Monmouth's Ask the Doctor November-December 2018


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2. Lawsuit- With over 80% of the world’s attorneys residing in the U.S., we live in a sue happy society. Most Americans would have trouble affording the legal fees on either side of a case, but without proper protection, the los- ing party will certainly realize financial despair. Liability protection on Auto and Homeowner’s insurance are a crit- ical line of defense. An umbrella policy can go above and beyond these lines of coverage to add more security. Qual- ified retirement accounts, assets held in certain trusts, and real estate titled by “tenancy by the entirety” are a few other ways to further shield assets. Small business owners must pay special attention to how their business is structured to limit liability. Lastly, always document disputes/complaints and rely on contracts, NOT handshakes. 3. Taxes- Uncle Sam will always be there to collect his share… federal income taxes, state income taxes, city taxes, property taxes, capital gains taxes, payroll taxes, sales taxes, gas taxes, etc. Working with qualified advisors and CPA’s can help limit this burden. A commonly overlooked issue is the funding of pre-tax retirement accounts to chase current year tax deductions. This is not a tax-savings, but rather a compounding tax-postponement. Retirees often forget or downplay the effect income taxes will have on their retirement distributions. Roth options, post-tax in- vestment accounts, and Cash Value Life Insurance all pro- vide a future tax hedge. 4. Market Volatility- The 54% crash in the Dow Jones Industrial Average was only a decade ago, but since then our memory has been blurred by the greatest bull market in history. Much of investing is based on timing. A big loss can become devastating if it occurs during a distri- bution period. Active management of portfolios and diver- sification, particularly after the accumulation phase, is vital. Certain annuities can also provide security and de-risking strategies in retirement years. 5. Healthcare- Health insurance premiums contin- ue to skyrocket, and deductibles keep going up. This added exposure can be planned for by utilizing a Health Savings Account (HSA), which allows tax-deductible contributions and tax-free withdrawals for qualifying expenses. In the same vein, Long-Term Care provides a huge what-if for re- tirement planning. This issue is so variable and potentially expensive it escapes the scope of this article, but neverthe- less requires attention. In closing, before you give your financial plan the bul- letproof stamp of approval, be sure to address each one of these threats on an ongoing basis.

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