Financial Planning

When it comes to financial planning, you probably have a general idea of what you need to do to assure your financial future, ie. save for emergencies, invest wisely for your children's education and your retirement, and plan your estate. The problem is, as the saying goes, "The devil is in the details."

You might be asking yourself: How do I know if I'm investing enough to meet my goals? Where do I put my money to get the maximum potential return based on my risk tolerance? When should I change investment strategies? How will the economy affect my investments? Can I accomplish my goals? What about the tax implications?

These and many other questions can be answered by consulting with one of our trained financial advisers. Our focus is on creating, preserving and transferring wealth for every generation. With expertise in a number of financial disciplines, our experts can help plot your course to financial success.

Retirement Planning

Thanks to advances in medicine and health care, many people retiring at age 65 will need a nest egg that will last another 20 years or longer. Most of us dream of a comfortable and fulfilling retirement where we can travel and do the things we've always wanted to do. Yet, our ability to live those dreams hinges on careful planning right now.

Social Security and employee sponsored retirement plans may not provide enough money for your retirement needs. Therefore, starting early and investing wisely for your retirement is essential. But no matter where you are on the road to retirement, we can help you make the most of what you have and help you plan to make your retirement dreams come true.

Retirement Plan Distributions

The work might end when you retire, but unfortunately, so does your paycheck. To help you afford to live the retirement you've dreamed of, it's important to pick a retirement plan distribution option that leaves more money for you by avoiding unnecessary taxes and penalties. Making decisions about your retirement plan distribution can be nerve wracking when you don't fully understand the consequences. We can help by giving you a projection of your retirement income and help you make any necessary changes to maximize it. We'll show you the various options available and recommend the best alternative. We'll base it not only on your current needs, but also on any anticipated future needs or concerns that you may have yet to identify.

How you elect to distribute your retirement plan may be the single most important financial decision you will make. Don't do it without fully understanding your options and their consequences.

Long Term Care Planning

The costs of long-term care can be staggering and we are starting to get more questions about insurance to help cover the costs associated with assisted daily living. There are several options, and a number of things to consider when setting up your coverage.

First, there are two different policy types: the New York State Partnership Plan and the Non-Partnership Plan. We recommend the Partnership Plan because this policy offers total asset protection and, after three years, you automatically qualify for the Medicaid Extend Program. If you choose the Non-Partnership Plan you must buy a longer benefit period because, once your benefits expire, you will have to cover expenses on your own.

Why do you need long-term care insurance? First and foremost, this insurance protects your assets in the event you need long-term care. It also allows you to choose the facility that you will enter, and the level of care you will receive.

Consider this insurance once you reach age 40 and when you feel you have enough assets to need protection. The earlier you purchase long-term care insurance, the less you pay for it. And, don't forget, you'll get a tax deduction on the premium you pay. The deduction is calculated on a sliding scale, based on age.

Contact the insurance experts at CAP COM Financial Services at 518.782.0209 to help you protect your life savings while you are caring for your health.

If you have questions, or would like to set up an appointment, call CAP COM Financial Services at 518.782.0209.

Estate Planning

In order to ensure that your heirs receive the full value of your estate, careful planning is essential. Misguided efforts are little better than no action at all and may result in a large part of your heir's inheritance being lost to estate taxes and probate fees. By establishing a responsible estate plan, you can save your family the stress of administering your estate, as well as any unnecessary fees, taxes or delays.

We can explain the importance of a will, the probate process, trusts, and any legal and tax issues. We will develop your estate plan in conjunction with the legal counsel of one of our strategic partners or we can work in unison with your own attorney to design your plan. Estate planning is too important an issue to ignore. Consult your trusted financial advisors at CAP COM Financial Services.

Managing Longevity Risk
Awareness may be the first step to making your money last

Big Picture Planning

The first step in assessing your personal longevity risk is figuring out how much you can realistically afford to withdraw each year from your savings and investments.

One strategy for managing longevity risk is to withdraw a conservative 4% to 5% of your principal each year. However, your annual withdrawal amount will depend on a number of factors, including: The overall amount of your retirement pot, your estimated length of retirement, annual market conditions and inflation rate and your financial goals.

Strategies for Minimizing Risk

As you review your own situation, consider the following strategies:

Maintain a cash cushion for living expenses. A common rule of thumb is to keep at least 12 months of living expenses in an interest–bearing savings account, though your needs may vary.
Develop a diverse income strategy. Responding to the current interest rate environment is one way to potentially squeeze more income from your savings and stretch out the money you've accumulated for retirement. For example, if rates are trending upward, you might consider keeping more money in short–term Certificates of Deposits (CDs). The opposite strategy may be employed when rates appear to be declining.
Use bonds to generate income. "Laddering" of bonds involves buying an assortment of bonds of different maturities along the entire maturity spectrum. This strategy can potentially create a steady income stream while helping reduce long–term interest exposure. Bonds do contain risk, which you should consider carefully prior to purchase.
Consider dividend–paying equities. These stocks potentially offer the opportunity for supplemental income by paying part of their earnings to shareholders on a regular basis. Plus, dividend–paying stocks are currently taxed at a maximum rate of 15%, rather than ordinary federal income tax rates, which can run as high as 35% (consult your tax professional; this rule is scheduled to expire after 2008 unless extended by Congress).
Keep an element of growth in your portfolio. Finally, try not to be overly conservative with your investments. Many people may live 30 or more years in retirement. Therefore, your portfolio may need a boost of stocks to outpace inflation over the years.

Life Insurance and Long Term Care
Under one policy

Consider purchasing a benefit rider with your life insurance policy while you are still active and healthy.

Planning now can protect your assets, your independence and your family from the burden of expensive costs that come with long term care. The Benefit Rider is a simple way to meet both the needs of long term care and life insurance – all under one policy! The rider would cover the costs of skilled, intermediate or custodial care by extracting from your death benefit. When the life insurance policy is used for long term care expenses, the death benefit is reduced dollar for dollar, and the cash value and policy account value are reduced proportionately.

You can customize your long term care coverage; use it all, some of it or none at all to pay for your care. The portion you don't use will be paid to your heirs and will be income tax–favored under current law.

To find out if the benefit rider would fit your needs, call Herb Warden at 518.782.0209.

Rule allows for easier transition to a ROTH IRA

If you will not need the required withdrawals from an individual retirement account to cover your living expenses once you retire, you may be interested in a rule that would make it easier for you to convert your Traditional IRA into a Roth IRA and avoid the taxable distributions.

The rule says that individuals age 70½ and over no longer have to include the required minimum distributions they take from their Traditional IRA as part of their modified adjusted gross income (MAGI), making it easier for them to meet the $100,000 threshold required to convert it to a Roth IRA.

Although one drawback of the conversion may be a required tax payment up front, a Roth IRA would allow your money to continuing growing tax deferred for your heirs, rather than drawing it down after age 70½ through the required minimum distributions.

We are here to help you with this kind of planning. Consult a CAP COM Financial Services Advisor at 518.782.0209.