Get The Word OUT!

I've been getting a lot of questions about the book, "Help! My 401(k) Has Fallen - And Must Get Up!" The book will be available shortly (end of May) for ordering from Amazon. Since this book was written to help EVERYONE with a 401(k) or 403(b), my biggest concern now is -

How do I make sure that EVERYONE knows about it?

Having a radio program is a real bonus. In fact, on May 29, I am doing a special edition of "Improving Your Financial Health". With so many questions about this unique book, I thought the best way to answer them would be on the air. Be sure to listen to the program Sat. May 29 at 9:00 am on Harvest 103.1 WHME-FM. If you don't live in the South Bend area, or aren't able to listen at that time, no worries. You can still catch the archived recording on my website, www.helpmy401k.us . All previously recorded programs are kept there.

My book website, http://www.my401khasfallen.com/ will also include FAQs and resources which were helpful in writing the book. The new video will be there also, and can currently be seen on You Tube. I will write some more about this, and I've gotten a lot of positive feedback so far on the video.

Most people are thrilled that I didn't strip nude, a la Erykah Badu. (You DON'T want to see this body in the buff!) Although I can't say the same for the pig, who is the main character in the video.

Sooooo, if you want to see a naked piggy bank reading a book, you will like this! (Don't worry the nudity is tastefully done in an 'artsy' way.)

Anything that you can do to help get the word out about the book

"Help! My 401(k) Has Fallen - And Must Get Up!" would be greatly appreciated.

For rolling over a 401(k), or the best rates on tax-free bonds, you can contact me through my website http://www.helpmy401k.us/. You can also follow me on Twitter @deanvoelker or Linked In. 

"Improving Your Financial Health" is a weekly financial advice radio program, which also showcases interesting guests. This program airs Saturday mornings at 9:00 am on WHME-FM in South Bend, IN and on my website.

Diary of a Wimpy 401(k) - Movie

Well, my daughter wanted to see the "Wimpy Kid" movie yesterday. I know she likes the book series and they are pretty funny so we went.

The movie was pretty funny, a bit different from the book with several new adventures for the Wimpy Kid, Greg Heffley, as he deals with surviving middle school. You really don't want to know about the "cheese touch".

I'm not planning a "movie" for my book "Help! My 401(k) Has Fallen - And Must Get Up!" Although if Bruce Willis' agent will return my calls, I may change my mind. James Gandolfini might be interesting also......
a 'mafia' financial advisor......hmmmmm.

Seriously, don't look for a movie with either of these guys. Although I am still planning a short video clip with Pentavision. I'm supposed to meet with them again this week.When we put up the new website, the video will be there and we can direct orders to the page on Amazon.

I'm also getting more book cover ideas this week, which I hope to be able to post and get feedback.

My other project is to find blogs on 401(k)s and IRAs and post responses to questions. I have several which I know of.

If any readers want to send me links for 401(k) blogs, please contact me.

You can get a copy of a free report on my website – "The 5 Biggest Problems With 401(k) Plans – And How to Fix Them".


You may also contact me on Linked In or Twitter at http://www.twitter.com/deanvoelker. I also host a weekly financial advice program, Improving Your Financial Health on Blog Talk Radio and WHME-FM.

Diary of a Wimpy 401(k)

OK, here we go. One of the things I have done so far in the publishing process was to read a book titled "The Well-Fed Self Publisher" by Peter Bowerman. Mr. Bowerman has some very good & practical ideas on why it is better to self publish instead of going through a publisher.

Kudos to my good friend, Nikki Stauffer who recommended the book. Nikki always seems to come through for me when I really need some advice. If her firm was willing to promote the book, I'd hire her in a heartbeat.

Bowerman told several "horror stories" about publishing houses. Most people have a fantasy that they can simply write a book and sell a gazillion copies and then live like John Grisham for the rest of their life. Needless to say, I am pretty grounded in reality. The truth is, many authors have a hard time getting it published. Jack Canfield, author of the "Chicken Soup" books has a favorite word when he was getting multiple rejections - "Next!"  

Anyway, even if you finally do get a publisher to take on your book project, and a promotion agent to write a press release, you will still end of doing the promotion leg work yourself. also, the publisher gets to keep most of the money. He shows examples of authors who wrote books that sell for about $15 and their cut is about .50 per book. Now THAT is wimpy!

According to Bowerman, once they write the press release, the publisher is done. On to the next Stephen King wannabe. There is only one person in the whole world who really cares about making sure that your book is promoted regularly - the author. So if you have to promote it yourself, why not publish it yourself.

The whole reason for this book was that I was meeting many people in this area who really weren't getting the most from their 401(k). Northern Indiana is one of the hardest hit areas for unemployment, and many folks simply cashed it in, in spite of taxes and penalties. Others who didn't cash in stopped contributing to their 401(k) especially if their company stopped matching contributions. There is no doubt in my mind that people need to have a much better understanding of how the 401(k) works.

Someone needs to say - This is your retirement plan. It may also be the only savings you have, so you'd better stop being 'wimpy' about it and start saving.

"Help! My 401(k) Has Fallen - And Must Get Up!" reveals little known secrets about 401(k) plans and IRAs. If you read the book, you will understand them and get more from them.

That's all for today. I really apreciate those who have been reading this, and those who have been supporting me. Also thanks to those who have been listening to "Improving Your Financial Health" on either Blog Talk Radio or WHME-FM.      

Blog Talk Radio - Be Our Guest

I've been a bit busy this week, working on my upcoming book, "Help! My 401(k) Has Fallen - And Must Get Up!" . This is an "everyman's" (and everywoman's) guide to getting more from your 401(k) plan. Most books I have seen on 401(k) plans really are geared more to advisors and financial people, which is what inspired me to write it.

For most of us, the 401(k) is a major source of our savings, and for some it may be the ONLY source of savings. We need to get more out of it if we want to retire someday and have our money last the rest of our lives. I'm very excited to contribute something unique - and hope others find it helpful.

Anyway, I plan on doing more with the blog and hope that my message finds the right people. Last week I wrote about Blog Talk Radio. My experience with Blog Talk Radio has been great. I began using it in July 2009 on the advice of a friend of mine, Brian Seim, a radio veteran.

Although I have made a TON of mistakes (and still do!), I must have done a few things right also. A few weeks ago I began an affiliation with WHME-FM in South Bend (103.1) . We agreed to replay my interviews from Blog Talk Radio as a 30 minute program on Saturday mornings - "Improving Your Financial Health" .

If I had to pick the one factor which has made the show appealing - its the GUESTS! My guests have mostly been financial experts and authors, although some have been very interesting people with great personalities with no financial background at all. Even so, they had something of value to share with listeners and wer a lot of fun to talk with. Some examples would be Ruben Gonzalez, a 4 time Olympian who has written 3 books on staying motivated, or Charlie Adams, who is also a professional speaker and helps High School athletes to get college scholarships. Kristen Harmel who has written 6 novels and has a passion for helping kids with reading, Kay Yasin who overcame personal tragedies to change her life and is now an expert trainer and bodybuilder, and Darin Pritchett who is well known in the South Bend area for his Weekday Sportsbeat show. These and many others are wonderful people and gave fun & interesting interviews. All would all be welcome guests in the future.

Once I committed myself to doing the program, I have always been on the lookout for people who would make great guests . When I find someone I like, I contact them and and tell them about the program and try to schedule a time for them to be on. Always let them know that you are doing this regularly (for me once a week) and tell them names of other guests I've interviewed.

Whatever you choose to do a program about - for business or for fun - I would certainly recommend having interesting guests that fit in with your message. Again, the guests make the show fun. (Who would want to listen to just me for 30 minutes?)

People have often asked me where I find my guests. You can find guests in several places. My main source would be searching the internet for financial blogs or articles I also subscribe to Money and Smart Money magazines and have found great articles there.

Referrals can be a great source also once you tell others what you are doing. My friend, Nikki Stauffer in Ada, MI deserves a special mention. She has referred 2 nationally recognized financial experts and authors to me who are guests. Eric Tyson (author of "Investing for Dummies" and "Personal Finance for Dummies") was one. There aren't many financial advisors out there who can say they have their own "jingle" written by Paul Shaffer of the David Letterman band.  Another is Robert Krakower, who has graciously agreed to be interviewed on March 23. His new book is titled "Redefining Retirement for a New Generation".

By the way, Nikki Stauffer has a great weekly show of her own, "Gather Round the Table" .  She has also done pretty well with guests, including Megyn Price (Rules of Engagement), Maria Canals-Barrera (Wizards of Waverly Place), and Mayim Bialik (Blossom), among others. This program promotes the importance of family values by eating meals together, and Nikki's guests normally share one of their favorite recipes. Check out her site and archived interviews at http://www.gatherroundthetable.com/. 

I also need to thank Erica Sandberg one of my early guests, and author of "Expecting Money", for her referral of a colleague of hers, Sally Herigstad, CPA, and author of "Help! I Can't Pay My Bills!". Both ladies were wonderful guests and I look to have them on Blog Talk Radio again.

Pam Batcho of Express Pros, also has been a great referral source. She referred Ruben Gonzalez, whom I mentioned earlier and also her boss, Norm Robertson, owner of the local Express Pros branch.

Sometimes, it pays to be persistant. Anya Kamenetz was a young lady I had really admired from reading her first book, "Generation Debt" a few years ago. It highlights the challenges of being young today, especially with the high costs of college and student loans. Anya was nominated for a Pulitzer Prize for her efforts.
She is also a nationally recognized speaker, and has appeared on college campuses nationwide.

I knew Anya would make a great guest, and tried to e-mail her (4 times over 6 weeks) with no reply. Finally one day out of the blue, I got a very kind note from her. She apologized that she had been out of town and wasn't getting her e-mails. She also sent me her personal e-mail and agreed to an interview. The interview went great and it was quite an honor for me.  

Whoever the guest is, I really try to be respectful of their time. I really want to make sure the experience goes well for them - I may want to have them back sometime, or want their help with a project.

Before doing a program, I send the guest specific instructions confirming the date and time and Call-In phone number. Since some of my guests live in different parts of the country, I also make sure I note EST - and whatever time it may be for them. 1:00 pm here is 10:00 am in California. That may seem like a small thing, but trust me - its important!

Another habit of mine is to send the guest a list of questions personally tailored to them. Some guests have even suggested questions that the like to be asked. By reviewing their website or reading their books, it has helped me quite a bit to learn about them. It helps the interview to go more smoothly.

My objective is to build them up as an expert which (I hope) makes me look like a good guy as well. Speaking of building up, its also very important to use a proper introduction. A good introduction should be at least 3 sentences, highlighting their achievements. You are telling your listeners why you chose this person to be on your show and why their advice will be valuable to them.

One last point on guests - You can't say "Thank You" enough. I always thank them at the end of the program and give them a chance to give contact information and promote their book or services . After the show, I also send an e-mail thanking them for their time once more.

Blog Talk Radio has been a great venue for me. I plan on writing one more article about Blog Talk Radio, which includes tips and techniques. You can contact me through my website, http://www.helpmy401k.us/ and
through Linked In or Twitter.

There is a Free Report now available through my website, "The 5 Biggest Problems With 401(k)s - And How To Fix Them". Please contact me to receive your free copy. This is a sample of my upcoming book, "Help! My 401(k) Has Fallen - And Must Get Up!"

Tax Free Interest In Indiana - Shhh, Your Bank Doesn't Want You To Know

Do you live in "The Middle"? Besides unpredictable weather and being referred to as "Hoosiers", there are actually a few perks to living in Indiana.

Indiana offers some tax benefits to investors that are unique to our state. Municipal Bonds are very popular here. These bonds are a great (and Safe) way to earn more interest on your savings. The interest you earn on a bond from ANY STATE is FREE from Federal Tax, State Tax, and Local Taxes!

Municipal Bonds, or Munis have been used for over 200 years as a way to raise money to build or improve schools, hospitals, libraries, and roads. These days, stadiums have also been funded by having bonds issued. Once the bond is issued, you can loan money to the project and be repaid with interest which is free from Federal taxes. When the bond matures, you get the amount back which you loaned to the project.

If the bond is issued by your home state, your interest may also be free from State and Local taxes.

Again, the benefit for us "Hoosiers" living in Indiana is this. It doesn't matter which state the bond came from. We enjoy interest income on any muni bond which is free from Federal, State, and Local Taxes!  
That may be worth an additional 1.5% - 2% or more on your savings, depending on your tax bracket. 
(Check with your advisor when buying bonds to see if you may be subject to Alternative Minimum Tax, depending on your total income.)

Currently, http://www.bankrate.com/ (as of Feb. 4, 2010), shows us what the highest rates are for a 1 Year CD
(1.7%) and a 5 Year CD (3.55%).  Dave Ramsey refers to these as "Certificates of Depression". You can see why!

Did you also know that CDs are RISKY? Why is that, you ask?
Easy - You LOSE Future Buying Power!

Let's do the math, and see which option may be better for long term savings.

5 Year Municipal (Investment Quality) Bond at 5%

$10,000 x .05 = $500/year. 
$500 x 5 years = $2500 (TAX FREE) 
Most Bonds pay interest twice per year, directly to you the investor, so you will get 2 checks each year for
$250 for 5 years. When the bond is due, you get the $10,000 back. That may also happen if the bond is called early, but that's another lesson.

5 Year CD at 3.55%
Remember that was the BEST rate in the US today on http://www.bankrate.com/.

$10,000 x .0355 = $355/year.
$355 x 5 years = $1775, and you WILL PAY TAXES on this.

Hmmmm......let's see.....I can get $2500 in interest that is tax free OR $1775 in interest that is taxable. I wonder which one I should pick......

Did you ever wonder how banks make money? They use your money and either loan it or invest it.
Now you can see why your bank may not share the muni bond idea with you.

If you would like to learn more about Municipal Bonds, please contact me. 
You may also contact me for more information on 401(k) plans or IRAs at http://www.helpmy401k.us/.
You may also contact me on Linked In at http://www.linkedin.com/in/dvoelker or Twitter at http://www.twitter.com/deanvoelker. I also host a weekly financial advice program, Improving Your Financial Health at http://www.blogtalkradio.com/401kcoach.

Taking Stock

I'm not a big individual stock fan. For most people, mutual funds are a much better way to invest. Its easier to be diverisfied and its also easier to add money systematically.

However, I did see something recently which I thought my readers may enjoy. If you were going to invest in stocks, which companies would be good ones to own long-term? At least one sign of a great company is one which is able to consistently increase their dividend payment.

If you aren't sure what a dividend is, think of it this way. When you own stock, you own a tiny piece of that company. Your investment rises and falls with the performance of the company. Over time, you would like to think the company will grow, and your money will grow with it. Companies which have established themselves and become profitable will share part of their profits with you as a part owner. Those profit sharing payments are known as dividends and are usually paid once every 3 months.

Again, the sign of a great company is one which has raised its dividend payment consistently, even in tough times. Raising the dividend for shareholders is like giving them a pay raise. (CDs don't do THAT!!) Those companies would be great to own long term.

What if a company were able to raise its dividend 25 years in a row or more?

Here are the ones which have:
Abbott Labs                     (ABT)
Bemis                               (BMS)
Century Tel                     (CTL)
Chubb                               (CB)
Coca-Cola                        (KO)
Exxon-Mobil                    (XOM)
Johnson & Johnson         (JNJ)
Mc Donalds                     (MCD)
3M                                   (MMM)
Pitney Bowes                  (PBI)
PPG                                 (PPG)
Proctor & Gamble          (PG)
Walmart                          (WMT)    

S&P reports that since 1926, dividends have contributed to about 1/3 of the total return on your investment.

Another thing I like about dividends is that when the stock price goes down, the dividend yield goes up. Its a great time to buy more of great companies. That is what Warren Buffett does!

For example, lets look at Proctor & Gamble. Shares of PG are currently (2/3/10) at $62.90. Dividends are paid at $1.76/share, which is divided into 4 quarterly payments. You will get a dividend return of 2.8% on any shares purchased at that price.

What if you had been fortunate enough to buy in March of 2009, when it was selling for around $44/share? Well, you still would have gotten $1.76 per share, but that works out to about a 4% dividend return. (Better than a CD, and with potential to grow!)

Warren Buffett has become extremely wealthy because he buys great companies and holds them, collecting dividends which increase year after year after year.

Again, I am not encouraging people to buy individual stocks. There are plenty of financial stocks such as Citigroup and Bank of America which also had wonderful histories of increased dividends, until 2008.
Dividends are certainly something to consider though for any investment - including mutual funds and annuities.

You can contact me through my website, http://www.helpmy401k.us/. You can also contact me on LinkedIn at http://www.linkedin.com/in/dvoelker, or Twitter at http://www.twitter.com/deanvoelker. I am currently hosting a weekly financial advice program, "Improving Your Financial Health" on Blog Talk Radio at http://www.blogtalkradio.com/401kcoach.  Let me know how I may help you!

  

Tired of Taxes?

Are you tired of taxes? Tired of hearing about them? Tired of giving your hard-earned dollars to Uncle Sam? Tired of politicians who say they will lower your taxes - then do the opposite?

How would you like a stream of income later in life that you WON'T pay taxes on at all?

That's what the Roth IRA is all about!

The Roth IRA was created as a future Tax Reduction Account in 1997. It's a great way to save for your future retirement. The name "Roth" is in honor of the bill's main creator - late Sen. William Roth of Delaware.

The beauty of the Roth is that there are NO TAXES on either the growth, or withdrawals you take after age 59 1/2. So your income will be TAX FREE!

You can contribute to a Roth IRA for either 2009 or 2010 right now - up to $5000/year. If you are 50 or older, you can put in an extra $1000.

Here are 2 new things in 2010 about the Roth IRA you should know.

* There are no income restrictions for making Roth IRA contributions this year. This allows

more people than ever before to use a Roth.

* You can convert your traditional pre-tax IRA to a Roth by simply paying taxes on the amount

you convert. That isn't new, but what IS new is that you can SPLIT the tax burden over

2 Years - 2011 & 2012.

If you really want less taxes later, set up your Roth IRA (Tax Reduction Account) today. You have until April 15 to contribute for 2009.

You can contact me in South Bend, IN through my website at www.helpmy401k.us. You can also follow my on Twitter at www.twitter.com/deanvoelker. I also host a weekly internet radio program, "Improving Your Financial Health" on Blog Talk Radio www.blogtalkradio.com/401kcoach.

Where's The Beef?

During the 1980’s there was a very popular commercial by Wendy’s. An elderly lady ordered a burger at a generic fast food counter. Upon seeing how puny and pathetic her tiny burger was, she grilled the sales clerk repeatedly - “Where’s the beef?” The commercial was a huge hit and “Where’s the beef?” was a well known catch phrase.

These days “Where’s the beef?” could easily be applied to the 401(k)s & IRAs of many people. In Daniel R. Solin’s book, “The Smartest 401(k) Book You’ll Ever Read”, he points out that “the typical twenty-something only invests 50.4% of his or her account in stock mutual funds.” You can’t keep up with inflation that way! Mr. Solin goes on to say that as we get older, that figure is also pretty timid. “The typical worker in their forties invests only 54.3% in stock funds.”

It doesn’t matter how old you are. Even people on the verge of retirement should be invested in stock mutual funds with a good part of their long term savings. After all, you could be retired for 20-30 years.

Stocks have been the only investment which has beaten inflation over the long term. And we NEED to prepare for inflation! Did you know that in 1989 (20 years ago), a loaf of bread costs an average of 0.67? And a postage stamp was just 0.25?

Mr. Solin also points out that “If you invested $1.00 in blue chip stocks in 1926, it would be worth $3077.33 today. That pencils out to a 10.42 average yearly return.”

Don’t be too fancy trying to pick the “right” fund. Look for mutual funds with long histories (10 years or longer) and low expenses. High management fees can really affect the return on your investment.

We will be looking at a few other ways to put some “Beef” back into your 401(k) in a future article.

You may contact me through my website at http://www.helpmy401k.us. You can also follow me on Twitter at http://www.twitter.com/deanvoelker. I also host a Weekly Internet Radio Broadcast "Improving Your Financial Health on Blog Talk Radio http://www.blogtalkradio.com/401kcoach
　

Digging A Hole

Do People still invest in CDs anymore? (Don’t answer that.) I know that they are the “investment” of choice for a number of folks and for banks. Let’s be honest though – Rates are TERRIBLE!!

As of today, Oct. 2, 2009, according to bankrate.com, the best rate on a 12 month CD in the USA is 2.05 at India Bank. For a 3 Year CD, the best available rate is 2.97 at Flagstar Bank.

When I called banks in the area, I actually had to keep a straight face when Diana told me about their “Special Rate” of 1.5% on a 13 month CD – only for current customers, though. Woo-Hoo!!

CDs do appeal to those who want “safety”, which means the FDIC Guarantee. That means your money is guaranteed by the Federal Deposit Insurance Corporation (i.e. the U.S. Government) OK, I feel MUCH BETTER about THAT!!

About a year ago, as part of the new financial legislation, the FDIC raised its limit on the maximum amount guaranteed from $100,000 to $250,000. I’m not sure exactly how that helps Joe Lunchbucket, but there was quite a bit of fuss made about it last October.

Dave Ramsey has often referred to CDs as “Certificates of Depression” and with good reason. Did you know that for 11 of the past 20 years, CDs actually have a “Real Return” that is Less Than 1%? Once you consider inflation and taxes on the interest, it is really about the same as burying your savings in the backyard.

As a retiree, wouldn’t you like to get a better return on your savings? What if you could have your nestegg generate income for you of at least 5% of the principal – and have that income paid to you for the rest of your life?

Often when I meet with clients, I learn about their situation and their goals and suggest an appropriate solution which will help them with their long term savings. Clients normally can see the value, but may get hung up on time frames with CD money. A common response may be “That sounds great. I’ve got a CD due in a couple of months. Call me back then, and we will get back together. I can’t touch it until then.” (The Early Withdrawal Penalty looms overhead like the ‘Grim Reaper’.)

So, being a good guy (I don’t want to see anyone lose money.) I mark the date on my calendar and follow up with them as they asked me to. Except now the situation has changed. The CD was renewed. OR the due date was different from what they thought. OR the dog needs braces. OR….. Bottom Line - EVERYONE (most of all the client) LOSES.

Soooo, this being October, I called 3 leading banks in South Bend to see just how “scary” the Early Withdrawal Penalty is. At Wells Fargo , I was told that the penalty would be forfeiting 6 months of interest on a 16 month CD and 3 months of interest on a 12 month. First Source Bank had the best rate locally on a CD – 1.5% on a 13 month CD, which also came with a penalty of 6 months of interest for early withdrawal. National City Bank (soon to be PNC) told me that you could lose 1/2 of your interest for the remainder of your term or 3 months of interest, whichever is greater.

OK, lets do the math. Let’s say you have a CD of $10,000. You have about 3 months left on the term. Let’s give you the BEST rate (a whopping 1.5%) and the stiffest penalty for taking it out early (6 months interest). $10,000 x .015 x .5 (6 months is 1/2 of a year) = a loss of $75.

But what do you gain? There are only 2 types of money – liquid cash (you need it NOW) and investment savings (you need it LATER). What if you invested it into something that gave you an average return of 5% or more? $10,000 x .05 = $500 after 1 year. Last time I checked, $500 – $75 = a GAIN of $425. And I want the best for my clients. So let’s leave the “scariness” to the little ghouls and goblins on Halloween.

Remember to invest for the long term!

You can always contact me through my website, http://www.helpmy401k.us/. You can also follow me on Twitter at www.twitter.com/deanvoelker My weekly Internet Radio Program is “Improving Your Financial Health” on Blog Talk Radio at http://www.blogtalkradio.com/401kcoach

How To Find A Financial Advisor in South Bend

So the stock market has rebounded from its low point in March, 2009. As we are wrapping up the 3rd Quarter of this year, I have been reflecting on a few thoughts.

Although we have seen some market recovery, for many of us, 2009 has been more challenging than 2008.

* As I talk with people, I am sensing more uncertainty over the future of the economy and

their plans for retirement.

* Unemployment continues to stay at a high level. Some regions are higher than others

nationally. The Michiana area, with its long ties to the RV and automotive industry, has

experienced higher unemployment than other areas.

* Most recently, according to today’s South Bend Tribune we learned that the Braking

Division of Robert Bosch Corp. will be sold to Akebono Braking Industry of Tokyo, Japan. This

puts more strain on our area’s economy and could result in additional job losses.

* Many of those I have talked with are continuing to look for ways to pinch pennies, cut

corners and make their money last.

The one thing which hasn’t changed is that people still need to live their lives in dignity when they finally retire. And with people living longer than they used to, that takes Savings & Planning. Costs of living will continue to rise as well.

If you are living in the South Bend, IN area, how do you find someone who can help you develop the right strategy for you to reach your goals in these trying times? There are several qualities you should look for when shopping for an advisor, no matter where you live.

* Is he/she a Good Listener? Can you share your dreams & goals with them?

Do they make you feel important? Do they ask you questions such as “What is
important about your savings to you?” and “What would you like your retirement to be
like?” If all they do is tell you about the latest stock tip, or if they do all the talking, it
may be time to look elsewhere.

* Do they have a reasonable amount of experience?

Advisors can sometimes fall into 2 groups. You may not want an advisor that the ink on
their license has not yet dried. Most of us if asked would prefer an experienced advisor,
although you may want to find out if they are accepting new clients, or is there a
minimum amount to invest. There is a great website, http://www.financialadvisormatch.com/.
You can plug in the area you live in and it can give unbiased information on advisors in
that area. Also you can look up an advisor by name.

Another great website to learn information is http://www.linkedin.com/ which is a
professional networking site. This can give you great information about your
Advisor, much like an on-line resume.

* Does he/she have the “heart of a teacher”?

This is a comment often made by financial talk radio show host, Dave Ramsey.

Dave has grown in popularity because people are getting back to basics and
want common sense advice. Most people want investing concepts made simple.
Can your advisor help make this ‘fun’ to learn? Or do they talk in technical jargon?

* Does he/she talk about WHY Investing is so important for all of us?

Can they look at your budget with you and help you determine what type of income
you’ll need at retirement? By helping you know how much income you need (after
Social Security and any other sources of income), you should have a much better idea
for how much you need to be saving - AND put together a plan to do it!

* Will they offer to review your 401(k) and other statements for FREE?

Some advisors are “fee” based and charge by the session or by the hour for advice.
Others work on commission and are only paid when investments are made. For most of
us, this is the fairest method. There will always be times you have a question, and
advice should be free. Depending on how much you invest, you may also qualify for
volume discounts, also known as “breakpoints”.

* Is your advisor independent, or do they work with a larger firm?

This is really a matter of personal preference and there are pros & cons to each. Also
there are great advisors with either side. Many people prefer an established name brand
firm, while others enjoy the personal attention they may get from an independent.
In some ways, you could compare working with an advisor to eating at a restaurant.
There are large national chains, and also individually owned local restaurants which
have found their own niche.

There was a great article earlier this month (Sept 14, 2009)
“Schwab Says Independent Advisers Attract Brokerage Firm Assets”
http://www.bloomberg.com/apps/news?pid=20603037&sid=aYTCv4DGu76Y
by Alexis Leondis of Bloomberg.com. The article shows the results of a survey done by
Charles Schwab about where clients are holding their assets. Ms. Leondis states,
“Almost 90% of the independent Registered Investment Advisors said that they gained
assets in the last 6 months and 45% of the assets came from so-called full-service
brokerage firms.”

Whether he/she works independently, or with a larger firm, your advisor can’t prevent
market declines. However, working with someone you are comfortable with should at
least help you to feel better about the future of your retirement.
Best wishes in your search!

Dean Voelker is an Independent Registered Investment Advisor in South Bend. He has
been licensed in Indiana and Michigan since 2003. You can follow Dean on Twitter, and also find his profile at Linked In and Financial Advisor Match. Dean also hosts a weekly Podcast program

on Blog Talk Radio, "Improving Your Financial Health". 　
　
　
　

Raising Arizona (and Arizona State and Others) - SOLUTIONS

In my first part on this, we looked at the problem of rising college costs. I believe we are at a point where students must “do their homework” before taking out a college loan. You want to be sure that you will get a good return on your investment and be able to pay it back easily. Ideally, you’d like to NOT take a loan at all. College is now a “business” decision, not a right.

I wouldn’t be a good advisor to bring up a problem without mentioning some viable solutions. There are enough good ideas, that I will talk about a few now and a few more in my next piece. None of these are magic – but if you apply these common sense ideas you’ll be better off than doing nothing. So here are some ways to Make College More Affordable.

* Saving in a 529 or UTMA plan (regularly)

The key word here is “regularly”. You can set up either of these plans as soon as your baby is born. (And I highly recommend that!) Did you know that if you were to save $100/month for 18 years (216 months) at an average return of 8%, you’d have saved $46,865? And $200/month over the same period = $93,730.

The 2 plans are different, but the idea is the same. The 529 http://en.wikipedia.org/wiki/529_planallows for tax-free withdrawals for college related expenses. Here in Indiana, since 2007, you can also get a 20% tax credit on any contributions to a 529 plan. Put in $5000 and you get $1000 back in the spring. Also, money can be transferred between family members. If it isn’t used for college, you are simply taxed on the growth at withdrawal.

UTMA (U -T – M – A ….you ain’t got no alibi, its UTMA!) OK, so I should give up on ‘cheerleading’ – but I couldn’t resist. This is the Uniform Transfer to Minors Act. A parent or guardian acts as a “custodian” for an account in the child’s name. http://www.fairmark.com/custacct/regret1.htm until the child reaches age 21. At that time, the money is turned over to the child. This is also counted in the child’s assets when you go to apply for financial aid later.

One advantage that someone may see in the UTMA is that it doesn’t matter if the money is used for college or not – although there are no tax benefits. They have full control over the money.
Personally, I prefer the 529 plan (for the tax benefits) and have set one up for both of my daughters. Whichever plan you choose, (talk to your advisor) the most important thing is to save something regularly.

Another note here – a common question I get is whether families should contribute to retirement or college.If you must choose – retirement savings trump college. ‘Nuff said.

* Part Time Work

Wow, real genius stuff here, Dean! I told you this wouldn’t be ‘magic’. But think about this. I believe students should learn the value of a dollar – and appreciate the value of education. When I was in High School, I cleaned tables and washed dishes for a local family restaurant. Part of my pay went into my ‘college’ account.

Currently minimum wage for “flipping burgers” is $7.25/hour. What if Johnny flipped burgers for 3 years at Mc Donald’s and put $400/month into his college savings? In 3 years, Johnny would have saved $14,400. Between this idea and the last one, we’ve put a good dent into Johnny’s college costs, and haven’t even gotten to financial aid yet.

Not able to save as much as we’ve talked about? Getting started ‘late’ with savings? What about putting off college for a year or 2, to build up savings. There is no law that says YOU MUST enter college immediately after high school. (I checked). In fact, chances are very good that Johnny (or Jill) may be more mature at 20 and get more from their college experience, having spent some time in the ”real world”.

I’d much rather see Johnny (or Jill) wait a bit and not be burdened with debt after they graduate. If they do this, they must focus on the idea that college is still in the plan - flipping burgers is only temporary.

* Go to School, Live at Home

Being in the Chamber, I often attend networking events. Recently I had a chance to visit IUSB (Indiana University at South Bend). I was very impressed with the quality of the facilities and was very surprised to learn that their enrollment exceeds 7500 students. http://www.iusb.edu/about/ (You may have heard there is another school here in South Bend).

People are saving quite a bit by having Johnny and Jill live at home while going to college.Because IUSB is affiliated with Indiana University, many programs are similar. For those not living in this area, I would be willing to wager that you have a similar local university nearby.

In the next article I will continue to explore some other ideas which can help make college more affordable.

You can contact me at www.helpmy401k.us and follow me on Twitter at www.twitter.com/deanvoelker.My weekly Blog Talk Radio program, “Improving Your Financial Health” is at http://www.blogtalkradio.com/401kcoach.

Raising Arizona (and Arizona State and Others)

OK, I know - cheap marketing gimmick to get you to read it. Sorry I don't have anything Nicholas Cage here. However this may be more valuable information than the movie.

Inflation affects everything - the price of bread, milk, gasoline etc. But one thing that seems to have gone up even more drastically is the cost of college. When I graduated from the University of Illinois in 1986, I left with about $3000 in student loans, which was easily repaid in a few years.

Today, student loans can reach $19,000 or more for a graduating senior from a public college.
http://encarta.msn.com/encnet/departments/financialaid/?article=averagestudentloans For
private schools that figure may be even higher.

Want to study law or medicine? For as long as I can remember (back to my finger painting days), those were the "good money" jobs. Both professions require years of post graduate education and loans can easily climb into the $100,000 range. Recently, I saw a young female med student on the news questioning President Obama about his healthcare proposal. Her concern was that at graduation, her total student debt would exceed $300,000 - yes that was not a typo. She wasn't sure if her future income would be sufficient to pay it back.

Really?? I think some thought should have gone into this before taking the loans. Its hard to blame either the President or his healthcare bill for that. Out of curiousity, I checked to see what a monthly payment on this would be. To pay off $300,000 in 12 years at 5% interest would require a monthly payment of $2775.00. Now you could take longer or the interest rate may be different, but this gives you an idea. Certainly its out of my ballpark.

Dave Ramsey always encourages his listeners to look at the opportunity cost of buying something - whether its a car, a flat screen TV, or even college. http://www.daveramsey.com/etc/cms/go_to_college_5788.htmlc

What that means is - even if you have the money, what other opportunities might you be missing? What else could the money be used for? When it comes to college, can you really afford it if it means loading yourself down with debt? What is your re-payment plan going to be?
How likely is it to get a career in your chosen field of study that will allow you to re-pay the loan?

I'm not anti-college. I just want us to think and ask questions first before jumping in.

In the early days of the United States, colleges such as Harvard and Yale were primarily for the wealthy. As the country grew and times changed, state schools offered a wider range of programs and more people were able to attend college.

"No qualified student who wants to go to college should be barred by lack of money. That has long been a great American goal. I propose that we achieve it now." Former President Richard M. Nixon said this in a special message to Congress in 1970. A lot has happened in the past 40 years. Are we back to a point where college is only for the wealthiest among us?

As a Financial Advisor, I will say that college does require financial planning and disciplined saving. Flipping burgers for the summer will only scratch the surface.

In my next part on this, we will look at some solutions which can help with college costs.

You can contact me at www.helpmy401k.us and follow me on Twitter at www.twitter.com/deanvoelker. You can also listen to me on Blog Talk Radio at www.blogtalkradio.com/401kcoach.

Most Magical Place

Having 2 very young daughters, I’ve become quite familiar with the Disney Channel, but its amazing to think of how large this company is and how it affects our lives in many ways, known world wide for family friendly products.

This is NOT an opinion or endorsement of Disney Stock - simply a few interesting facts about its history. The Walt Disney Company (DIS) has been part of the Dow Jones Industrial Average since May 6, 1991.

The Walt Disney Company started in 1923 in the rear of a small office occupied by Holly-Vermont Realty in Los Angeles. It was there that Walt Disney, and his brother Roy, produced a series of short live-action/animated films collectively called the ALICE COMEDIES. http://studioservices.go.com/disneystudios/history.html

“Mickey Mouse” which still serves as the logo and mascot for Disney was originated in 1928, as one of the short animated films.

In 1937, Disney's innovative first full length animated feature, SNOW WHITE AND THE SEVEN DWARFS, was released. Walt Disney saw a need to increase the size of his studio, and moved it to Burbank, CA. He was involved with all aspects of the design, even the animators chairs. More movies such as FANTASIA, BAMBI, CINDERELLA, ALICE IN WONDERLAND, and PETER PAN were produced in the 1940’s and 1950s.

In 1954, Walt Disney had a vision of creating a Family Theme Park. Disneyland was completed in July, 1955. Disney World Magic Kingdom opened in Orlando, FL in October, 1971. To this day, Disneyland and Disney World are the standard for cleanliness, customer service, and family fun in theme parks. Sadly Walt Disney died in 1966, and did not see the opening of Disney World.

Today, the Disney entertainment empire includes Disney movies, the ABC family of networks, ESPN, the E! Entertainment Network, and of course the Disney Channel. Disney has helped launch the acting and musical careers of such recent stars as Justin Timberlake, Britney Spears, Christina Aguilera, Miley Cyrus, and the Jonas Brothers to name a few.

Disney issued its first public stock on November 12,1957. http://corporate.disney.go.com/investors/stockinfo/quote_1957.pdf The stock closed on its first day at $13.88. It has split 7 times since then, the last split happened in 1998. http://corporate.disney.go.com/investors/split_history.html. One share of DIS stock over that time due to splits & spinoffs would be worth close to $6000 today.

For more information, you can contact me directly at http://www.helpmy401k.us and you may also follow me on Twitter at www.twitter.com/deanvoelker.
　
　
　

The Real Thing

Recently, I've been thinking about what else to write about. We've covered a wide range of topics - annuities, tax-free bonds, mutual funds, the importance of savings, and 401(k)s.

Although I am licensed to buy & sell individual common stock, I strongly believe that most people should own them within mutual funds. There are a number of companies that have some very interesting stories though. One of them is Coca-Cola.

This is NOT an opinion of Coca-Cola's stock, or an endorsement - merely some history, which I hope you will find as fascinating as I do.

According to Wikipedia,

http://en.wikipedia.org/wiki/Coca-Cola , the first Coca-Cola recipe was invented in a drugstore in Columbus, GA by John Pemberton in 1885. Pemberton developed it as a non-alcoholic version of French Wine Cola. The first sales were at Jacob's Pharmacy in Atlanta, GA on May 8, 1886. It was initially sold as a patent medicine for 5 cents a glass at soda fountains. Many people at that time believed that carbonated water was good for your health. Pemberton claimed Coca-Cola cured many diseases, including morphine addiction, headaches, and even impotence (the first "Viagra"?).

Asa Candler acquired a stake in Pemberton's company in 1887 and incorporated it as Coca-Cola Company in 1888. Due to some controversy in ownership, Candler incorpoarted a second time in 1892 as THE Coca-Cola Company. Coca-Cola was sold in bottles for the first time on March 12, 1894. The first outdoor wall advertisement was painted in 1894 as well in Cartersville, GA.

Although the company grew and even had a celebrity endorsement from baseball star and Georgia native, Ty Cobb http://www.tycobbfoundation.com/ common stock for Coca-Cola never went public until 1919. http://beginnersinvest.about.com/od/investmentbanking/a/aa073106a.htm

In 1919, you could buy one share of Coca-Cola (NYSE - KO) for about $40/share.

http://beginnersinvest.about.com/od/investmentbanking/a/aa073106a.htm

However, the price quickly fell to $19 due to a sugar shortage. http://query.nytimes.com/gst/abstract.html?res=990CEEDA1131E433A2575AC1A9619C946195D6CF Times were tough due to World War I. I'm certain many people gave up on this investment, and lost out. Had they stayed invested over the long term, that ONE SHARE of Coca-Cola stock, with splits and dividends reinvested is worth OVER $5 MILLION TODAY!!

http://beginnersinvest.about.com/od/investmentbanking/a/aa073106a.htm

Coca-Cola joined the Dow Jones Industrial Average on March 12, 1987.

http://www.encyclopedia.com/doc/1P2-1310943.html

For more information, please contact me at http://www.helpmy401k.us. You may also follow me on Twitter at http://www.twitter.com/deanvoelker.

Caught In The Web

One of the truly wonderful things about being an Independent Financial Advisor is that it has really allowed me to open myself up and explore new and different ways of connecting with prospective clients.

I'm sure you'd agree that the past couple of years have been difficult for investors, haven't they? Difficult because of disappointing returns on your savings. Even if you don't consider yourself a stock market investor, you are discouraged with interest rates on your CDs and savings accounts.

However a dangerous side effect to all of this has been that many people have scrapped solid investing principles. They have become like ships without a rudder, not knowing where to turn, and fearful of trusting anyone or anything. Times like these are when we really NEED professional advice more than ever, wouldn't you agree? So where do you find good sound professional advice? Whom do you trust?

For someone like myself, I'm learning that traditional marketing methods - cold calling, mailers, and print ads have been less effective than usual in reaching out to others and making connections. Have you noticed that over the years, TV and Radio Programs include MORE ads and LESS programs? http://www.nydailynews.com/archives/entertainment/2005/07/28/2005-07-28_kelley__too_many_ads_on_netw.html

Its like that old Wendy's ad (oops there is another one!) "Where's the Beef?"

We've become jaded and resistant to traditional marketing. Again, my belief is that people need professional advice NOW more than ever. For me, its also very important to connect with clients whom I can truly serve. A great client is one that we have established a bond of trust. They have shared their goals and dreams with me, and they are open-minded to my advice. When they hear my advice, they can easily see that I want to help them reach their goals, and my advice is truly in their best interests.

So how does one find "great clients" without traditional marketing methods that aren't effective?Using social media websites has been one solution. Writing this blog has been fun, and its allowed me to provide professional advice which anyone can use and benefit from.

Linked In (www.linkedin.com/in/dvoelker) is a great site to reinforce my professional side. It is my online resume and helps me to establish my credentials. I'm also very active in my local Chamber of Commerce (www.sjchamber.org). This provides some great networking opportunities.

Twitter (www.twitter.com/DeanVoelker) allows us to say anything to the whole world (in 140 characters or less). This is a good way to post notices for my blog or other articles of interest.

Facebook (www.facebook.com/dean.voelker) is an absolute blast, which has allowed me to show a more personal side, as well as professsional. And of course, all of these sites allow you to access my own website (www.helpmy401k.us), which serves as another excellent resource for retirement savings.

Most recently, at the suggestion of my friend, Brian, whom I've know since high school, I've also begun a weekly internet radio broadcast (www.blogtalkradio.com/401kcoach). Brian has extensive radio experience and has been very helpful in helping me get started. This show has been a lot of work, but also fun to do, and certainly helps to set me apart from other advisors.

I've always been a believer in giving. What goes around comes around. My faith in God tells me that we will get throught this challenging time, and be stronger for it. Someone recently told me that God is never in a recession. Have Faith!

Please contact me at www.helpmy401k.us if I may be of service to you in any way.

This Time Its Different - II

Recently I posted an article, titled “This Time It’s Different”. Most people when asked about the idea of investing in the market, have responded that “They are waiting to see what happens” and yes, “This Time It’s Different because…..”

If you read my previous article, “This Time It’s Different”, http://5reasonsyoushouldownaroth.blogspot.com/2009/07/this-time-its-different.html I referred to a study done by Hartford on the Recession of the mid 1970’s (1973 & 1974), arguably the closest parallel to our present economic situation. The low point in the market was Sept. 30, 1974. The Dow closed at 607.87 (not a misprint) This was down more than 40% from its high in 1972, when it crossed the 1000 mark for the first time. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×4124348

The stock market had gone through back-to-back negative years for the first time since the Great Depression.

We should set the stage a bit at this point. In 1972, we were still heavily involved in the Vietnam War, which was highly unpopular, and dragged on for several years. Also, in 1972, the Watergate scandal began. This resulted in the indictment and conviction of several of Nixon’s closest advisors, and ultimately in the resignation of the President himself, on August 9, 1974. http://en.wikipedia.org/wiki/Watergate_scandal

To make matters worse, the Oil Embargo http://en.wikipedia.org/wiki/1973_oil_crisis was put into effect by OPEC, which refused to ship oil to the US due to their support of Israel at that time. Unemployment had reached a high of 6.7% in 1974. http://www.nytimes.com/2008/12/06/business/economy/06jobs.html

So things in 1974 looked pretty bleak. I recently read a letter written by Jim Fullerton of the Capital Group to shareholders at that time(November 1974). Here are some highlights from Mr. Fullerton’s letter.

“Each economic, market, and financial crisis is different from previous ones. But in their very difference, there is commonality….. Today there are thoughtful, experienced, respected, economists, bankers, investors, and businessmen who can (tell) you why this time the economic problems are different; why this time things are going to get even worse – and hence, why this is NOT a good time to invest in common stocks, even though they may appear low…..This time is a whole new ball game.”

“In 1942 everybody knew it was a whole new ball game…..The Germans had overrun France. The British had been thrown out of Dunkirk. The Pacific Fleet had been disastrously crippled at Pearl Harbor. We had surrendered Bataan, and the British had surrendered Singapore. The U.S. was so ill-prepared for a war that……75% of our field artillery was equipped with horse-drawn, French 75mm guns.” (Mr. Fullerton served in WWII.)

“In April 1942, inflation was rampant…..On April 8, 1942, the lead article in the (Wall Street) Journal was: ‘Home Construction, Total far behind last year’s. Private Builders hardest hit.’…..Washington D.C. also considered more drastic rationing with price fixing, or still higher taxes as a means of filling the ‘inflationary gap’ between increased public buying power and the diminishing supply of consumer goods.”

“A leading stock market commentator wrote: ‘The market remains in the dark as to just what it has to discount. And as yet, the signs are still lacking that the market has reached permanently solid ground for a sustained reversal.”

“Yet on April 28, 1942, in that gloomy environment, in the midst of a war we were losing, faced with excess-profits taxes and wage and price controls, shortages of gasoline and rubber…..and with the virtual certainty…..that once the war was over, we’d face a post-war depression, the market turned around.”

“Now I’d like to close with this: ‘Some people say they want to wait for a clearer view of the future. But when the future is again clear, the present bargains will have vanished. In fact, does anyone think that today’s prices will prevail once full confidence has been restored?’ That comment was made by Dean Witter in May of 1932 – only a few weeks before the end of the worst bear market in history.”

“Have Courage! We have been here before – and we’ve survived and prospered.”

Jim Fullerton

As of today, July 23, 2009, the Dow is up nearly 200 points, crossing the 9000 mark for the first time this year. This is a gain of over 38% from its low point of 6547 on March 9, 2009. Yes, This Time It’s Different.

For more information, you may contact me at http://www.helpmy401k.us. You may also follow me on Twitter at www.twitter.com/deanvoelker.

This Time Its Different

Last year (2008), the Dow Jones Industrial Average fell about 34% (www.djindexes.com), then dropped ANOTHER 20% in the first 2 months of 2009.

It is estimated that investors accounts have declined in value by about $10 TRILLION DOLLARS TOTAL. http://www.businessweek.com/mediacenter/podcasts/cover_stories/covercast_03_05_09.htm

Severe recessions such as this one can test the resolve of even the most experienced investors.
It is easy to say "This time its different." Many people are still feeling that way.

However, it is important to keep in mind a few points.

* Financial decisions (any financial decisions) should not be based on emotion.
* Historically, after every past recession, the market has gone on to hit new highs.
* Declines in the market & economy, even our most severe ones, have been temporary.
* Since 1926, the Dow Jones has had TWICE AS MANY positive returns as negative ones.
Despite more than 12 recessions dating back to 1926, $1.00 invested in the Dow in 1926
would have been worth $2045.00 at the end of 2008.

The late Sir John Templeton, founder of Franklin Templeton Investments liked to say, "The Four most expensive words in the English Language are 'This time it's Different.' "

The National Bureau of Economic Research www.nber.com http://www.nber.org/cycles/
states that the United States has weathered a recession EVERY decade since the 1920's. https://financialprofessional.hartfordinvestor.com/planco/om/P7135.pdf - Page 4.

As painful as the recessions are, when we are experiencing one, they have always been short lived, about 11 months on average. It can be difficult to predict when one will end, and announcing the "end" may take a while. According to NBER, they have waited an average of 15 months before declaring an "end". This way they avoid confusion. If there is further economic turmoil, it can be linked to a new recession, rather than the old one.

While we are "waiting to see what will happen" rebounds are often quick and robust. Stocks tend to recover about 6 months before the economy does. According to Morningstar www.morningstar.com, stocks are referred to as a leading indicator. On average, stocks have returned about 25% from market lows to the "end of the recession".

Did you know that the Dow Jones has increased by nearly 30% since its low point on
March 9, 2009? Have you been "in" the whole time, or did you go to something "safe"?

3/9/2009 - 6547
7/1/2009 - 8504

"The most expensive words in the English Language are 'This time it's different'."
Sir John Templeton

If you went to cash, thinking you were being "smart", think again. Cash can actually slow your recovery, and make it much harder to get your savings back.

In a recent study, Hartford shows data from the recession of 1973-1974, which had been our most severe until the present one. The study (please contact me at www.helpmy401k.us for more information) shows 4 seperate scenarios, each starting with $100,000 invested in equities on Dec. 31, 1972.
(Equities are represented by the S & P 500 Index. Cash is represented by the 30 Day Treasury Bill Index.)

In the study, they wanted to see how long it would take to recover the original $100,000 for the Low Point in the Market (Sept. 30, 1974)

Investor A (stayed in Equities) - back to $100,000 in July 1976 (1.75 years)
Investor B (moved to cash for 6 months, starting 9/30/1974) (5.3 years, or Jan. 1980)
Investor C (moved to cash for 12 months, starting 9/30/1974) (also 5.3 years)
Investor D (moved to cash for 18 months, starting 9/30/1974) (6.2 years, or Nov. 1980)

Yogi Berra sometimes said, "Its deja vu all over again."

In a challenging economy such as this one, isn't this precisely when you need a financial professional working side by side with you?

For more information, please contact me at http://www.helpmy401k.us. You may also follow me on Twitter at www.twitter.com/deanvoelker.

Lets Say I Live To 100

People are living much longer these days. With modern medicine, technology, and taking better care of ourselves, reaching 100 is much more common than it used to be. According to a Wall Street Journal article from April 14, 2008, Hallmark sold over 85,000 “Happy 100th Birthday”
cards in 2007. And that is just Hallmark. Currently the average life expectancy for a Female is 87 years, and 85 years for a Male.

Living that long is great, but it can also raise concerns about your savings. What are you doing to make sure your money lasts that long also? Can your savings generate income for the rest of your life, even if you live to 100 or beyond?

Also, how prepared are you to keep up with rising costs? Did you know that 20 years ago (1989), the cost of a postage stamp was 0.25 and a gallon of gas was about 0.97? Compare those prices with today. A stamp is 0.44 and a gallon of gas…..well it fluctuates more than the stock market. As of today, it is about 2.45, and last summer had peaked well over 4.00.

If you are retired for 20 years or more, costs will go up. How can your savings handle that? Can you give yourself “Pay Raises” and still make it last?

One last question for consideration - this past year was one of the most challenging ever for investors. How can you grow your income, make your money last, and do it “Safely”?

Here are some tips that may help answer these burning questions.

* Talk with your advisor. And if you don’t have a strong relationship with your advisor, or
you don’t feel they have your best interests in mind, find a new one. Your advisor needs to be a
great listener, and your partner - NOT just a stockbroker. Tell them what your needs are.
What is most important to you about your money?

* Be Open Minded. If your money is going to last for your lifetime, CDs aren’t going to get it
done. Especially at the current bank rates today. There are other ways you can invest, and
let your money grow over time safely. A good advisor should learn as much about you as
they are able - just like a doctor who will learn your history before prescribing anything.

“Whatever you fear most has no power - it is your fear that has the power.”
Oprah Winfrey

* Be Diversified. I’ve always thought of “diversification” like clothes in your closet.
You need to have clothing for summer, winter, fall, casual wear, dressing up,
working in the yard…..ALL occasions and ALL types of weather. Investing needs to be
the same. Would you like less risk? The best way to do that is by diversifying.

“Money, you should pardon the expression, is a little bit like manure. It doesn’t
do any good unless it’s spread around, encouraging young things to grow.”
Barbra Streisand

For more information on how to make your money last to 100 or beyond, please contact me at
www.helpmy401k.us. You may also follow me on Twitter at www.twitter.com/deanvoelker.

Income For Life

One of my clients once told me that the biggest lesson he learned in retirement was this. You don't retire on a Lump Sum of Money. Rather, you retire on the INCOME which the Lump Sum of Money can create. Think about that statement for a bit. Let it sink in. In fact, let me repeat it, because this is what retirement means. You don't retire on a Lump Sum of Money. Rather, you retire on the INCOME which the Lump Sum of Money can create. You spend your working career saving, accumulating, investing, and building a "lump sum". At some point, you will want to use it for income.

Soooo.....what exactly is a "Lump Sum of Money"? Is it $100,000? $300,000? How about $1,000,000? More than that?

The best way to answer that is that the amouth may be different for everyone. However, we can help you to narrow down what you amount should be at retirement. Here are 4 steps.

1. Determine your monthly budget. You don't want any debt at retirement. Leave plenty of
room for "Miscellaneous" expenses - travel, kids, hobbies. If you aren't working, you are
spending.

2. Determine your Social Security Income amount. There are 3 categories for Social
Security income - Reduced Benefit (usually age 62), Full Benefit (usually age 66), and
Enhanced Benefit (age 70). As the terms suggest, if you take Social Security at an earlier age,
you are "stuck" with a smaller amount of income - and "Grounded For Life." There has also
been a growing movement for proposed changes in Social Security in order to make the
money last longer. At least one of those changes includes pushing back the age for Full
Retirement Benefits, which would force most of us to work longer. Whatever benefit amount
you select, you need to know the amount so it can be applied to your budget.

3. Do you have other sources of income? These may include rental property, part time
work, or anything else which generates income.

4. Look at your budget again, and deduct your budgeted expenses from your total
income.
This sounds simple - and it is- however you would be surprised at how many people don't do
it. Do you have enough income to cover your expenses? Is there money to do "special" things
you want to do in retirement? Travel? Golf when you want?

If there is a "gap", how much is the gap? Let's assume there is a gap of $800/month. $800 x
12 months = $9600/year. Now let's take $9600 and divide it by .04. (4% is a reasonably
"safe" amount to withdraw from a lump sum.) $9600/.04 = $240,000. Now we have a "lump
sum" goal of saving for retirement. This can be saved in your 401(k), IRA, Roth IRA, or
ordinary savings. Do not retire until you have this amount saved to cover your additional
budgeted expenses.

In a future article we will look further at annuities and how they can provide income for life. We also need to consider the impact of inflation on your savings.

For more income on annuities or on budgeting, please contact me at http://www.helpmy401k.us. You may also follow me on Twitter at www.twitter.com/deanvoelker

Using Protection?

That should have gotten your attention!

In my last post, I discussed some basics of annuities. Annuities can offer some protection for your savings which other investments, such as stocks or mutual funds do not. Keep in mind that the value of your account may still go down.

Lets talk about a few protections which you may get from an annuity.

GUARANTEED DEATH BENEFIT - The first one, common to most annuities, is the Guranteed Death Benefit. What is means is that if you invested a sum of money into an annuity, your beneficiaries will receive at least that amount (minus any income or withdrawals taken).

For example, lets say that John puts $100,000 into a variable annuity. The market goes south, and the value of the annuity dips to $80,000, when John dies. If he has not taken income, his heirs will get the full $100,000. Now lets say that the market goes up, and the account grows to $120,000. When John dies, his heirs get $120,000. In this case, it would not matter if he has taken income - if the account value has grown from his original investment, his heirs get the account value.

GUARANTEED GROWTH - There are a lot of different insurance brokers who provide annuities, and not all of them offer this. Whichever provider you use, I would certainly recommend using a large, stable, reputable (Name Brand) company. The protection is only as good as the insurance company backing it.

I have become familiar with Jackson National Life, one of the largest annuity providers in the US. They have an AA rating in Financial Strength from Fitch & Standard & Poors, which is Very Strong. What that means to a client is that they should feel secure with the protections they are getting on their money. (Source: Jackson Life http://www.jackson.com/)

Jackson offers a Fixed Account Option on its annuities. The Fixed Option offers a 1 Year Interest Rate, which is reset each year, but is never less than 3% (Special Benefit Value). 3% actually looks pretty good right now, doesn't it?

Lets say that John starts out at age 55 by investing his $100,000 in a Fixed Index Annuity. Assuming that the annuity value has grown by 3% per year, by age 65 (10 years) it will be worth $134,392 minimum. (Source: Jackson Ascender Plus Select Brochure, http://www.jackson.com/).

A Variable Annuity should provide more growth over time, however its performance is related to the stock market. The Standard & Poors Index, also referred to as the S & P 500 represents the largest 500 companies in the USA. It has been the measuring stick for comparing investment performance.

If John had been investing his $100,000 in a Variable Annuity using the S & P Index, Jackson lets you have a "win-win". If the market goes up, the account will also go up. If the market goes down, the account value stays the same. This would have been particularly valuable in 2008 when the S & P declined by 42.9%. The value in John's account would have been the same. Had John kept his money invested over the last 10 years, he would have $145,825 today. (Source: Jackson Ascender Plus Select Brochure, http://www.jackson.com/)

I will look at Guaranteed Income Options in another segment. I will also look at additional charges for these features (where they apply). Please keep in mind that an annuity is not for everyone. You should consult with your advisor to determine if an annuity is right for you.

For more information, you may contact me at http://www.helpmy401k.us/. You may also follow me on Twitter at http://twitter.com/DeanVoelker .