“Buckets of Money: How to Retire in Comfort and Safety,” by Raymond J. Lucia, CFP (John Wiley & Sons, Inc., 2004)
by Richard F. O’Boyle, Jr., LUTCF, MBA
“The Insider’s Guide to Retirement and Insurance Planning”
http://www.retirementandinsurance.com
We’re taught to save throughout our working years to fund our retirement – diligently socking money into our 401(k)s and paying down our debt. But once we flip the switch and settle into a presumably worry-free retirement, how do we effectively and efficiently spend down our assets in those golden years? Ray Lucia, a Certified Financial Planner with a celebrity’s flair, helps us to answer this tough question with his “buckets of money” planning strategy.
The gist of “Buckets of Money” is that our nest eggs should be separated into three “buckets” of ultra-safe income streams, conservative medium-term assets and aggressive stock funds. Over seven-year cycles, the funds are depleted and shifted into the next immediate bucket to be used for current income. The buckets strategy leaps the key retirement planning hurdle by providing safety, growth, diversification, tax-efficiency and lifetime income. The book identifies which investments are appropriate for which buckets, along with guidelines for the proportions of each.
The book reads like a infomercial, but don’t let that turn you off. The general discussion of asset classes and products (stocks, bonds, annuities, etc.) is valuable for the novice and experienced investor alike. His comprehensive perspective honestly allows him to cover all potential investment classes. Mr. Lucia isn’t trying to sell you on anything other than his planning strategy (and he does that well).
Mr. Lucia’s website contains some notes on changes, but I’d like to see a fully updated edition of the book. For example, the buckets strategy recommends real estate holdings of as much as 20% of a portfolio in the form of real estate investment trusts. Given the 2008 mortgage meltdown, perhaps that should be reconsidered. Mr. Lucia only skims past the important backstop that life, disability and long-term care insurance provide as we switch our retirement portfolio from accumulation mode to distribution mode. Fortunately, the author takes into account the complexities of the tax code since intelligent tax planning can make or break a retirement plan. The book’s numerous statistical examples remain useful today.
The worksheets included in the book are quite easy to use. While the potential to “do it yourself” is there for the experienced investor who has a trusted advisor, I wouldn’t recommend that an individual adjust her portfolio without consulting a professional. I’m not sure if the buckets strategy is an “all or nothing” approach to investing. Any retirement plan can benefit from the non-controversial concepts presented here.
Friday, 26 August 2011
Book Review: “The Complete Guide to Reverse Mortgages,” by Tammy Kramer and Tyler Kraemer
“The Complete Guide to Reverse Mortgages,” by Tammy Kramer and Tyler Kraemer (Adams Media, 2007)
by Richard F. O'Boyle, Jr., LUTCF, MBA
"The Insider's Guide to Retirement and Insurance Planning"
http://www.retirementandinsurance.com
Tammy and Tyler Kraemer do professional advisors and consumers a valuable service by demystifying reverse mortgages. The sale of reverse mortgages has boomed in the past 20 years as house-rich/cash-poor retirees seek to tap into their home equity to fund their golden years. “The Complete Guide to Reverse Mortgages” details and explains the many benefits and pitfalls of these complex and poorly understood financial products. Every professional advisor should read this book, along with every consumer seriously considering one.
Over the last three or four years I have seen a surge in published articles (good and bad) on reverse mortgages. This is mainly because our retirement investments have failed to produce the expected pile of money to live off of. Up until 2008 (the year after this book was published) our home values had increased beyond rationally expected levels. The perfect storm of crashing investment accounts, crimped budgets and plummeting home equity values makes the consideration of a reverse mortgage even more pertinent.
“The Complete Guide to Reverse Mortgages” is a consumer-friendly volume with useful worksheets and illustrations. If you are a senior considering a reverse mortgage (or adult child of one), take 30 minutes to pencil through the worksheets. Better yet, sit down with a financial advisor or mortgage specialist and do them together. Don’t hesitate to float the idea past intelligent friends, your family attorney or a neighborhood insurance agent. The consumer is well-advised to carefully network to find a reputable reverse mortgage specialist. You may bring any financial advisor along with you to a consultation. By speaking with a variety of advisors, you will be sure to explore the fullest spectrum of options. This is a financial purchase you should be extremely cautious about because it’s a long-term commitment.
Many things have changed in the reverse mortgage market since the 2008 financial meltdown so on February 25, 2011, I spoke with Jim Calimopulos, Reverse Mortgage Sales Manager at Worldwide Capital Mortgage Corp. in Bay Shore, NY.
Mortgage rates and the costs of reverse mortgages in general have increased, and property values have decreased, which means that less money is ultimately put into a consumer’s pocket when they take out a reverse mortgage. The highly publicized failure of IndyMac bank (one of the largest reverse mortgage providers) has fortunately not made a great impact on the availability of these products to consumers since other companies such as Financial Freedom and MetLife continue to be strong players.
Since 2010, the Department of Housing and Urban Development’s Home Equity Conversion Mortgage program has sought to lower some costs and provide more options to consumers. As Mr. Calimopulos explained, if a couple is downsizing their home and moving into a new home, they can greatly benefit from the HECM program. For example, if they sell their home for $300,000 and then buy a $250,000 home in a 55+ community, they can still get a reverse mortgage for up to $190,000 on the new property. Ultimately, the couple will have about $110,000 in cash to put aside for use in the coming years.
by Richard F. O'Boyle, Jr., LUTCF, MBA
"The Insider's Guide to Retirement and Insurance Planning"
http://www.retirementandinsurance.com
Tammy and Tyler Kraemer do professional advisors and consumers a valuable service by demystifying reverse mortgages. The sale of reverse mortgages has boomed in the past 20 years as house-rich/cash-poor retirees seek to tap into their home equity to fund their golden years. “The Complete Guide to Reverse Mortgages” details and explains the many benefits and pitfalls of these complex and poorly understood financial products. Every professional advisor should read this book, along with every consumer seriously considering one.
Over the last three or four years I have seen a surge in published articles (good and bad) on reverse mortgages. This is mainly because our retirement investments have failed to produce the expected pile of money to live off of. Up until 2008 (the year after this book was published) our home values had increased beyond rationally expected levels. The perfect storm of crashing investment accounts, crimped budgets and plummeting home equity values makes the consideration of a reverse mortgage even more pertinent.
“The Complete Guide to Reverse Mortgages” is a consumer-friendly volume with useful worksheets and illustrations. If you are a senior considering a reverse mortgage (or adult child of one), take 30 minutes to pencil through the worksheets. Better yet, sit down with a financial advisor or mortgage specialist and do them together. Don’t hesitate to float the idea past intelligent friends, your family attorney or a neighborhood insurance agent. The consumer is well-advised to carefully network to find a reputable reverse mortgage specialist. You may bring any financial advisor along with you to a consultation. By speaking with a variety of advisors, you will be sure to explore the fullest spectrum of options. This is a financial purchase you should be extremely cautious about because it’s a long-term commitment.
Many things have changed in the reverse mortgage market since the 2008 financial meltdown so on February 25, 2011, I spoke with Jim Calimopulos, Reverse Mortgage Sales Manager at Worldwide Capital Mortgage Corp. in Bay Shore, NY.
Mortgage rates and the costs of reverse mortgages in general have increased, and property values have decreased, which means that less money is ultimately put into a consumer’s pocket when they take out a reverse mortgage. The highly publicized failure of IndyMac bank (one of the largest reverse mortgage providers) has fortunately not made a great impact on the availability of these products to consumers since other companies such as Financial Freedom and MetLife continue to be strong players.
Since 2010, the Department of Housing and Urban Development’s Home Equity Conversion Mortgage program has sought to lower some costs and provide more options to consumers. As Mr. Calimopulos explained, if a couple is downsizing their home and moving into a new home, they can greatly benefit from the HECM program. For example, if they sell their home for $300,000 and then buy a $250,000 home in a 55+ community, they can still get a reverse mortgage for up to $190,000 on the new property. Ultimately, the couple will have about $110,000 in cash to put aside for use in the coming years.
Wednesday, 24 August 2011
Positive Changes For Diabetics In The UK Critical Illness Market
For a long time the provision of critical illness cover in the UK for diabetics has been extremely limited. Where critical illness cover has been available it has come with significant exclusions for cardio vascular risks, the very critical illnesses that would be of most interest to those with diabetes.
The good news is that significant changes are taking place which mean that for some diabetics we are now able to arrange critical illness cover without any exclusions. As specialists in the proctection market for people with health conditions welcome this excellent new development which we believe will be of real benefit to many diabetics. Diabetics wishing to make enquiries should visit http://www.moneysworth.co.uk/ or call 0845 430 5200
The good news is that significant changes are taking place which mean that for some diabetics we are now able to arrange critical illness cover without any exclusions. As specialists in the proctection market for people with health conditions welcome this excellent new development which we believe will be of real benefit to many diabetics. Diabetics wishing to make enquiries should visit http://www.moneysworth.co.uk/ or call 0845 430 5200
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