Life insurance update — March 2013

By Steve Savant

Ash Brokerage Corporation


Every month carriers release product updates and transition rules to keep up their market share. There are just too many for one show. But Steve and Jessica address the market trendsetters that are making the news. Jessica also highlights one of Steve’s blogs, “How can you keep more money safe for retirement?” Here’s an excerpt:

"There are four pickpocket factors that can reduce your retirement income: retirement plan expenses, ordinary income taxes, inflation and market losses. All retirement plans have expenses taken out during the plan’s contribution and distribution periods. It’s important to realize that total expenses paid over a lifetime can be significant and drain your retirement plan, resulting in less income.

Ordinary income taxes can also rob a retiree of their income when they need it most. The tax deduction offered with 401(k)s is a great savings plan if you’re in a high tax bracket. But most Americans pay taxes at the marginal tax rate, so they may be inadvertently trading a small tax break today for a larger tax bill tomorrow. Qualified plan income like 401(k)s, IRAs and other pensions are taxed at ordinary income rates and are used to calculate whether your Social Security benefits are taxed as well. Most Americans pay ordinary income tax on both, resulting in less income.

Inflation devalues your dollar and reduces its purchasing power for necessary living expenses, extra nights on the town and out of town vacations. Savings accounts in CDs and money markets are safe, but they don’t return enough interest to beat inflation and maintain your money’s purchasing power. Most advisors agree: you have to be in the market to beat inflation. But what about market risk? No one has forgotten the pain of the market meltdown of 2008."