Lets Talk Savings in Retirement

Last week I had a face-to-face with one of my long time clients. She was recently laid off from her job of 30+ years and is earnestly looking at the idea of not returning to work and retiring early. She asked me for some real world ideas on how to live more frugally and to make her retirement dollars last longer. I thought that would be a good chance for me to share with you some of the strategies we discussed:

  1.  Maximize Social Security-  One of the most powerful ways to maximize lifetime income is to collect the largest check possible from Social Security. Benefits rise with inflation, and it provides a survivors benefit for married couples, which is important when savings are limited. It is never good to assume that the best time is as soon as you are eligible, so be sure to meet with an expert on the options before you make your election
  2.  Reduce the Tax Burden- Minimizing taxes can help when every dollar matters.If there is a period in your retirement where you expect to be in a lower tax bracket, it could make sense to convert dollars from your traditional IRA into a Roth. Roth withdrawals won’t count towards your tax bill and this could also help lower any potential tax implications on your social security.
  3. Buy an Annuity – Giving money to an insurer in exchange for a guaranteed income can really help retirees cover the basics. The payout rates on an income annuity can be higher than bonds because it provides a source of return that investments cannot.
  4. Look at a Reverse Mortgage – Reverse mortgages, most of which are backed by the Federal Government, let people over the age of 62 with substantial home equity access that equity- it does not have to be paid back until the borrower dies or moves out of the house. One approach is a “standby” reverse mortgage where a borrower can open a line of credit to be tapped when necessary. Reverse mortgages have a one time upfront fee and some other charges but for retirees who have little capital but lots of “house” equity- this can be a good plan.
  5. Policy Analysis and Review –  If you own a life insurance policy now is a very good time to have it reviewed. Mortality costs have gone down over time so a thorough review is imperative. It you are healthy it may be possible to get the same insurance for less money, more insurance for the same money or even to have a “paid-up” policy.
  6. Live on Less- This is the hardest part. But when we are working we tend to buy before we think since income is not a problem. Once we are on a fixed income we need to change our habits. Sometimes we have to stop ourselves and say – do we really need this or can I do without it?
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Four Words

That is right. Four words. Experts say that just four words can change your practice and help you gain the trust and confidence of your clients. Those four words…

“What do you think?”

By asking one question – “what do you think?” – you let people know that you value their input, respect their opinion and have an open mind toward solving problems. Clients know that you are knowledgable, but asking for their input helps form a valuable bond that leads to a more satisfying relationship.

What do you think?

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Think About Scripting

Have you ever thought how important it is to script your message for each and every client appointment? Words matter and the difference in just a few words can be powerful. To be successful you need to capture and practice the exact words you use on your very best days. And to reach the next level, you cannot coast and relax. The next level is not less scripting, it’s more scripting. It is delivering prepared material so well that it comes across as a conversation rather than as a presentation.

By scripting we don’t simply mean the words you might use. We are also talking about “word pictures.” Stories and metaphors help connect your clients to the message and often provide the catalyst for decision-making. In the appointments that matter most, do you want to leave the details to chance?


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Corporate Wellness is a NOW benefit

Insurance reps, accountants and attorneys who champion corporate wellness are champions in their own right. They give companies a reason, which is more a matter of moral justice than a mandate from our judicial system, to create—and popularize—a program that empowers workers by educating them about how to live healthier lives, in and outside the workplace.

By immersing themselves in this process, reps prove that corporate wellness is a catchall for involvement by a multitude of professionals, from doctors and nurses to nutritionists and naturopathic physicians, from athletes and attorneys, too. The process itself allows companies to ensure their standards comply with the law while giving their employees the information necessary to succeed.

According to Wayne R. Cohen, a professor at The George Washington University School of Law and a partner at Cohen & Cohen, P.C., attorneys are (to a degree) unofficial wellness counselors. He says:

To counsel is to not only advise but to advocate on behalf of a client for whom your insight can provide much-needed peace of mind. Transferring that skill from the courtroom to the boardroom, so a lawyer can collaborate with a company and better complement a wellness plan, benefits everyone. The more inclusive this dialogue is, the more effective companies will be.

As a non-practicing attorney, who also happens to write about insurance, investments and the importance of corporate wellness, I applaud Cohen’s analysis. If anything, we need more reps to educate workers about their rights—and we will always need attorneys to confirm companies do the right thing. An attorney or rep who reviews a wellness plan is, therefore, someone who advances the legal health of a business as much as he accelerates the pace of change among all businesses; he is an agent of change, whose expertise does more to align a plan with the law than it would do so without him; whose goal, regardless of which side he represents, is to verify a company is in the right by honoring the rights of its employees.

This approach is proactive because it establishes a precedent for executives to follow and workers to emulate. It broadens the definition of what it means for a company itself to initiate—in words and deeds—policies that can lower medical and insurance costs, increase productivity, and improve morale between management and labor.

Let us welcome the development of this newest chapter in an ongoing report about health and innovation.

Let us do so with respect for the integrity of corporate wellness and the safety of workers nationwide.

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It is Official

We are writing this blog post to give you our view of the “best interest” landscape. Yesterday, the Fifth Circuit Court of Appeals issued a mandate vacating the Department of Labor (DOL) Fiduciary Rule in its entirety, meaning the fiduciary rule no longer applies to sales of annuity products. Now that the court has issued the official order to vacate, we wanted to confirm that you are no longer a fiduciary when recommending annuity products to your customers.

We understand that this change will not impact how you will interact with your customers, as we at ISN have always known that our producers act in the best interest of their customers when making a recommendation of products.

We will continue to monitor both the NAIC and the SEC as the regulatory environment evolves.

Thank you for your continued business and your patience as we navigate through these uncertain regulatory times.

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Business Priorities

When surveyed, business owners indicated what their top financial priorities were. But, in reality the priorities did not always match the actual strategies that they had in place. Surprised? Here are the latest results

TOP 5 Priorities

  1. Protecting their business – Only 36% have business protection in place despite this being the #1 business priority for the last 10 years of the survey.
  2. Protecting their income- In the past three years we have seen the % increase from 26% in 2015 with income protection to almost 35% in 2018.
  3. Health and Wellness Solutions- Health Insurance and wellness benefits are still offered by more than 50% of all business owners.
  4. Group Benefits – In addition to health insurance, almost 2/3 (62%) of business owners offer additional group benefits like life insurance or DI.
  5. Qualified Retirement Plans – 52% offer some sort of qualified plan. Most see the importance of retirement focused benefits and the most popular plan offered is the 401(k) plan.

There are many reasons why the top priorities are not often met by business owners. Some of the common issues include lack of capital, too busy running the business or it’s just not at the top of their mind. Perhaps the biggest reason that the survey uncovered is that most business owners are not sure where to start. This is our opportunity. We can help them get started- all we have to do is ask.

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Is it Time to Add PAR to Your Practice?

It amazes me how many years go by before the average client gets an annual review.  Sometimes, it’s many years, and that’s not good for anyone. Policy Analysis and Review (PAR) is perhaps the #1 tool that top advisors use to provide a valuable resource for their clients.

While you may think that clients don’t want to see you for a full review every year, you may be wrong.  They at least need the option to say no. And, with the ISN PAR program, a review can be done easily over the phone after emailing the client a detailed insurance portfolio review. This can be looked at together over any geographical distance and within almost anyone’s limited schedules. They want to know that you are on the job and available to help, so make that effort.

This is a big part of building loyalty and trust.  It is also a big part of making financial planning practical; every plan needs adjustment regardless of the talent of the planner.  The only way to make those adjustments practical and valuable is to do a review regularly and according to life needs. Coverage could go up – but it could also need to go down. Both options will improve your persistency and build rapport.

To keep this short, there are three necessary goals in an annual review:

  1. First, you must review the changes in the life of your client and the people around them.  What has happened that might make a plan change necessary?  To make sure you don’t miss any of these questions, check the Annual Review Questionnaire available from ISN.
  2. Second, advise the client of the changes that have happened in the industry in the past year that may cause them to make some changes to their plan.  That might mean that interest rates have changed which require adjustments to UL assumptions, or pricing reductions which make early term renewal more valuable than waiting. Most important is the fact that mortality tables have changed. People are living longer and this means costs are coming down.
  3. Finally, review their existing insurance portfolio.  Discover if there are any benefits they are missing.  Are their options they are not exercising?  What about LTC riders? What about child riders? Term switch options? Early term renewal or conversion? Underfunding of UL? Dividend option switches? Remember, products evolve over time – and in our industry the changes can be dramatic.

To be most effective, make this meeting more formal.  Inject importance to their ongoing plan and use an agenda to stay on track.  It’s that last key to making your clients’ financial plans more practical. You can also use our handy “STAMP TOOL” to make it a part of your process.

When you make financial planning practical you have become essential to your clients.  You are relevant to their ongoing lives and become someone they need.  This is a potent combination for them and for you. Plus, relevance in their lives produces referability, which drives your business.  It’s time to make financial planning practical.

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