Financial Strategies Just for Women Life Insurance and annuity products are issued by AXA Equitable Life Insurance Company...
“ You cannot escape the responsibility of tomorrow by evading it today.” Abraham Lincoln
Main Menu Funding Your Child's Education Having a Plan Helps Concerns in Widowhood Concerns in Divorce Estate Planning For...
Funding Your Child’s Education GE-45090 (8/08)
Source: The College Board; Trends in College Pricing 2007 Today’s Costs Average Published Tuition and Fee and Room and Boa...
Source: The College Board; Education Pays 2007 <ul><li>People with a bachelor’s degree generally earn an average of 62% mo...
<ul><li>What type of college or university? </li></ul><ul><li>How many years? </li></ul><ul><li>What expenses do you plan ...
<ul><li>Grants </li></ul><ul><ul><li>Federal Pell Grant </li></ul></ul><ul><li>Scholarships </li></ul><ul><ul><li>Academic...
<ul><li>Coverdell Savings Accounts </li></ul><ul><ul><li>Allows for contributions up to $2,000/year </li></ul></ul><ul><ul...
<ul><li>Section 529 Plans </li></ul><ul><ul><li>Saving through a special state education program </li></ul></ul><ul><ul><l...
Having a Plan Helps GE-45090 (8/08)
<ul><li>Determining how much you’ll need to maintain desired lifestyle after retiring </li></ul><ul><li>Knowing what you n...
<ul><li>On average, women live longer than men:  80 years for women –– 75 years for men as of 2007* </li></ul><ul><li>Reti...
Source: 2006 Retirement Confidence Survey—Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. <ul>...
<ul><li>Who’s Helping You to Plan for Retirement? </li></ul><ul><li>Started saving for retirement  57.78% </li></ul><ul><l...
Concerns in Widowhood GE-45090 (8/08)
Source: U.S. Census Bureau, Current Population Survey, 2006 Annual Social and Economic Supplement Widow Population in the ...
<ul><li>Q: What to do first? </li></ul><ul><li>A: Find the important papers. </li></ul><ul><li>Death Certificate </li></ul...
<ul><li>…  more documents </li></ul><ul><li>Dependent Children’s Birth Certificates  & Social Security Numbers </li></ul><...
In the following months, you will need to update  or change ownership, title or beneficiaries of:   <ul><li>Insurance Poli...
In 2006, 42.4 % of all older women were widows or 8.6 million widows. Source:  “A Profile of Older Americans: 2007.” Admin...
<ul><li>28.3% of female households with no husband present were below poverty in 2006. </li></ul>Source: U.S. Census Burea...
Q: What should I do now, today? A: Plan ahead!   <ul><li>Set up an “Important Papers” file </li></ul><ul><li>Open your own...
Concerns in Divorce
Source: Press Office Fact Sheets, “Social Security  Is Important to Women,” September  2007.  www.ssa.gov. <ul><li>$859 ––...
Source:Press Office Fact Sheets, “Social Security Is Important to Women,” October 2007. www.ssa.gov. <ul><li>Must have bee...
For more complete information or answers to other questions,  contact the Social Security Administration at: www.SSA.com Y...
<ul><li>Make sure all payments are made on time </li></ul><ul><li>Learn your rights regarding property distribution </li><...
<ul><li>Statements or Documents for: </li></ul><ul><li>All Accounts </li></ul><ul><li>Employee/Group Insurance Benefits </...
<ul><li>Domestic Records: </li></ul><ul><li>Of Other Received Income </li></ul><ul><li>Of Monthly Living Expenses </li></u...
Estate Planning
<ul><li>Proper estate planning can help: </li></ul><ul><li>Increase the amount of assets transferred to beneficiaries; </l...
<ul><li>The estate planning process involves: </li></ul><ul><li>Assessing the current value and nature of your assets (inc...
<ul><li>If you die without a will, the Probate Court: </li></ul><ul><li>Names an executor to distribute your assets; </li>...
<ul><li>By having a will, you can: </li></ul><ul><li>Name your executor to distribute your assets; </li></ul><ul><li>Desig...
<ul><li>Durable Power of Attorney </li></ul><ul><li>Medical Power of Attorney (a.k.a Health Care Proxy) </li></ul><ul><li>...
A legal relationship created when an owner of a property (the grantor) transfers property to another person (the trustee) ...
A trust established by the terms of a will to become effective upon probate of the will.  Testamentary Trusts
<ul><li>There are several potential benefits to a Trust.  A Trust can: </li></ul><ul><li>Provide management of assets for ...
<ul><ul><li>Gift Tax </li></ul></ul><ul><ul><li>Estate Tax </li></ul></ul><ul><ul><li>Unlimited Charitable Deduction </li>...
How does the Unified Credit work? Total Estate $5,000,000 Surviving Spouse $5,000,000 Federal  Estate Tax  $1,635,000 Net ...
Q: What is it? A: A Traditional IRA or Roth IRA that is inherited from a  deceased owner. Q. Why set one up? A: If an IRA ...
<ul><li>Q: What are the benefits? </li></ul><ul><li>A: An Inherited IRA: </li></ul><ul><li>Can provide an income stream th...
<ul><li>Some things to keep in mind: </li></ul><ul><li>Estate and income taxes </li></ul><ul><li>Annuities and the Interna...
For the Executive GE-45090 (8/08)
<ul><li>Pay living expenses while you are unable to work </li></ul><ul><li>Pay for training or other assistance </li></ul>...
<ul><li>Employee Benefits </li></ul><ul><li>Social Security Benefits </li></ul><ul><li>Other Resources </li></ul>But First...
<ul><li>Definition of disability </li></ul><ul><li>Amount of income </li></ul><ul><li>Income taxes </li></ul><ul><li>Premi...
Many variables. Different needs. GE-45090 (8/08)
The Pension Predicament: The Single Life Option or The Joint and Survivor Option GE-45090 (8/08)
<ul><li>If one spouse dies shortly after retirement, the surviving  spouse faces a lifetime of reduced pension benefits. <...
Purchase a permanent life insurance policy on the life of the participant prior to or at retirement designed to provide th...
<ul><li>If you die, your spouse’s income can  continue in the form of life insurance proceeds* that can be set up as an an...
<ul><li>Irrevocable choice </li></ul><ul><li>Spousal consent </li></ul><ul><li>Spouse’s health care benefits </li></ul><ul...
<ul><li>Women who usually worked full time had median earnings of $618 per week, or 79.8% of the $774 median for men.  </l...
<ul><li>Part or all of contributions can be pre-tax </li></ul><ul><li>Investments grow tax-deferred </li></ul><ul><li>Comp...
<ul><li>Learn as much as you can about the plan </li></ul><ul><li>Invest pre-tax </li></ul><ul><li>Use the over 50 catch-u...
<ul><li>Watch your rate of return </li></ul><ul><li>Don’t put all of your eggs in one basket </li></ul>Invest for the Futu...
Q. What is it? A. A promise by an employer to pay an executive   a benefit in the future. Deferred Compensation GE-45090 (...
<ul><li>Benefit Maximums </li></ul><ul><ul><li>2008 Defined Benefit Maximum: $185,000 </li></ul></ul><ul><ul><li>2008 Defi...
70% of Final Compensation ? = Company Pension + Social Security + 401(k) Income Retirement Income Resources GE-45090 (8/08)
<ul><li>Increased Financial Independence </li></ul><ul><ul><li>Retirement Benefits </li></ul></ul><ul><ul><li>Death or Dis...
For the Business Owner
The process of defining what will happen to a business owner’s stock at his or her death, disability or retirement. What I...
<ul><li>No disruption or sale </li></ul><ul><li>Avoid unwanted ownership </li></ul><ul><li>Establish a fair price </li></u...
<ul><li>A contract between two or more owners of   a business </li></ul><ul><li>Sets out the conditions under which transf...
<ul><li>Cross-Purchase Agreement </li></ul><ul><li>Each stockholder owns and is a beneficiary of a policy on the life of e...
<ul><ul><ul><ul><ul><li>Disruption </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Loss of profits </li></ul></ul></...
<ul><ul><li>To financially protect your company from the adverse impact of the sudden loss of a key employee. </li></ul></...
<ul><ul><li>Your company purchases a permanent life   insurance policy using a key employee as the  insured; </li></ul></u...
Does Your Company  Need Key Person Insurance?
In Conclusion “ You have to have confidence in your ability, And then be tough enough to follow through.”   Rosalynn Carter
Please be advised that this presentation is not intended as legal or tax advice. Accordingly, any tax information provided...
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Financial Strategies Just For Women

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  • Welcome to “Financial Strategies Just for Women.” Thank you for taking the time out of your busy schedules to join us this evening. We plan to cover a range of topics that all touch upon a woman’s financial health and well-being. By attending this evening’s discussion, you are taking an active role in your financial future. Whether you are a business owner, a career executive or a full-time mom, there are financial issues you, at the least, should be aware of and stay on top of or even perhaps take charge of.
  • Financial Strategies Just For Women

    1. 1. Financial Strategies Just for Women Life Insurance and annuity products are issued by AXA Equitable Life Insurance Company (New York, NY). Variable products are co-distributed by AXA Advisors, LLC and AXA Distributors, LLC. AXA Equitable, AXA Advisors and AXA Distributors are affiliated companies and do not provide tax or legal advice.
    2. 2. “ You cannot escape the responsibility of tomorrow by evading it today.” Abraham Lincoln
    3. 3. Main Menu Funding Your Child's Education Having a Plan Helps Concerns in Widowhood Concerns in Divorce Estate Planning For the Executive For the Business Owner Conclusion
    4. 4. Funding Your Child’s Education GE-45090 (8/08)
    5. 5. Source: The College Board; Trends in College Pricing 2007 Today’s Costs Average Published Tuition and Fee and Room and Board Charges at Four-Year Institutions, Five-Year Intervals, 1977-78 to 2007-08 (Enrollment-Weighted) GE-45090 (8/08)
    6. 6. Source: The College Board; Education Pays 2007 <ul><li>People with a bachelor’s degree generally earn an average of 62% more than people with a high school education. </li></ul><ul><li>Those with master’s degrees earned almost twice as much, and those with professional degrees earned over three times as much per year as high school graduates. </li></ul><ul><li>Over a lifetime, the difference in earning potential between a high school diploma and a college degree is more than $800,000. For those who earn higher degrees, the lifetime earnings premium is over $1,000,000. </li></ul>Education Does Matter GE-45090 (8/08)
    7. 7. <ul><li>What type of college or university? </li></ul><ul><li>How many years? </li></ul><ul><li>What expenses do you plan to cover? </li></ul><ul><li>What are any expected sources of funding? </li></ul><ul><li>To what extent will education planning supercede other financial goals? </li></ul><ul><li>In the event of death or disability, do any assumptions change? </li></ul>What to Consider: Define the Goal
    8. 8. <ul><li>Grants </li></ul><ul><ul><li>Federal Pell Grant </li></ul></ul><ul><li>Scholarships </li></ul><ul><ul><li>Academic, social and athletic </li></ul></ul><ul><ul><li>Private groups, philanthropic organizations, religious groups and colleges </li></ul></ul><ul><li>Borrowing </li></ul><ul><ul><li>Up to 52% of total aid awarded each year* </li></ul></ul><ul><li>Work-Study </li></ul><ul><li>Gifts </li></ul>*Source: The College Board, “How the Borrowing Process Works” Copyright ©2007 collegeboard.com, Inc. Non-Investment Funding Options GE-45090 (8/08)
    9. 9. <ul><li>Coverdell Savings Accounts </li></ul><ul><ul><li>Allows for contributions up to $2,000/year </li></ul></ul><ul><ul><li>Contributions subject to income limits </li></ul></ul><ul><ul><li>Funds grow tax-free </li></ul></ul><ul><ul><li>Considered an asset of the account custodian </li></ul></ul><ul><li>UTMA/UGMA </li></ul><ul><ul><li>Custodial accounts set on behalf of a minor </li></ul></ul><ul><ul><li>Contributions not subject to income limits </li></ul></ul><ul><ul><li>Subject to income and capital gain taxes </li></ul></ul><ul><ul><li>Contributor maintains control over account until beneficiary reaches majority </li></ul></ul>Investment Funding Options GE-45090 (8/08)
    10. 10. <ul><li>Section 529 Plans </li></ul><ul><ul><li>Saving through a special state education program </li></ul></ul><ul><ul><li>Some states allow very large contributions </li></ul></ul><ul><ul><li>No income limits </li></ul></ul><ul><ul><li>Growth and withdrawals are currently federal tax free </li></ul></ul><ul><ul><li>Everyone is eligible </li></ul></ul><ul><ul><li>Account owner maintains control in naming beneficiary and directing distributions </li></ul></ul>More Investment Funding Options GE-45090 (8/08)
    11. 11. Having a Plan Helps GE-45090 (8/08)
    12. 12. <ul><li>Determining how much you’ll need to maintain desired lifestyle after retiring </li></ul><ul><li>Knowing what you need to save each year </li></ul><ul><li>Reviewing regularly and revising as necessary </li></ul><ul><li>Preparing for long-term needs </li></ul>What Does It mean to Have a Plan? GE-45090 (8/08)
    13. 13. <ul><li>On average, women live longer than men: 80 years for women –– 75 years for men as of 2007* </li></ul><ul><li>Retirement period likely to be longer </li></ul><ul><li>Health care needs are likely to be greater for women </li></ul>*Source: National Vital Statistics Report 8/21/07: Deaths, Final Data for 2004. Why Have a Plan? GE-45090 (8/08)
    14. 14. Source: 2006 Retirement Confidence Survey—Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. <ul><li>From a Retirement Confidence Survey </li></ul><ul><li>41% of women tried to calculate how much they will need </li></ul><ul><li>• 13% of women believe they need to accumulate $1 million or more for retirement </li></ul>Planning to Achieve Do you know how much you should save for your retirement? GE-45090 (8/08)
    15. 15. <ul><li>Who’s Helping You to Plan for Retirement? </li></ul><ul><li>Started saving for retirement 57.78% </li></ul><ul><li>Working with a financial advisor 32.15% (i.e. more than half of those who are saving) </li></ul><ul><li>No plan 29.52% </li></ul>Source: Forrester Research, Inc., 2007 Summer Recontact Mail Survey What’s Your Goal? GE-45090 (8/08)
    16. 16. Concerns in Widowhood GE-45090 (8/08)
    17. 17. Source: U.S. Census Bureau, Current Population Survey, 2006 Annual Social and Economic Supplement Widow Population in the U.S. GE-45090 (8/08) 42.4% 13.1% 65+ 9.9% 2.5% 18+ Women Men Age
    18. 18. <ul><li>Q: What to do first? </li></ul><ul><li>A: Find the important papers. </li></ul><ul><li>Death Certificate </li></ul><ul><li>All Insurance Policies </li></ul><ul><li>Social Security Number </li></ul><ul><li>Military Discharge Papers </li></ul><ul><li>Marriage Certificate </li></ul>GE-45090 (8/08)
    19. 19. <ul><li>… more documents </li></ul><ul><li>Dependent Children’s Birth Certificates & Social Security Numbers </li></ul><ul><li>Will and/or Estate Plan </li></ul><ul><li>Complete List of All Assets/Property </li></ul><ul><li>Most Recent Federal Income Tax Return </li></ul><ul><li>Credit Report </li></ul>GE-45090 (8/08)
    20. 20. In the following months, you will need to update or change ownership, title or beneficiaries of: <ul><li>Insurance Policies </li></ul><ul><li>Automobiles </li></ul><ul><li>Your Home and Other Property </li></ul><ul><li>Your Will </li></ul><ul><li>Bank Accounts, Stocks, Bonds </li></ul><ul><li>Safe Deposit Box </li></ul><ul><li>Credit Cards </li></ul>GE-45090 (8/08)
    21. 21. In 2006, 42.4 % of all older women were widows or 8.6 million widows. Source: “A Profile of Older Americans: 2007.” Administration on Aging based on data from the 2007 Current Population Survey of the U.S. Bureau of the Census. GE-45090 (8/08)
    22. 22. <ul><li>28.3% of female households with no husband present were below poverty in 2006. </li></ul>Source: U.S. Census Bureau, Current Population Survey, 2006 and 2007 Annual Social and Economic Supplements. GE-45090 (8/08)
    23. 23. Q: What should I do now, today? A: Plan ahead! <ul><li>Set up an “Important Papers” file </li></ul><ul><li>Open your own bank account </li></ul><ul><li>Save or invest money in your own name </li></ul><ul><li>Establish credit in your own name </li></ul><ul><li>Balance the family checkbook and pay the bills yourself </li></ul><ul><li>Know what your family owns and owes </li></ul>Source: “Sad Business: Managing Financial Issues in Bereavement” in Women and A ging Newsletter , Winter 2002, Vol. 5, No. 4. GE-45090 (8/08)
    24. 24. Concerns in Divorce
    25. 25. Source: Press Office Fact Sheets, “Social Security Is Important to Women,” September 2007. www.ssa.gov. <ul><li>$859 –– women’s average retirement monthly benefit paid in 2006 </li></ul><ul><li>$1,137 –– men’s average retirement monthly benefit paid in 2006 </li></ul><ul><li>Women’s benefits average about 32% less than men’s </li></ul>You and Social Security
    26. 26. Source:Press Office Fact Sheets, “Social Security Is Important to Women,” October 2007. www.ssa.gov. <ul><li>Must have been married for at least 10 years and not remarried </li></ul><ul><li>Both of you must have reached age 62 </li></ul><ul><li>Can receive 50% of ex-spouse’s benefits </li></ul><ul><li>Benefits based on your own work history must be less than half his benefits at age 65 </li></ul><ul><li>Must be divorced at least two years to make a claim </li></ul>You and Social Security
    27. 27. For more complete information or answers to other questions, contact the Social Security Administration at: www.SSA.com You and Social Security
    28. 28. <ul><li>Make sure all payments are made on time </li></ul><ul><li>Learn your rights regarding property distribution </li></ul><ul><li>Find out what your credit rating is </li></ul><ul><li>Establish credit in your own name </li></ul><ul><li>Establish your own bank account </li></ul>Before You Divorce
    29. 29. <ul><li>Statements or Documents for: </li></ul><ul><li>All Accounts </li></ul><ul><li>Employee/Group Insurance Benefits </li></ul><ul><li>Other Benefits </li></ul><ul><li>Retirement Plans </li></ul><ul><li>Insurance Policies </li></ul><ul><li>Real Estate </li></ul><ul><li>Household Furniture/Antiques </li></ul>Financial Assets and Property Checklist: What to Track <ul><li>Tax Returns: </li></ul><ul><li>Payroll Stubs </li></ul><ul><li>Federal, State, Local </li></ul><ul><li>Federal W-2 Forms </li></ul><ul><li>Past 5 Years </li></ul>
    30. 30. <ul><li>Domestic Records: </li></ul><ul><li>Of Other Received Income </li></ul><ul><li>Of Monthly Living Expenses </li></ul><ul><li>Pre- and Post-Nuptial Agreements </li></ul><ul><li>Information on Previous Divorce Settlements </li></ul><ul><li>Wills and/or Trust Documents </li></ul><ul><li>Work/Business: </li></ul><ul><li>Business Tax Returns </li></ul><ul><li>Business Financial Statements </li></ul>Financial Assets and Property Checklist: What to Track
    31. 31. Estate Planning
    32. 32. <ul><li>Proper estate planning can help: </li></ul><ul><li>Increase the amount of assets transferred to beneficiaries; </li></ul><ul><li>Avoid forced liquidation of assets; </li></ul><ul><li>Distribute estate assets fairly among heirs; </li></ul><ul><li>Maintain control of assets while you are alive; </li></ul><ul><li>Retain some control over the distribution of assets at death; and </li></ul><ul><li>Can help to reduce the tax bill that may confront your executor, heirs and estate. </li></ul>Why Have an Estate Plan?
    33. 33. <ul><li>The estate planning process involves: </li></ul><ul><li>Assessing the current value and nature of your assets (including business valuations); </li></ul><ul><li>Implementing tax-saving strategies through the proper use of gifts and trusts; </li></ul><ul><li>Deciding on the best forms of property ownership; </li></ul><ul><li>Periodically reviewing estate documents; </li></ul><ul><li>Naming a personal representative or executor for your estate. </li></ul>What Is Estate Planning?
    34. 34. <ul><li>If you die without a will, the Probate Court: </li></ul><ul><li>Names an executor to distribute your assets; </li></ul><ul><li>Appoints a guardian for your minor children; </li></ul><ul><li>Will decide how to divide your estate. </li></ul>Why Have a Will?
    35. 35. <ul><li>By having a will, you can: </li></ul><ul><li>Name your executor to distribute your assets; </li></ul><ul><li>Designate a guardian for your minor children; </li></ul><ul><li>Outline your personal bequests; </li></ul><ul><li>Specify any financial arrangements to be made upon your death for the benefit of your heirs. </li></ul>What Does a Will Do?
    36. 36. <ul><li>Durable Power of Attorney </li></ul><ul><li>Medical Power of Attorney (a.k.a Health Care Proxy) </li></ul><ul><li>Living Will (Advanced Medical Directive) </li></ul>Additional Documents
    37. 37. A legal relationship created when an owner of a property (the grantor) transfers property to another person (the trustee) to hold such property for the benefit of a third party or person (the beneficiary). What Is a Trust?
    38. 38. A trust established by the terms of a will to become effective upon probate of the will. Testamentary Trusts
    39. 39. <ul><li>There are several potential benefits to a Trust. A Trust can: </li></ul><ul><li>Provide management of assets for the grantor’s convenience or for legally, mentally, or financially incapacitated beneficiaries; </li></ul><ul><li>Accumulate income for later distribution to a beneficiary; </li></ul><ul><li>Enable the grantor to provide one person with lifetime benefits, while ensuring the remainder will go to another person at the life beneficiary’s death; </li></ul><ul><li>Can provide income, gift and estate tax savings. </li></ul>Why Use a Trust?
    40. 40. <ul><ul><li>Gift Tax </li></ul></ul><ul><ul><li>Estate Tax </li></ul></ul><ul><ul><li>Unlimited Charitable Deduction </li></ul></ul><ul><ul><li>Unlimited Marital Deduction </li></ul></ul><ul><ul><li>Unified Credit </li></ul></ul>What Are All of Those Taxes?
    41. 41. How does the Unified Credit work? Total Estate $5,000,000 Surviving Spouse $5,000,000 Federal Estate Tax $1,635,000 Net to Heirs $3,365,000 Net to heirs without using the Unified Credit Net to heirs with Unified Credit Planning Total Estate $5,000,000 Surviving Spouse $3,500,000 Federal Estate Tax $450,000 Net to Heirs $4,550,000 By-Pass Trust $2,000,000 $900,000 Federal Tax Savings
    42. 42. Q: What is it? A: A Traditional IRA or Roth IRA that is inherited from a deceased owner. Q. Why set one up? A: If an IRA is paid as a lump-sum distribution, the income tax consequences can be substantial and may deplete a significant amount of the IRA funds inherited. The Inherited IRA: Q&A
    43. 43. <ul><li>Q: What are the benefits? </li></ul><ul><li>A: An Inherited IRA: </li></ul><ul><li>Can provide an income stream that, over time, may possibly exceed the amount your beneficiary would have received had the IRA been distributed in a lump-sum taxable payment; </li></ul><ul><li>Retains its tax-deferred status so remaining funds stay invested for continued potential growth; </li></ul><ul><li>May also help reduce income taxes; </li></ul><ul><li>Provides an income stream in the form of annually required minimum distributions based on the beneficiary’s single life expectancy. </li></ul>The Inherited IRA: More Questions & Answers
    44. 44. <ul><li>Some things to keep in mind: </li></ul><ul><li>Estate and income taxes </li></ul><ul><li>Annuities and the Internal Revenue Code </li></ul>The Inherited IRA:
    45. 45. For the Executive GE-45090 (8/08)
    46. 46. <ul><li>Pay living expenses while you are unable to work </li></ul><ul><li>Pay for training or other assistance </li></ul><ul><li>Avoid depleting savings for children’s education or retirement </li></ul>What Can It Do for You? GE-45090 (8/08)
    47. 47. <ul><li>Employee Benefits </li></ul><ul><li>Social Security Benefits </li></ul><ul><li>Other Resources </li></ul>But First, What Are Your Other Resources? GE-45090 (8/08)
    48. 48. <ul><li>Definition of disability </li></ul><ul><li>Amount of income </li></ul><ul><li>Income taxes </li></ul><ul><li>Premiums </li></ul>Comparing Policies <ul><li>Waiting or elimination periods </li></ul><ul><li>Length of benefit coverage </li></ul><ul><li>Cost-of-living adjustment (COLA) </li></ul><ul><li>Renewability </li></ul>GE-45090 (8/08)
    49. 49. Many variables. Different needs. GE-45090 (8/08)
    50. 50. The Pension Predicament: The Single Life Option or The Joint and Survivor Option GE-45090 (8/08)
    51. 51. <ul><li>If one spouse dies shortly after retirement, the surviving spouse faces a lifetime of reduced pension benefits. </li></ul><ul><li>If both spouses live well into retirement but die within a year or so of each other, little benefit is gained. </li></ul><ul><li>When both die, no benefit to pass on to children or other heirs. </li></ul>The Joint and Survivor Option What Are the Costs? GE-45090 (8/08)
    52. 52. Purchase a permanent life insurance policy on the life of the participant prior to or at retirement designed to provide the surviving spouse with a death benefit that would provide for a monthly income benefit and take the “Single Life” pension option. Individuals must qualify to obtain life insurance necessary for this concept. A life insurance policy is a contractual agreement in which premiums are made to an insurance company. In return for these premium payments, the insurance company will provide benefit to a beneficiary upon the insured’s death. Life insurance policies have exclusions, limitations, and terms for keeping them in force. Fees and charges associated with life insurance include mortality and expense risk charges, cost of insurance, surrender charges and administrative fees. Guarantees are based on the claims-paying ability of the issuing insurance company. It is important to review the terms of your individual pension to ensure that no additional benefits, such as health insurance, are lost by not taking the joint/survivorship benefit. The Third Option GE-45090 (8/08)
    53. 53. <ul><li>If you die, your spouse’s income can continue in the form of life insurance proceeds* that can be set up as an annuity if desired. </li></ul><ul><li>If your spouse dies, your maximum pension benefit continues and you could: </li></ul><ul><ul><li>Make systematic withdrawals of any potential policy cash values to help supplement your retirement income. </li></ul></ul><ul><ul><li>Cash in the life insurance policy to obtain any potential cash value available. </li></ul></ul><ul><ul><li>Change the beneficiary. </li></ul></ul>*Provided insurance premiums have been paid, the policy has not lapsed, and a death benefit is paid. The Benefits GE-45090 (8/08)
    54. 54. <ul><li>Irrevocable choice </li></ul><ul><li>Spousal consent </li></ul><ul><li>Spouse’s health care benefits </li></ul><ul><li>Income trade-off </li></ul>Other Considerations GE-45090 (8/08)
    55. 55. <ul><li>Women who usually worked full time had median earnings of $618 per week, or 79.8% of the $774 median for men. </li></ul><ul><li>Women retirees generally receive less pension benefits than men. </li></ul><ul><li>Declining coverage by traditional pension plans </li></ul>Sources: US Department of Labor Bureau of Statistics, “Usual Weekly Earnings Summary Q4’07”, 1/17/2008 Why Save in Your 401(k)? GE-45090 (8/08)
    56. 56. <ul><li>Part or all of contributions can be pre-tax </li></ul><ul><li>Investments grow tax-deferred </li></ul><ul><li>Company may match all or part of contributions </li></ul><ul><li>Deducted directly from paycheck </li></ul>Some Benefits of Participating GE-45090 (8/08)
    57. 57. <ul><li>Learn as much as you can about the plan </li></ul><ul><li>Invest pre-tax </li></ul><ul><li>Use the over 50 catch-up </li></ul><ul><li>Don’t touch it! </li></ul>Get Started Now! GE-45090 (8/08)
    58. 58. <ul><li>Watch your rate of return </li></ul><ul><li>Don’t put all of your eggs in one basket </li></ul>Invest for the Future GE-45090 (8/08)
    59. 59. Q. What is it? A. A promise by an employer to pay an executive a benefit in the future. Deferred Compensation GE-45090 (8/08)
    60. 60. <ul><li>Benefit Maximums </li></ul><ul><ul><li>2008 Defined Benefit Maximum: $185,000 </li></ul></ul><ul><ul><li>2008 Defined Contribution Maximum: $46,000 </li></ul></ul><ul><li>401(k) Maximum Salary Deferral </li></ul><ul><ul><li>2008 Maximum: $15,500 </li></ul></ul><ul><li>Maximum Compensation That May Be Considered </li></ul><ul><ul><li>2008 Maximum: $260,000 </li></ul></ul><ul><li>Income Subject to Social Security Tax </li></ul><ul><ul><li>2008 Maximum: $102,000 </li></ul></ul>Caps on Retirement Benefits GE-45090 (8/08)
    61. 61. 70% of Final Compensation ? = Company Pension + Social Security + 401(k) Income Retirement Income Resources GE-45090 (8/08)
    62. 62. <ul><li>Increased Financial Independence </li></ul><ul><ul><li>Retirement Benefits </li></ul></ul><ul><ul><li>Death or Disability Benefits </li></ul></ul><ul><li>Defer Taxes </li></ul><ul><li>Individualized Planning </li></ul><ul><li>Overcomes Limitations of Qualified Plan and Social Security </li></ul>Potential Benefits to the Employee GE-45090 (8/08)
    63. 63. For the Business Owner
    64. 64. The process of defining what will happen to a business owner’s stock at his or her death, disability or retirement. What Is Business Continuation Planning?
    65. 65. <ul><li>No disruption or sale </li></ul><ul><li>Avoid unwanted ownership </li></ul><ul><li>Establish a fair price </li></ul><ul><li>Facilitate estate settlement </li></ul>Why Establish a Business Continuation Plan?
    66. 66. <ul><li>A contract between two or more owners of a business </li></ul><ul><li>Sets out the conditions under which transfer of ownership will take place </li></ul>A Key Component of Business Planning: The Buy/Sell Agreement
    67. 67. <ul><li>Cross-Purchase Agreement </li></ul><ul><li>Each stockholder owns and is a beneficiary of a policy on the life of every other stockholder. </li></ul><ul><li>Surviving shareholders or partners agree to buy the interest of any deceased shareholder. </li></ul><ul><li>Stock Redemption Plan (a/k/a entity purchase) </li></ul><ul><li>The business owns and is the beneficiary of the insurance. </li></ul><ul><li>The business pays the former owner, or her heirs, for their outstanding stock from the proceeds of the policy. </li></ul><ul><li>Stock is then retired. </li></ul>Funding the Buy/Sell Agreement
    68. 68. <ul><ul><ul><ul><ul><li>Disruption </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Loss of profits </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Loss of confidence </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Delays in business </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Weakened credit rating </li></ul></ul></ul></ul></ul>What Would Happen to Your Business If You or a Key Person Were to Die?
    69. 69. <ul><ul><li>To financially protect your company from the adverse impact of the sudden loss of a key employee. </li></ul></ul>The Objective:
    70. 70. <ul><ul><li>Your company purchases a permanent life insurance policy using a key employee as the insured; </li></ul></ul><ul><ul><li>Your company owns the policy and is the beneficiary; </li></ul></ul><ul><ul><li>Your company pays the premium and any cash value has the opportunity to grow tax-deferred; 1 </li></ul></ul><ul><ul><li>After death, the company collects the policy proceeds, generally income tax free. 1 </li></ul></ul>1 In some instances, the corporate alternative minimum tax may apply. How Does It Work?
    71. 71. Does Your Company Need Key Person Insurance?
    72. 72. In Conclusion “ You have to have confidence in your ability, And then be tough enough to follow through.” Rosalynn Carter
    73. 73. Please be advised that this presentation is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances form an independent tax advisor.

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