3 Things 1-10
1/10/2022 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One Get Started Or Keep At It It’s an election year and we'll soon be inundated with ads featuring politicians who will be trying to convince us that if we only vote for them everything about our lives will be better. But history and our own experiences both tell us that politicians, no matter the party, aren’t as interested in, or capable of, improving our lives as they would have us believe. The reality is that no matter who we vote for, we as individuals bear the responsibility for improving our circumstances. That said, here is some data on the circumstances we find ourselves in with respect to our retirement readiness: Median and average household retirement savings by age group compiled by Vanguard: Ages 65-74 Average $426,000 Median $164,000 Ages 55-64 Average $408,000 Median $134,000 Ages 45-54 Average $254,000 Median $100,000 Ages 34-44 Average $131,000 Median $60,000 Under 35 Average $30,000 Median $13,000 While it might be interesting to know where you are relative to others in your cohort, you shouldn't get overly concerned with that perspective. Instead, consider where you are relative to where you would like to be and get after it. Contact us if you’d like some help
Thing Two Why Buy Life Insurance There's an old saying in the life insurance business, "Buy term, and invest the rest." The thought behind the phrase is pretty simple. Insurance is for mitigating risk. Investing is for creating a return on invested capital. Don't mix the two unnecessarily. If you need to buy insurance, you should buy the least expensive kind (that meets your needs) and only buy it for the amount of time that you've determined you need it. Then, if you have money left over, you should invest it in a manner that minimizes your expenses and is consistent with your tolerance for risk. But how do you know if you need life insurance? Take a look at the eight items listed below. If you can relate to any one of them, you likely need to give life insurance further consideration. 1 - To protect your family in case you die prematurely. This is the most basic reason for purchasing life insurance. People die unexpectedly all the time. If that person happens to be the primary breadwinner in a family, that death might create undue financial hardships in terms of liabilities that persist after death like mortgages, car payments, etc,. And even if that person isn't the primary breadwinner, the untimely death might create financial issues where none existed previously like childcare, homemaking, and even the loss of any secondary income. Income replacement properly summarizes reason number one for purchasing insurance. 2 - To create an estate. You might determine that you will not be able to leave behind the type of estate that you would like to. You can use life insurance to "create" an estate to pass on, provided you can pay the premiums. The earlier you make this decision the better as age and health sell life insurance. 3 - To protect an estate. When you die, your heirs will have to pay taxes on what you pass to them. If you would like to keep the government from taking too much of what you had planned to leave your loved ones, you can buy insurance for the purpose of paying the estate taxes, thereby relieving your heirs of that burden. 4 - To guarantee insurability. Many young parents (and grandparents) who are worried about potential health issues purchase insurance on their young children to establish insurability while they're young and inherently more insurable. The idea is that as they get older they can always increase the coverage amounts of existing policies without providing evidence of insurability through health exams. That means that if they develop health conditions later in life, they're already covered. 5- To create a cash value savings account. With anything other than a term policy, there is the opportunity to build up a cash value by routinely paying the premiums. This is a kind of forced saving account. It's not the best way to save, but it's an option. 6 - To protect a business if a key person dies. Business owners will often purchase key person insurance policies to protect themselves against the untimely demise of a key employee. The specific knowledge, skills, and abilities of the deceased individual are typically not easily replaced, but the proceeds from key-person policy can help buy the business time to rebuild the lost knowledge by providing capital for additional resources and training. 7- To protect remaining partners in a business if one partner dies. There are cases where one partner dies and it would be impractical, for any number of reasons, for the surviving partner to continue in the business with any of the deceased partner's heirs. Policies known in the business as buy-sell agreements allow for this by making funds available upon a partner's death to "buy out" the heir's interest in the business. 8 - As a part of an employee's compensation package. There are times when a business buys life insurance on an employee, who is usually an executive, as a fringe benefit to that employee. .
Thing Three Just A Thought "The freedom to make my own mistakes is what I have enjoyed most about my life." - George R.R. Martin