.  You could also choose to include values as positive factors like diversity or environmental performance.  Go check out my blog on ESG to get more on this subject of screening investments to align with your values.

“To thy own self be true.” Look in the mirror and ask yourself, Who are you and what is important to you? What are causes that motivate you?  Activities that give you boundless energy and joy?  Programs that inspire you and those you care most about?  Take those values into your investing strategies and know that you vote with pocketbook/purse.

Get educated on your options and get out of the fog.  Most advisers today are still in the fog when it comes to screening for values.  Most will give lip service to a fund for one product off the shelf without personal conviction or personal study of what is possible for you.  I tell you it is worth it.  It was June of 1986 and the first investments I recall making with a client was the Calvert Social Investment Fund.  I was employed with Calvert Securities then and it seemed to align with this individual’s values.  Management and other advisers discouraged me that almost no one wants screened investments.  They told me to focus on the more popular funds that “advertise” will make your selling a lot easier.  It is interesting how we are attracted to things and move away from them only to return to them years later with more wisdom and experience to bring to the table of conversation.

I would love to hear your experiences as you converse with professionals regarding the idea of screening investments to align with your values?

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He was not exactly popular with business leaders/traders.  Slavery was about money.  Money for the traders, transport and benefits of cheap labor to plantation owners in the New World and other places.  Wilburforce was the leading English abolitionists and he headed the parliamentary campaign against the British Slave Trade.  He worked 26 years until the passage of the “Slave Trade Act 1807″.  He championed many causes and campaigns including: prevention of cruelty to animals, free those under British Rule and he did just days before he died saw the passage of the “Slavery Abolition Act of 1833″.  How did this take place?

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1) Started with strong conviction

2) Joined with others (British Quakers and Anglicans)

3) Utilized various methods to influence: lobbying, pamphlets, meetings, press, boycotts, campaign logo.

4) Sought to influence in other countries as well- France , Spain, Portugal, Denmark

5) Used political influence in hearings

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Here is a quote of his resolute determination.
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“So enormous so dreadful, so irremediable did the Trade’s wickedness appear that my own mind was completely made up for Abolition.  Let the consequences be what they would never rest until I had effected its abolition.”
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What is your strong conviction that motivates you?

Were you aware there is a donor bill of rights?  Did you know that there are ethical rules of conduct for those in the gift planning business? It is simply called Model Standards of Practice for Gift Planners. I am active with a local group Philanthropic Advisors Council of Central Florida a chapter of national organization Partners in Philanthropic Planning. Locally we discuss ethics in gifts and the need for a gifting policy as advisors and gift officers meet for regular education and relationship building activities.

Did you know that the United Nations has principles for investment?  Principles for Responsible Investment. Why should I include this link?  Sustainability and fairness are at the root of these principles.

Were you aware of the EPA’s research and publication of sustainability?  Here is the link Sustainability US EPA.

The Plan Giving Design Center has several articles addressing specific issues on ethical giving here  http://www.pgdc.com/pgdc/management/ethics

Stanford Center on Philanthropy and Civil Society has a publication called Stanford Social Innovation Review.  Here, Chip Pitts does a review of the book GIVING WELL: The Ethics of Philanthropy. http://www.ssireview.org/articles/entry/ethical_philanthropy/

Good Stewardship in giving will require some due diligence of the work done and the results or effectiveness.  Trusting those at the top of the organization is important but not everything. Financial accountability is only a part of the ethics. This process is good for you, your community, your charities and the world.  It does matter and you matter.  There are groups that encourage corporate giving and corporate participation into good community practices.  These groups sometimes operate more as think tanks and others operate as education on practical ways to engage and do more social and community good.  Not only does this affect the local good, but also the global good by cutting down on slave trade activities and exposing such issues to act upon.

Stewardship influence is something we can all do by getting better informed and taking steps of action. BSR is one large organization that seems to be making a difference in the corporate world.  BSR is for corporations and individuals in leadership roles at corporations.

Do you think ethics are truly important when giving? Does this sound too formal and stuffy when all that donors want to do is give and know they are meeting their needs including their need to give? Are you of the mindset that corporations should steer clear of doing good?  I would love to hear your thoughts below…

Have you heard of “Pyrethrin”?  It is an insecticide derived from a plant and has been used as an insecticide for more than 50 years.  Many use this for vegetables, ornamentals,  pets, and even in the home.  What about Payback Fire Ant Bait?  Organic ant killer kills most ants within days.  Are you dealing with caterpillers?  Try “Thuricide aka Bacillus Thuringiensis or Dipel.  Use this around vegetables, citrus, shrubs, trees and flowering plants.  Another good solution may be Neem Oil as it acts as fungicide, insecticide, and miticide and made from the oil of Neem tree.  If you prefer a more fun method of gardening purchase some lady bugs and let them loose in the garden.

Don’t forget composting works in your favor.  Kitchen scraps from veggies, leaves from the trees, peals from fruits and grass clippings all make for great soil enhancement.  If you have children do not neglect sharing the miracle of life: seed, soil, sunshine and rain (or for Hydroponics: seed, sun, technology and still a miracle ).  We are growing at the Thomas house watermelons, basil, zennias from seeds. Love the fruit, pesto and flowers and the process.

One small thing I try to do is pour my used coffee grinds over plants at both the house and the office.  These little actions do make a difference.  Not using harsh chemicals gives your earth worms and other beneficial creatures in the garden a better chance.

Stewardship matters and we would love to hear your comments and suggestions to make green gardening a better and friendly way of living.

Did you know that women’s philanthropy in America has increased by more then $15 billion annually since 1993 according to WOW Facts 2003.  True or False? Men still control family philanthropic decision making? False.

Some of the reasons for women’s wealth stated in studies included intergenerational transfers and longevity. Facts are women do live longer than men.

Here are some important things to consider about women in general on giving.  They have passion for cause and results and not of recognition.  They are slower to make a commitment up front but more loyal to continue funding.  There are several generational differences in the way women connect to philanthropy. There are several recent books on this subject and I recommend them to you.  Women and Philanthropy by Sondra Shaw-Hardy.  Another is Women Wealth and Giving by Margret May Damen.

Before we give stuff and things to others thing about what else we might consider giving like time and experiences and shared meals and laughter.  I have given gifts that had a short shelf life only to wind up in a dump somewhere.  Speaking of dumps.  I take my children about every  other year on a filed trip to the local dump.  Why? Why not? Great lessons of life are out there.  Where else can you find a pile of TV in a mound 20 feet high?  Where else do you see pile of dishwashers, washer and dryers all colors and makes rusting along the way? Where can you get a good smell of food and other household good baking in the sun?

Again, almost all stuff and things end up in the dump or lost.  Time ,weather, rust and mold take a toll.  Things and stuff are not the important things of life.  I would encourage you to take your children or grandchildren to the dump for an inexpensive field trip.  By the way, do not expect them to get hungry while you are there.

Just because a groups says they are ESG investors or filter for ESG doesn’t make it so.  There is a best in class definition and then there is a strict no tolerance standard.  How often do they monitor and review their screens and do they do primary research or do they  hire out screening experts?  If this were easy you would see a lot more of these investments.  Everyone I discuss this with that has been doing screening finds it hard and inconvenient.  If done properly it is work, and if you wish to customize more than broad categories it takes intensive listening and research.  Get clear about what you want in your values before chasing some advertisement touting great returns and statements of social or ethical values.  What do you hope to achieve by hiring an ESG labeled investment firm?  Why are you passionate for  _______?  Reflect on the why behind your passion or concern and it will help you get even more clear and then your choices are more distinct. Knowing your story and how you came to admire or detest some issue is an important link in choosing a proper screen for your ESG investments.  Before you seek professional get educated on the basics.  Positive or negative screening and what that means.  What are the specific values you desire to screen? Are these strict screening or best in class or partially screened i.e. less than 30% of revenue comes from questionable activity.  Is there community involvement or industry involvement by those you seek advice?  Ask by what means they are screening investment values or the screeners? Shoot me an e-mail asking for our screening sheet if you want to see more.

So you have a daughter married to wealthy man and they want for nothing as they could buy most anything.  Your other daughter is a single mother struggling to take care of two precious grandchildren.  You may wish to help one now and maybe help the other or not.  Change the situation you have two sons and one has major substance abuse issues and the other is steady worker who is very responsible.  Love the same but if you treated them the same would they harm themselves or help others?  Would they squander any proceeds or would they handle it wisely?  You often know the answer and just need someone to help you by asking these types of questions. While equal treatment may be the easiest thing for you to do in regards to your giving now and later.  It rarely is in the best interest of them or society.  You know something in my 25 years of counseling on finances and legacy, not one grandparent has ever said to me, “I wish they (children or grandchildren) could just live it up everyday on my money and worry about nothing forever.”  While that will likely never be said verbally I see it played out all the time in actions or lack of planning.

Lastly, in my office today I had a conversation with a couple regarding an unequal allocation of 90/10 split.  Their were lots of reasons for the allocation and it makes sense based on “the story”. What I do not understand on situations like this the lack of communication or talking it out.  Help your children out and explain to them your reasoning or allocations and what you have valued.  Always encourage them and build them up. Transfer value without transfer of values is a recipe for disaster.

Leaving things better off is a way of life and good stewardship.  Focus on what we can do especially where we live and work.  If you have a yard and house start there.  Recycle, use environmental friendly cleaners and monitor wasteful use of water and power.  Over the past few years I have noticed several thank you notes in will the power bill encouraging us to reduce water and power usage.  Turning off fans and lights makes a difference.  Combining trips when running errands is smart way to save time and energy.

One group that is trying to unite and encourage faith groups is the Cornwall Alliance they have declaration.  Check it out on the link ans see if it prompts your thinking.

Here are some real examples of where I have found money.  You and your spouse are approaching the ages 62-66 and now will be faced with planning your options in taking “Social Security” benefits.  So you make a call to get appointment with SS office and they provide you with a few numbers.  At age 62 $ x at age 66 $ y and at age 70 $ z.  Because your married there are other options: reset, switch and deciding on if delays in one or the other makes more sense.  It would not be uncommon to find an extra $200 a month more real dollar benefits if you properly plan and utilize these strategies not discussed (nor should they be your financial adviser) at the SS office.  What would you do with an extra $200 a month for life?

Here is another real life example: Carl is 62 and Betty is 60 and they have whole life insurance policy and Carl is very healthy.  They have not reviewed the coverage and check out more efficient lower mortality costs of contracts issued int he past 15 years.  Carl was paying $150 a month for $150,000 of coverage and for similar rated company and contract he was able to either increase the coverage to $300,000 for the same $150 a month premium or reduce the premium to $75 a month or take a paid up policy for less coverage.

If you are a commercial real estate owner then here is one we have had great success.  Ask your accountant/CPA if “cost Segregation” is right for you.  If they act like they never heard of it or get defensive do not be alarmed.  If you have purchased or remodeled a commercial property in the last 5 years and the valuation is great than $750,000 then you may be a good candidate to save some big money today.  How does it work?  Well there are several aspects to a commercial property like tile, wiring, carpet, paint, trim, fixed fixtures, HVAC and electrical.  All of these have a different life to them.  They are treated differently for depreciation purposes and you could be in for a big surprise.  The last couple of these we referred out came back with an extra $150,000 of cash flow in the first two years on roughly $1 million office building.  What would you do if your cash flow increased in this economy?

My wife is not a coupon person however she has started seek out weekly buy one get one free deals on stuff we already consume at the local grocery store.  This little stuff adds up and is good stewardship.  This is not about going out to wholesale club and buying 6 gals of mustard.  It buying the brands and the stuff we use all the time and with little to no risk it will go