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Deferred Retirement Option Program (DROP)

We DROP six hints on preparing for retirement


FINANCIAL NETWORK OF AMERICA

Before you “DROP” out, six things to consider!!!

Now is the time to take a close look at your financial future, including: participation in a Deferred Compensation Plan; the DROP plan – how long to stay in and what happens when you DROP out; your future income needs during retirement; and how to reach your goals.  The sooner you begin analyzing and planning, the more time you have to make necessary adjustments.

If you are one of the many OPBA members within 5 years of retirement, you need to prepare for those years, which means making several important decisions.  Will you have enough money to live on during your retirement years?  There are many people who live longer in retirement than the years they worked.  As retirement comes closer, the overwhelming possibilities leave people uncertain about where to start.

We DROP six hints on preparing for retirement:

Define your retirement:  Your vision will drive your plan.  Will you continue to work, start a new career, volunteer, go back to school or develop new hobbies?  Will you relocate and where?  How long you stay in DROP will also drive your plan and help you determine whether FNA’s DROP IRA is right for you.  Visualizing your plans and setting goals will help in achieving a secure retirement.

Know where you stand financially:  Take inventory of your assets and all possible income sources, and understand that income is the most important asset you can have during your retirement years.  You need to look at how much you are putting away now and if it will meet your needs when the time comes to start drawing on those assets.

Consider Health Care expenses – more than just a DROP in the bucket:  Healthcare will be a significant expense during retirement and factoring the cost as well as inflation is very important.  The cost will not remain level.  If you retire 5 or 10 years before you are eligible for Medicare coverage, you will need to pay for that gap, which could cost hundreds of dollars per month.  

Manage asset allocation:  Regularly monitor and review your investments to ensure they support your goals.  Consulting with a financial planner can help keep you on track and make sure your assets are growing so that your income needs will be met.  An income needs analysis should be done each year before retirement.  A quarterly analysis should be done in your last year.  And annual updates should be performed each year during retirement.

Planning for your loved ones:  Create a will or update your current one, and select the person whom you trust to manage your estate.  Estate planning is an efficient way to distribute the maximum amount possible to your loved ones at the time of your death.  Added benefits like reducing estate taxes enhance the value of adding life insurance into your overall planning for retirement.

Explore options to create a retirement income you cannot outlive:  Research the possibility of creating a Pension Maximization Plan that will give you the most from your Police and Fire Pension while still providing for your spouse.  In addition, there are products that can help generate a guaranteed retirement income from your DROP, while not giving up control of your money.  It may be advantageous to secure these types of products before up to five years before your retirement.  Consult with a financial planner to see if such products will fit your retirement goals.  

It’s never too early or too late to start taking these suggestions into consideration.  For a FREE retirement needs analysis and a no obligation consultation, DROP us a line before you DROP into retirement.

Investors should consider the contract and the underlying portfolios’ investment objectives, risk, charges, and expenses before investing.  This and other important information is contained in the prospectus, which can be obtained from your financial professional.  You should read the prospectus carefully before investing.

Financial Network of America, Ltd. (800-837-9190) Your Retirement Planning Team;  Joseph C. Randazzo, JD, CFP®, Sal Catalano, Suzanne Lipps

Securities are offered through WRP Investments, Inc, Member FINRA & SIPC.  FNA is not affiliated with WRP Investments, Inc.  Securities activities are supervised from 4407 Belmont Ave., Youngstown, OH 44505 (330) 759-2023

Last Updated (Thursday, 24 March 2011 11:54)

 

ANOTHER thing you may not know about DROP, but need to know BEFORE retiring

http://blog.ClevePoliceCU.com
Blog update

I've posted a new blog article entitled:

"ANOTHER thing you may not know about DROP, but need to know BEFORE retiring"


By Nancy Coveleskie

As you know by now, I'm always telling you guys that one way we learn how to avoid the landmines of retiring as a police officer is by watching the others before you who have made mistakes. Sometimes it is because they didn't plan far enough in advance and backed themselves into a corner. Sometimes they listened to the wrong people for advice. Sometimes they just make ill-informed decisions.


But every once in a while I see something happen to someone that comes completely out of left field, and this is one of those times. I owe it to you guys to spread the word - in hopes that it saves another officer from this fate.


Did you know that if you are eligible for another pension and elect to start receiving it while in DROP, it will have detrimental consequences? One officer found out the hard way.


For starters, he lost 2 months worth of his contributions going into the DROP account. By the way, this amount totaled two years worth of the pension he is receiving from OPERS...talk about a penalty. Then, they disallowed all of the further contributions into DROP. Next, he received no additional interest on the money he thought was accumulating in the account.


The consequences are threefold:  click here to continue reading

About Blue Line Financial Services, Inc

Give us a call at the Cleveland Police Credit Union and let us help you get the retirement you think you and your family deserve. We believe in giving officers choice and control over their financial matters, and setting up a complimentary meeting is a step in the right direction. We have been helping police officers for 11 years. Nobody knows retirement planning for police officers like Blue Line. Nobody.


Blue Line Financial Services, Inc.

A wholly owned subsidiary of the Cleveland Police Credit Union

http://blog.ClevePoliceCU.com

2301 Payne Avenue

Cleveland OH 44114

216-621-4440


Upcoming Seminars - click for details and to enroll
Tuesday, March 22nd - Denny's Restaurant North Olmsted 8 a.m. to 11 a.m.
Wednesday, March 23rd - CPCU  11:30 to 1:00 p.m.
Tuesday, April 5th - OPBA North Royalton 6 p.m. to 9 p.m.


Last Updated (Wednesday, 16 March 2011 20:49)

 

How Much Life Insurance is Enough?

Your life insurance needs often depend on a number of factors, including whether you’re married, the size of your family, the nature of your financial obligations, your career stage, and your goals.

There are a number of approaches you can use to figure out how much insurance you should have.  One method, called the “family needs approach,” focuses on the amount of life insurance it would take to allow your family to meet its various financial obligations and expenses in the event of your death.

Family Needs Approach


With the family needs approach, you divide your family’s financial needs into three main categories:

1.  Immediate needs at death, such as cash needed for estate taxes and settlement costs, credit card and other debts including mortgages (unless you choose to include mortgage payments as part of ongoing family needs), an emergency fund for unexpected costs, and college education expenses.

2.  Ongoing income needs for expenses related to food, clothing, shelter, and transportation, among other things.  These income needs will vary in amount and duration, depending on a number of factors, such as your spouse’s age, your children’s age, your surviving spouse’s capacity to earn income, your debt (including mortgages), and whether you’ll provide funds for your surviving spouse’s retirement.

3.  Special funding needs, such as college funding, charitable bequests, funding a buy/sell agreement, or business succession planning.

Once you determine the total amount of your family’s financial needs, you subtract from this total the available assets that your family could use to defray some or all of their expenses.  The difference, if any, represents an amount that life insurance proceeds, and the income from future investment of those proceeds, can cover.

EXAMPLE:  John and his wife, Wendy, are estimating the appropriate amount of life insurance to buy on John’s life.  They first estimate their immediate needs as follows.

Final medical expenses:  $5,000

Estate settlement costs including funeral and burial expenses:    $37,000

Debts, including credit cards and mortgages:  $317,000

Emergency fund:  $100,000

Subtotal:  $459,500

Next they estimate ongoing income needs, such as:

Providing for their dependent children’s needs for a period of
time:  $500,000

Wendy’s income needs until her retirement:  $450,000

Wendy’s retirement income needs:  $380,000

Subtotal:  $1,330,000

Adding the sub totals together, John and Wendy estimate that, should John die, their family would need $1,789,500.  They then determine that assets available to offset their needs include:

Bank Savings:  $40,000

Investments:  $220,000

Retirement Assets:  $250,000

Existing life insurance on John’s life:  $300,000

Subtotal:  $810,000

The difference between their family needs ($1,789,500) and their available assets ($810,000) equals their life insurance need ($979,500).

Review Your Coverage


Trying to figure out how much life insurance is enough isn’t always easy, and that amount will likely change with your changing circumstances.  By examining your family’s anticipated expenses during various periods after your death, you get a more realistic estimate of your life insurance needs.

Unfortunately, many people underestimate their insurance needs and are underinsured.  Often, the purchase of life insurance is based on cost instead of what’s needed.  By the same token, it’s possible to have more insurance than you need.  You may have purchased a large policy during a particular point in your life, and then didn’t adjust your coverage when your insurance need was reduced.  Both of these circumstances are reasons to review your insurance coverage periodically with your financial professional.  Doing so can reveal opportunities to change your levels of coverage to match your current and projected life insurance needs.

Financial Network of America, Ltd.
(800-837-9190)
Your Retirement Planning Team:
Joseph C. Randazzo, JD, CFP®
Michael Embrescia, Sal Catalano, Suzanne Lipps

Securities are offered through WRP Investments, Inc, Member FINRA & SIPC.
FNA is not affiliated with WRP Investments, Inc. Securities activities are supervised from:
4407 Belmont Ave. Youngstown, OH 44505 (330-759-2023)

 

RETIREMENT: Does Your Withdrawal Strategy Need a Second Look?


In its simplest terms, a withdrawal rate is the percentage you withdraw from an investment portfolio in any particular year.  However, in retirement income planning, what’s important is not just your withdrawal rate, but your sustainable withdrawal rate. A sustainable withdrawal rate represents the maximum amount (expressed as either a dollar amount or a percentage) that can be withdrawn from your retirement assets each year with reasonable certainty that the portfolio will provide income for as long as it’s needed (for example, throughout your lifetime). A commonly expressed rule of thumb  states that your portfolio should last for your lifetime if you initially withdraw 4% of your balance (based on an asset mix of 60% stock and 40% fixed income securities), and then continue withdrawing that same dollar amount each year, adjusted for inflation.  However, this rule of thumb has been under increasing scrutiny, and like any rule of thumb, it may not apply to you.

Why is it important?

A sustainable withdrawal rate is critical to retirement planning.  Draw too heavily on your savings, especially in the early years, and you could run out of money too soon.  Take too little, and you might needlessly deny yourself the ability to enjoy your money.  You want to find a rate of withdrawal that gives you the best chance to maximize income over your entire retirement period. Withdrawal rates are based on a number of assumptions, including your living expenses, projected lifespan, risk tolerance, projected rates of return and inflation, asset allocation, taxes, and whether you wish to leave a portion of your estate to others.  As you progress in retirement, you’ll have empirical data against which you can evaluate these assumptions.  Plus, your investment horizon will be getting shorter.  That’s why it’s important to periodically revisit your withdrawal strategy during your retirement to see if your assumptions are still accurate and whether your strategy needs to be modified.


Financial Network of America, Ltd.
(800-837-9190)
Your Retirement Planning Team:
Joseph C. Randazzo, JD, CFP®
Michael Embrescia, Sal Catalano, Suzanne Lipps

Securities are offered through WRP Investments, Inc, Member FINRA & SIPC.
FNA is not affiliated with WRP Investments, Inc. Securities activities are supervised from:
4407 Belmont Ave. Youngstown, OH 44505 (330-759-2023)

Last Updated (Saturday, 12 June 2010 12:07)

 

Before you “DROP” out, six things to consider!!!

Now is the time to take a close look at your financial future, including: participation in a Deferred Compensation Plan; the DROP plan – how long to stay in and what happens when you DROP out; your future income needs during retirement; and how to reach your goals.  The sooner you begin analyzing and planning, the more time you have to make necessary adjustments.

If you are one of the many OPBA members within 5 years of retirement, you need to prepare for those years, which means making several important decisions.  Will you have enough money to live on during your retirement years?  There are many people who live longer in retirement than the years they worked.  As retirement comes closer, the overwhelming possibilities leave people uncertain about where to start.

We DROP six hints on preparing for retirement:

Define your retirement:  Your vision will drive your plan.  Will you continue to work, start a new career, volunteer, go back to school or develop new hobbies?  Will you relocate and where?  How long you stay in DROP will also drive your plan and help you determine whether FNA’s DROP IRA is right for you.  Visualizing your plans and setting goals will help in achieving a secure retirement.

Know where you stand financially: Take inventory of your assets and all possible income sources, and understand that income is the most important asset you can have during your retirement years.  You need to look at how much you are putting away now and if it will meet your needs when the time comes to start drawing on those assets.

Consider Health Care expenses – more than just a DROP in the bucket:  Healthcare will be a significant expense during retirement and factoring the cost as well as inflation is very important.  The cost will not remain level.  If you retire 5 or 10 years before you are eligible for Medicare coverage, you will need to pay for that gap, which could cost hundreds of dollars per month.  

Manage asset allocation:  Regularly monitor and review your investments to ensure they support your goals.  Consulting with a financial planner can help keep you on track and make sure your assets are growing so that your income needs will be met.  An income needs analysis should be done each year before retirement.  A quarterly analysis should be done in your last year.  And annual updates should be performed each year during retirement.

Planning for your loved ones:  Create a will or update your current one, and select the person whom you trust to manage your estate.  Estate planning is an efficient way to distribute the maximum amount possible to your loved ones at the time of your death.  Added benefits like reducing estate taxes enhance the value of adding life insurance into your overall planning for retirement.

Explore options to create a retirement income you cannot outlive:  Research the possibility of creating a Pension Maximization Plan that will give you the most from your Police and Fire Pension while still providing for your spouse.  In addition, there are products that can help generate a guaranteed retirement income from your DROP, while not giving up control of your money.  It may be advantageous to secure these types of products before up to five years before your retirement.  Consult with a financial planner to see if such products will fit your retirement goals.  

It’s never too early or too late to start taking these suggestions into consideration.  For a FREE retirement needs analysis and a no obligation consultation, DROP us a line before you DROP into retirement.

Investors should consider the contract and the underlying portfolios’ investment objectives, risk, charges, and expenses before investing.  This and other important information is contained in the prospectus, which can be obtained from your financial professional.  You should read the prospectus carefully before investing.

Financial Network of America, Ltd. (800-837-9190) Your Retirement Planning Team;  Joseph C. Randazzo, JD, CFP®, Sal Catalano, Suzanne Lipps

Securities are offered through WRP Investments, Inc, Member FINRA & SIPC.  FNA is not affiliated with WRP Investments, Inc.  Securities activities are supervised from 4407 Belmont Ave., Youngstown, OH 44505 (330) 759-2023

Last Updated (Wednesday, 17 June 2009 15:19)