According to the most recent Principal Financial Well-Being Index, 45% of American adult workers and 32% of retirees surveyed indicated their biggest financial planning regret was starting to save too late for retirement. Twenty-seven percent of workers and 22% of retirees said they regretted saving too little in their early working years. Nine percent of workers and 10% of retirees said they regretted managing their own financial planning. Harris Interactive conducted the index, which surveyed American adult workers at growing businesses with 10 to 1,000 employees.

When asked the most important lesson you can learn from financial planning assistance, 20% of workers and 19% of retirees said diversifying their portfolio. Another 16% of workers and 10% of retirees said investing the maximum in 401(k)/403(b) plans, IRAs or non-qualified plans was the best advice they’ve received.

The researchers recommended that Americans should be saving up to 15% of their paychecks during their working years in order to replace 85% of their income in retirement. Yet only 8% of the workers surveyed who participate in their company’s 401(k) plan are saving this amount. Twenty-one percent of those surveyed who are eligible to participate in their company’s 401(k) plan do not currently participate at all. Forty-two percent of those questioned said they are saving between 5% and 10% of their paychecks.

When it comes to thinking ahead to retirement, there are many financial issues that disturb Americans. More than 43% of U.S. adult workers, and 26% of retirees, said the ability to afford good medical care is a concern. Forty-two percent of those surveyed responded that being able to enjoy the same quality of life they live now was their greatest concern. Thirty-eight percent of adult workers responded that being able to afford basic necessities in retirement was their chief worry. However, the issue cited most often by retirees is the rising cost of inflation reducing purchasing power. But when asked if they had a plan to transition retirement savings into a steady income stream in retirement, only 51% of retirees had one.

The researchers noted that taking the time to plan for the retirement transition, with help from a financial professional, can mean the difference between achieving financial well-being in retirement or not. Why not contact Al Gibbons today to discuss a retirement transition plan that will help you maintain your quality of life when you retire?

Albert E. Gibbons

1288 Valley Forge Road, #53

Phoenixville, PA 19460

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This is an interesting article tucked away in today’s WSJ (click on the link below).  The team that helped establish AIG as a leader in the life settlement marketplace, has formed its own new company – “’There is a void in the market that we are looking to fill as institutional investors look for returns that aren’t volatile or closely linked to traditional markets….’Currently, investors are unsure of how to invest or who to trust.’”

What is so interesting to me is how much the life insurance industry has actually learned from life settlement promoters (bad and/or even fraudulent practices aside).  For example, I’ve written many times that high net worth clients are purchasing life insurance for pretty compelling internal rates of return (IRRs) on death benefit at life expectancy.  Additionally, as mentioned in the article, the returns can be guaranteed at any given age, are predictable, and non-correlated to the stock market.  Worth pondering…if life insurance death benefit can be considered a valuable investment by outside investors, might it not also be a valuable investment for clients?  I’m dealing with sophisticated clients everyday who are considering the purchase of life insurance because they want it, not because they need it.

http://online.wsj.com/article_email/SB10001424052702303404704577309840190718420-lMyQjAxMTAyMDIwOTEyNDkyWj.html?mod=wsj_share_email

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Albert E. Gibbons

AEG Financial Services

“Always do right.  This will gratify some people and will astonish the rest.”  (Mark Twain)

Albert E. Gibbons

1288 Valley Forge Road, #53

Phoenixville, PA 19460

Email Us

Website

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“Integrity without knowledge is weak and useless.  Knowledge without integrity is dangerous and dreadful.” ~ Samuel Johnson

 An essential quality of an outstanding advisor. To hear more on this quote Please listen to my recording about “The Ethics of Making Professional Referrals”

Click this link  Al Gibbons Recording!

Albert E. Gibbons

1288 Valley Forge Road, #53

Phoenixville, PA 19460

Email Us

Website

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HAVE YOU EVER BEEN UNSURE OR CONFUSED ABOUT GIVING OR RECEIVING A REFERRAL?

Please listen to my recording on the article that I published, “The Ethics of Making Professional Referrals”.

The question here is: On what basis and using what criteria…  should a professional refer other professionals.

AEG Financial Services

Deborah Jacobs, the author of this Forbes article, always does an excellent job explaining things that clients sometimes find difficult to understand.  You might want to share this article with clients who are or should be considering GRATs.  Enjoy your day!

http://www.forbes.com/sites/deborahljacobs/2012/03/07/facebook-billionaires-shifted-more-than-200-million-gift-tax-free/

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Al, in working with you I have found you to be, thorough, organized, concise, responsive and timely. You also are knowledgeable and communicate that knowledge well so that it becomes understandable. I would also consider you more business-like / professional than “folksy.”

As to whether that makes you unique, it is when you are compared to some folk I have had the “pleasure” of working with, but when I choose the people to work with; I look for these characteristics in all of them especially if we are to continue working together.

~ Estate Planning Professional

Albert E. Gibbons

AEG Financial Services

11 Minutes with Al Gibbons – “The 80/20 Estate Plan”

Follow the link to watch the video.

https://algibbons.com/media/video/8020.wmv

The Manhatten United States Attorney and the Federal Bureau of Investigation have charged three insurance agents with a $100 million fraud scheme involving stranger-owned life insurance or STOLI.

Typically, people buying a life insurance policy have some relationship to the person being insured. In contrast, with STOLI arrangements, a policy is bought with the intent to resell it to a third-party investor. Many insurance companies won’t allow this, and in varying degrees state laws prohibit it.

In an indictment announced Feb. 16, federal authorities accuse three agents–Michael Binday, 48, the president and owner of a Scarsdale, N.Y. insurance agency; James Kevin Kergil, 57, an insurance agent based in Peekskill, N.Y.; and Mark Resnick, 56, an insurance agent based in Orlando, FL–of conspiring to defraud major insurance companies into issuing life insurance policies to straw buyers, when the true owners of the policies were third-party investors and financiers. All three agents have been arrested.

The insurance companies referred to in the case are: American General Life Companies; Lincoln Financial Group; Security Mutual insurance Company and Union Central Life Insurance Company.

The policies involved were universal life policies, which combine an investment component with a death benefit–an amount paid to beneficiaries when the insured dies. Life insurance companies routinely take the position that the death benefit should correspond to the amount of money that the insured’s dependents would need to replace lost earnings or to cover estate taxes and other expenses. When issuing the policies they rely on information provided about the applicant’s financial condition and income.

In a statement announcing the indictment, Manhattan U.S. Attorney Preet Bharara said that the three insurance agents “concocted an elaborate scheme, using straw buyers and third-party agents, to deceive life insurance providers into issuing policies to unintended beneficiaries. And when their scheme was unraveling, they allegedly sought to throw investigators off the trail by destroying documents and telling other individuals to lie. Their alleged actions victimized the companies that issued these policies, and hurt the grand jury process.”

According to the indictment, the agents recruited elderly clients of modest means to serve as straw buyers and apply for universal life insurance policies. In exchange, the agents would pay them when the policies were resold.

Meanwhile, the agents did the necessary paperwork, misrepresenting key elements of the application. For example, they stated that the straw buyers were worth millions, although almost all of them had a net worth of well under $1 million. They shifted money around to make it look like the buyers were paying the premium themselves, while in fact it was coming from third-party investors.

While the applications stated that the buyers did not intend to sell their policies after they were issued, the agents had already made arrangements to sell them on the secondary market. All this generated hundreds of millions of dollars worth of commissions for the agents.

As the indictment notes, insurance fraud hurts companies because it leaves them holding the bag in a bad business deal. And that indirectly hurts consumers because companies must raise their premiums to make up for lost profits.

The indictment describes misrepresentations at every turn, in some cases starting with the system for recruiting straw buyers. Resnick, one of the agents, advertised burial insurance and then persuaded consumers who responded to the ad to buy life insurance instead.