http://www.articletrader.com/ Articles at ArticleTrader en-us http://www.articletrader.com/finance/investing/why-consider-variable-annuities.html http://www.articletrader.com/finance/investing/why-consider-variable-annuities.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to www.PlannerConnect.com.


You may already participate in an employer-sponsored retirement plan and/or contribute to an Individual Retirement Account (IRA). If so, congratulations! You're one step ahead of many Americans when it comes to saving your money. But chances are you will still need additional retirement savings to secure your financial future and reach your retirement goals.


Here are some reasons to consider investing in a variable annuity:


Need to get started. A variable annuity may help towards retirement savings and shift some of your tax burden to your retirement years, when you may be in a lower tax bracket. Be sure to consider your short-term savings needs before committing to this long-term investment.


Need to catch up. Home purchases, college tuition and other expenses can all hinder our ability to save for retirement. The unlimited contributions, tax-deferred compounding and long-term investment strategy of a variable annuity can help you start moving toward your retirement goals.


Need to contribute. Contribution restrictions in IRAs and employer-sponsored plans limit the amount of money you can invest. Self-employed individuals and small business owners don't always have access to employer-sponsored retirement plans. For these individuals, variable annuities can be particularly helpful.


Need to manage savings. If you are close to or already in retirement, a variable annuity can help you control taxes and manage your retirement income. With a variable annuity, you can choose to receive a guaranteed income for life. And, unlike traditional IRAs and employer-sponsored plans, you do not have to begin taking income from your variable annuities at age 70½.


Why Consider a Variable Annuity?

Variable annuities offer both long-term, tax-deferred growth potential and flexible payout options in retirement. They also offer unique benefits that make them an appealing investment alternative on their own.


Of all the retirement options available to you, only variable annuities give you: tax-deferred growth potential; investment flexibility; guaranteed retirement income; and,

insurance protection for your heirs. However, taxes are due upon distribution at ordinary income tax rates. Withdrawals taken prior to age 59 1/2 may be subject to an additional 10% IRS penalty tax.


This article is designed to help you understand the value of variable annuities and to show you the ways in which a variable annuity can be an integral part of your tax management strategy and retirement savings plan.


How Will You Live When You Retire?

America's pending retirement savings crisis has drawn a lot of media attention lately, and for good reason. As millions of baby boomers approach retirement age, more demands are being made on our Social Security system. Chances are, you'll be expected to rely heavily on personal savings and investments to fund your own retirement.


What's more, over time the effects of inflation may significantly erode the value of your hard-earned retirement savings. In fact, even a low inflation rate of just 3% will cut the value of your nest egg in half in just 25 years.


A Variable Annuity Can Help You Save

A tax-deferred variable annuity can help you reduce your current taxes and fight inflation as you save for your retirement. It's a strategy that more and more investors are using as Americans' fear of outliving their savings grows.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


Variable annuities are offered by prospectus. An investor should carefully consider the investment objectives, risks, charges and expenses of the variable annuity and the underlying fund options before investing. To obtain a prospectus that contains this and other information call your investment professional for a free prospectus. Read the prospectus and underlying fund prospectus carefully before you invest or send money. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares when redeemed may be worth more or less than the original amount invested. Variable annuities can offer tax deferral, lifetime income and death benefits. Variable annuities have riders that may be available at an additional cost. Guarantees are based on the claims paying ability of the issuer. Withdrawals may be subject to a withdrawal penalty, are subject to ordinary income tax, and if taken before age 59 1/2; a 10% penalty may also apply.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.



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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/tax-efficient-investing-a-wise-choice.html http://www.articletrader.com/finance/investing/tax-efficient-investing-a-wise-choice.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.


Taxes can take a chunk out of your investment returns; yet, many investors don’t give much thought to taxes when they make investment decisions. While investment decisions shouldn’t be based entirely on tax considerations, tax-efficient investing may make a significant difference in your net gain. Employing some of the following strategies could help you retain more of your potential investment earnings and lessen your tax obligation.


Invest in Stocks for the Long Term

Following a buy-and-hold strategy for your stock investments may save on taxes in the long run, as well as potentially increasing your net worth. If you trade your stock holdings frequently  even if it’s only once a year  you may end up owing estimated taxes and a significant capital gains tax on your profits.


Capital gains are taxed at 15% on investments you hold longer than one year (5% for gains that would otherwise be taxed in the 10% or 15% marginal federal income tax bracket). Gains on investments you’ve owned one year or less are taxed at your regular federal income-tax rate, which may be as high as 35% for 2005. So, even if you reinvest your sales profits, taxes will reduce the amount you’re reinvesting, effectively diminishing the size of your portfolio and its overall potential return.


Tax-Exempt Investments

Tax-exempt investments, such as municipal bonds, produce income that is generally exempt from federal - and often state and local  income tax. If you’re seeking income rather than growth, municipal bonds may be a good choice. This is especially true for investors in higher tax brackets. Income from municipal bonds may be subject to the alternative minimum tax.


To determine whether you would be better off buying a taxable or a tax-exempt investment, you need to calculate what a taxable investment would yield on an after-tax basis and compare that with the return on a tax-exempt investment. To do this, subtract your marginal tax rate from 100% and multiply this percentage by the rate of return the taxable investment is earning. That will give you your after-tax yield. Compare this with the yield on the tax-exempt investment to find out which is higher.


For example, if you are in the 30% marginal tax bracket, a taxable investment return of 6% equates to an after-tax return of 4.2% (100% – 30% = 70%; 70% × 6% = 4.2%). Thus, a tax-exempt investment yielding higher than 4.2% will give you a better yield after taxes are considered.


Sell a Loser To Offset a Capital Gain

Capital losses offset capital gains dollar for dollar and up to $3,000 of ordinary income a year. If you will have capital gains to report on your income-tax return, consider selling a losing investment and applying the loss to offset an equivalent capital gain.


Mutual Funds with Low Turnover Rates

A mutual fund’s turnover rate measures the extent to which the fund sells securities and replaces them with new ones: the higher the turnover rate, the more frequently the fund’s managers are trading the fund’s holdings. Turnover rate is important to you as an investor because, when the fund sells securities, a capital gain or loss generally occurs for tax purposes. A portion of any capital gains realized by the fund is taxable to you, even if no distribution occurs or if your distribution is reinvested in additional fund shares. A low turnover rate indicates that capital gains generated by sales of appreciated securities should be kept to a minimum, allowing you to wait until you sell fund shares to take potential profits.


Tax-Deferred Retirement Plan

Don’t neglect your retirement plan as a vehicle for tax-deferred investing. Participating in an employer’s 401(k) or 403(b) plan (or a Keogh plan, if you’re self-employed) reduces your tax obligation, since taxes on your contributions and earnings generally are deferred until you withdraw funds from the plan, typically at retirement. Distributions may be subject to income taxes and if made prior to the age of 59 ½, are subject to an additional federal 10% penalty.


Individual Retirement Accounts (IRAs) are another option to consider if you are eligible. Your contributions to a regular IRA may be tax deductible. And, although contributions to a Roth IRA are not deductible, account earnings are tax deferred and can ultimately be withdrawn from the Roth IRA income tax free, provided certain conditions are met.


Hanging onto as much of your hard-earned money as possible is the goal of tax-advantaged investing. Your financial advisor can help you invest with this goal in mind.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


Mutual funds are offered by sprospectus. An investor should carefully consider the investment objectives, risks, charges and expenses of an investment company before investing. To obtain a prospectus that contains this and other information call or ask your financial representative for a free prospectus. Read it carefully before you invest or send money. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares, when redeemed may be worth more or less than the original amount invested.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.




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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/business/small-business/considering-your-stock-options.html http://www.articletrader.com/business/small-business/considering-your-stock-options.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.


To attract and keep top employees, more companies are offering them employee stock options. If you receive employee stock options as part of your compensation package, careful planning can help you make the most of them.


What Is an Employee Stock Option?

Employee stock options give you the right to buy stock in the corporation that employs you at a specified price - the exercise or “strike” price - at a future time. Usually, the strike price is equal to the stock’s market value at the time the option is granted. You benefit if the value of the stock rises and you sell it for more than you paid for it.


Employee stock options usually have an “exercise period” during which you have to buy the stock or lose the options. They also may have a “vesting schedule” that requires you to wait a certain period before you can exercise your option.


Employee stock options come in two basic varieties: nonqualified and incentive.


Nonqualified Options

With a nonqualified stock option, you generally owe no taxes on the option until you exercise it. Then, you must report income equal to the difference between the stock’s market value and your exercise price.


For example, if you exercise an option to buy 100 shares of your employer’s stock for $10 per share when the stock is trading at $25 a share, you are considered to have received $1,500 (100 shares × $15 profit per share) of taxable income that year. You’ll have to pay tax on that income at regular tax rates, which range as high as 35%.

Once you exercise your option, you own the shares of stock. You can sell your shares right away or hold on to them and sell later. Returning to the example, you’ll make $1,500 if you sell the stock for $25 a share. Sell it for $35 and you’ll make another $1,000 (taxable as a capital gain). For most investors, the maximum long-term capital gains tax rate on stock held more than a year is 15% (through 2008).


Incentive Stock Options

With incentive stock options (ISOs), you don’t generally recognize any income for regular tax purposes when the option is granted or exercised. Rather, income is recognized only when you sell the stock and, if you meet two requirements, it’s taxed at the lower capital gains rates. Those requirements: You must wait until you’ve had the stock more than one year before you sell and the date of the sale must be more than two years after the date you were granted the option.


Watch Out for AMT

However, with ISOs, you could find yourself subject to alternative minimum tax (AMT) in the year you exercise the option. AMT is intended to prevent people from reaping more than their fair share of benefits when they use certain deductions, credits, and exclusions to reduce regular income tax. The difference between the price you pay for the stock when you exercise an ISO and the stock’s market value at that time is considered an adjustment for AMT purposes. If you’re subject to AMT, you effectively have to pay tax on this “profit” even though you haven’t yet sold your stock.


A common employee stock option strategy is to hold on to options as long as the stock price continues to rise. And waiting until you have plans for the money - college expenses, a new home, or retirement - can keep you from spending any profits frivolously. Talk with your professional financial advisor. He or she can help you integrate your employee stock options into your overall investment program.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.




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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/retirement-planning-scared-or-prepared.html http://www.articletrader.com/finance/investing/retirement-planning-scared-or-prepared.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.


If you are planning on winning the lottery, don't bother reading this. For the rest of you, however, it is never too early to begin planning for a comfortable retirement. Given the new economic realities of retirement planning, building up a nest egg is a top priority. No longer can you rely on the government or employer-provided pensions to carry you through your retirement years. The long-term viability of the Social Security system is uncertain, given the crush of aging baby boomers who will begin retiring after 2010.


Generally, the private sector is shifting away from defined benefit plans -- which promise a certain payout for long-time workers after they retire -- to other types of arrangements like 401(k) defined contribution plans, which place greater responsibility for retirement investing on employees. Additionally, Americans are living longer than ever before, so to avoid outliving your savings, you'll need to set aside more now to finance a retirement that could last over twenty years.


Unfortunately, when it comes to retirement planning, many people are more scared than prepared. Three out of four working Americans are worried about not having enough savings for retirement, yet over half have not begun to save for retirement, according to a New York Times/CBS poll. Retirement planning may seem like a struggle, but you can reach your goals if you develop a disciplined savings strategy.


The first step is to set your goals: when would you like to retire and what kind of lifestyle will you maintain during retirement? Next, you may want to contact a financial professional to help you estimate what your expenses in retirement will be, how much you will receive from Social Security and your employer's pension, and how much you'll need to make up any shortfall between retirement expenses and income. Full Social Security benefits now accrue at age 67 for someone born in 1960.

Don't rely too heavily on the rough rule of thumb that you'll need about 70 percent of your pre-retirement income after you stop working -- your expenses for health care and leisure activities, for instance, may increase as you get older.


Whether you have 25 years or five years until retirement, take full advantage of the time you have until you retire. Obviously, the earlier you begin, the more you will end up contributing over time. Additionally, starting early lets you generate a greater payoff down the road due to the process of compounding -- the process by which the investment earnings you accumulate begin to generate earnings of their own. Compounding benefits increase with time.


Avoid the habit of contributing to your retirement fund only if there happens to be any cash left over at month-end. Without fail, set aside a specific amount each month for retirement before paying other bills. Saving even a small amount regularly is much easier than trying to save it all at once.


Another tip: contribute as much as you can to any tax-deferred retirement plan offered by your employer. A 401(k) plan, for instance, lets you contribute pre-tax dollars and exclude any investment earnings from your yearly taxable income until you withdraw your money later at retirement. As an incentive for you to save, some employers match some or all of what you contribute, which can help build up your nest egg even more. Withdrawals prior to age 59 ½ are subject to a 10% penalty and income taxes.


Choosing the right investments isn't easy. Your portfolio will be shaped by several factors, including your age, time horizon, tax bracket, and risk tolerance. All investments are subject to varying degrees of risk, but one type of risk in particular -- inflation -- is often overlooked. Inflation erodes the value of your savings over time and takes its toll on most types of investments, including those, which are considered "safe," such as money-market funds.


Naturally, you want to be cautious with your retirement savings, but investing too conservatively can keep you from reaching your goals. Avoid putting all your eggs in one basket by diversifying or spreading your savings among several types of investments, such as stocks, bonds and money market accounts. Diversification may help moderate the risks inherent in investing, but diversification cannot eliminate the risk of investment losses.


If planning for your retirement seems like a daunting task, contact a qualified financial professional for help. He or she can help you devise a strategy to meet your goals and suggest the most appropriate investments for your retirement portfolio.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.




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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/do-retirees-need-a-new-investment-strategy.html http://www.articletrader.com/finance/investing/do-retirees-need-a-new-investment-strategy.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.


First growth, then income. If you’re like most investors, you want to achieve growth while you’re working and income after you retire. But that doesn’t necessarily make it smart to change your investment strategy when you retire by shifting your portfolio completely out of stocks into less volatile, “income” investments like bonds and cash equivalents.


The Tax Bite

As a rule, stocks are more risky and volatile than other types of investments. Therefore, you might decide, as some retirees do, to sell your stocks and reinvest in less risky securities in order to protect the gains you’ve achieved. But, unless the stocks you sell are in an individual retirement account or other tax-deferred retirement account, that move won’t preserve all of your accumulated gains. When you sell your stock, you’ll lose part of those gains to capital gains tax.


The Inflation Bug

You may also create another, potentially more serious, risk. Without stocks in your portfolio, you increase the risk that future inflation will seriously erode the real value of your investments and reduce your spending power.


Let’s look at some numbers. Social Security’s normal retirement age is gradually increasing. For someone born between 1943 and 1954, it’s 66. If you retired today at age 66, your additional life expectancy would be 20.2 years according to IRS tables. No one knows what the rate of inflation will be in the future. But, over the past 20 years, the Consumer Price Index (commonly used to measure inflation) has, on average, risen about 3% a year. If inflation continues at the same average rate for the next 20 years, you’d need over $90,000 of income in 2025 to match the buying power of $50,000 today.


The best way to fight inflation is to have the potential to earn investment returns that will keep you ahead of the erosion in your purchasing power. The problem is there’s no guarantee about the future returns of any variable investment.


A Better Way?

Instead of moving your entire portfolio out of stocks when you retire, you might consider other strategies. You could maintain your current portfolio mix until you retire. Then, gradually sell some of your stocks each year.


This strategy would slowly reduce your exposure to the risk of owning stocks and also generate income to supplement any cash dividends and interest income you receive. You’d spread out your capital gains taxes and be able to keep a large part of your portfolio invested in stocks for a considerable number of years. Note that through 2008, the federal tax rate on long-term capital gains is generally 15% for those in regular tax brackets higher than 15%. After that, the capital gains rate is scheduled to revert to the rate in effect before 2003, generally 20%.



Another strategy would be to simply reduce the portion of your portfolio that is invested in stocks as retirement approaches. For example, if 75% of your portfolio is in stocks before retirement, you might lower that percentage to 30% or another percentage that you’re comfortable with. That way, you’d still retain some opportunity to gain from any future stock market advances, but you’d also reduce your portfolio’s overall volatility.


When you say goodbye to your job, sticking with stocks may be a better strategy for a potentially very long retirement than moving to an all-income portfolio. If you want to know more about investment strategies during retirement, consult with your financial planner.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.




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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/plan-today-for-retirement-tomorrow.html http://www.articletrader.com/finance/investing/plan-today-for-retirement-tomorrow.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.


Planning and saving for retirement, like cleaning out the attic, may be something you figure you'll get to later. But when "later" arrives at retirement age, you may not have the financial resources to enjoy your golden years.


Long gone are the days when you could expect the traditional sources of retirement income -- Social Security and your company's pension plan -- to carry you through retirement. This is the result of several factors: inflation, longer life expectancies, company cutbacks of medical and pension benefits, and the rising age requirements for full social security benefits.


By taking an early and active role in planning for your retirement years, however, you can stay ahead of the game. Building up your personal savings should be at the center of your overall retirement planning strategy. Your savings could come under increased pressure in future years to make up for the shortfall caused by corporate and government retirement benefit cutbacks. So the sooner you start saving, the better.


Setting specific goals is the first step in planning for your retirement. That means figuring out when you want to retire and what kind of lifestyle you want to have. The younger you are, the tougher it is to calculate exactly how much money you'll need at retirement. A popular rule of thumb is if you earn $100,000 or more annually prior to retirement, you will need almost 70 percent of that amount ($70,000 or more) annually to maintain your standard of living after retiring. Your financial needs could be greater or smaller, of course, depending upon your individual circumstances.


Here's a closer look at the compelling forces, which are causing more workers today to recognize the importance of personal savings for retirement:


Medical Benefits

In response to soaring retiree health care costs, many cost-conscious employers are reducing health coverage for their retired workers. Companies are making retirees pay a greater share of the premium, tightening eligibility requirements, and requiring higher deductibles. Some businesses are even eliminating retiree coverage altogether. According to a Foster Higgins survey, only nine percent of firms with fewer than 500 employees offer coverage to retirees.


Pension Benefits

Employer-sponsored pension plans are an important source of retirement income for many employees. But recent changes may ultimately mean a decline in the standard of living for tomorrow's elderly. One trend is companies' shift, generally from defined benefit plans (which promise a specified payout upon retirement), towards defined contribution plans (in which the employer and/or employee may contribute to the employee's account, depending on the plan's specifics). As a result, the decision and risk on how to invest pension funds is shifting from employers to employees -- and many employees who make their own investment decisions are inclined to choose low-risk/low-return investments. Without greater diversification however, that strategy may leave them with a lower-than-expected standard of retirement living.


Social Security

A tidal wave of baby boomers will begin straining the Social Security system when they start to retire around 2010. Once considered politically untouchable, the system’s walls started cracking in the 1980s when benefits for couples earning over $32,000 were partially taxed for the first time. Higher Social Security taxes or reduced benefits remain a possibility in the future. So don't rely too heavily on Social Security to bankroll your retirement.


Other Factors

Inflation and family needs also can impact your retirement plans. Although the rate of inflation has been relatively low in recent years, the long-term effects of even a low inflation rate can eat away at your pension investment returns. And saving for your children's college education bills and caring for your elderly parents may also erode your savings.


There's no need to panic. But you should start planning for your retirement now. More than ever, it's up to you how large a nest egg you'll have at retirement. To help you determine how much money you'll need to retire on, or to see if your current retirement plan will achieve your goals, consult qualified professionals for retirement planning advice.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.




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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/business/small-business/plan-ahead-for-your-companys-survival.html http://www.articletrader.com/business/small-business/plan-ahead-for-your-companys-survival.html Mon, 16 Jul 2007 00:00:00 -0500

By David N. Chazin

In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.



As the founder, owner and manager of your family business, you probably have a hard time imagining anyone else running your company as well as you. You may be right, but that attitude spells trouble. Even though they know better, many successful entrepreneurs choose to ignore the need for planning for their business succession.


For many, it's a question of facing up to their own mortality. For others, it means making a difficult choice of a successor from among their children or valued employees. Since many owners' income and assets are tied up primarily in the business, passing it on means not only giving up control, but also their financial security.


Family businesses face other problems too: sibling rivalry, squeamishness among family members about addressing tough business issues, and a lack of talented or willing management to carry on the business into the next generation. In order to avoid a family rift, many families avoid the difficult question of what will happen to the business after the entrepreneur retires or dies. True, emotions are part of nearly every decision affecting the future of the company, but the business owner must be able to objectively assess the business from both a personnel and financial point of view.


Failure to adequately prepare for the future has been the death knell of many family businesses. According to a study by the Wharton Business School of the University of Pennsylvania, only about one-third of family-owned or controlled businesses survive into the second generation. And the odds of continuing into the third generation are even slimmer.


Waiting too long to put a business succession plan into place can also damage the business. Customers, creditors, suppliers, and even employees grow nervous about whether the company will fall apart once the owner is gone. Without a clear-cut program of succession, your family business may begin and end with you.


Creating a Solid Succession Plan

If you want your business to be in the one-third of businesses that survive, planning is essential. In essence, a business succession plan is a documented road map for your partners, heirs, and successors to follow in the event of your death, disability, or retirement. It can include a strategy for distributing business stock and other company assets, buy-sell agreements, life insurance policies for estate tax liabilities, debt retirement schedules, and the division of responsibilities among successors. A plan may also be used to orchestrate the sale of your business if your children aren't interested or capable of running it.


Plan for the Unpredictable

A viable business succession plan is, above all else, flexible. Business, family, health, and partnership situations can change at any moment. You should be able to easily modify and amend your plan to adapt to any changes that may lie ahead. Consider these examples:


•For years, your son has been an active player in your business; he's come up through the ranks and his last three deals netted a hefty profit for the company. Now it turns out your daughter wants in, too. Her legal background will be a big plus. But how will you divide company ownership and leadership responsibilities between them without causing family friction?


•What happens if someone on your management team is suddenly disabled and most likely won't be returning to work? What if your partner and her husband divorce and the settlement calls for a division of a portion of the business? Or, what if you need an infusion of capital to take advantage of a sudden expansion opportunity? Whatever situation may arise, is your business structured to handle unexpected changes and opportunities? Be prepared with a plan that can help meet the challenges of life's twists and turns.


Who Will Carry the Torch?

Is there really anyone out there who can run your business with that same inimitable style and acumen that you've brought to it? There won't be unless you're there to teach that person how. By grooming a successor now, you'll be able to impart the knowledge and experience you've accumulated over the years, and be assured of continuity in leadership style and, hopefully, profitability after you're gone. Picking a successor can be a minefield, however, especially if you have a choice of equally qualified children or employees.


With more than one child involved in the business, you must decide which one gets to be boss and which merely get voting stock. How will you divide assets equitably among your heirs if some are active business participants and others are off in their own careers? The distribution of power and assets among siblings can be a highly divisive issue, even in the happiest of families. More than one family business has folded because of discord over these problems.


Your challenge: divvy up business responsibilities and assets in a way that allows your business to survive while preserving family harmony. If you're lucky, you may already have a capable child whom you'd be pleased to pass the reins to. Once you've chosen your successor from among your children, the only hitch then is keeping the others interested, loyal, and productive despite being passed over.


No likely candidates among family members or your employee pool? That's a warning sign you shouldn't ignore. Your management style may be hampering employees from turning into leadership material. Or, your hiring and training programs simply may not be doing the job. It is difficult for any business owner to let go, but letting go and training the next generation of leadership is the only way to protect your company's future. Be sure to make career advancement and management training programs a top priority.


Don't wait until it's too late. With the guidance of qualified financial and legal professionals, put in place a business succession plan that will give your business the solid financial and leadership base it needs to survive.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.




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David Chazin is a fee-based financial planner with Sagemark Consulting. His practice focuses on providing his clients with a comprehensive solution to their financial needs. He delivers objective, strategic, and prudent advice designed to help his clients accumulate, retain and transfer wealth. This typically involves developing a customized, fully comprehensive financial plan identifying issues that need to be addressed and outlining steps that need to be taken. David then helps his clients implement the recommended strategies to best reach their financial goals, giving them a great deal of personal attention and adapting their plan to fit their ever-changing lives.

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/real-estate/1031-exchanges-a-tax-deferred-real-estate-strategy.html http://www.articletrader.com/finance/real-estate/1031-exchanges-a-tax-deferred-real-estate-strategy.html Thu, 12 Jul 2007 00:00:00 -0500

By David N. Chazin In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect


This article is for educational purposes. 1031 exchanges have restrictions and limitations.


When the time comes to sell your real estate, some owners of highly appreciated real estate could be staring at a substantial capital-gains tax bill. A section of the Tax Code may help you convert your appreciated property into an income stream—while deferring up to 100% of the capital-gains tax that would otherwise be due on the sale.


This transaction, known as a “1031 exchange,” is named for a section of the Internal Revenue Code that authorizes this exchange. With a 1031 exchange, you can dispose of an investment property without paying an immediate capital-gains tax (or triggering a depreciation recapture tax) if the entire proceeds are used to purchase full or partial interests in “like-kind” properties as defined by the IRS code.


The current capital-gains tax savings could be substantial. In addition to the federally imposed capital-gains tax of 15%, any gain on the sale of a property could otherwise be subject to state income tax. That means your total tax bill could run as much as 20% or higher.


In addition to the tax deferral, 1031 exchanges may provide real estate owners with an opportunity to help improve their lifestyles —for example, by exchanging a highly management-intensive property for one or more properties that are less demanding to manage. These transactions can be beneficial to real estate owners with appreciated properties that make up 5% to 50% of their net worth.


Reduced Stress and a Higher Level of Potential Income

It sounds simple enough, but with the Tax Code, there is always a hitch. In this case, the IRS has set out a long, stringent set of guidelines that define qualified transactions. But the principal issue is that proceeds from the sale of one property must be reinvested in a “like-kind” replacement property within a certain amount of time to avoid taking that tax hit. These properties don’t have to represent a one-for-one swap.


Investors can use the sale from one property to buy tenant-in-common, or TIC, interests in a variety of different properties, opening up an opportunity for strategic planning. For instance, investors who prefer to take a less active role in real estate management can trade a high-maintenance portfolio of rental properties for hands-off interests in other commercial ventures.


Through what’s known as a TIC transaction, you can reinvest the proceeds of those exchanges into a non-management, fractional interest in a larger commercial property. You get a share in the rental income without having to assume any responsibility for the day-today management of the property.


This option is particularly attractive for investors looking to boost income potential. The 1031 exchange may end up generating a higher level of income for the property owner than they had earned on the previous property. More importantly, you may be able to have a more diversified real estate portfolio than you might have had to begin with.


For instance, consider the case of a real estate owner who plans to reinvest the proceeds from a $5-million property into a $3-million property. The owner also plans to distribute the remaining $2-million in proceeds from the exchange across a variety of TIC investments. With the exchange of a single $2-million property, the owner could invest in as many as eight different TIC properties, assuming a standard $250,000-minimum investment in each TIC transaction.


Putting the ‘Estate’ in Estate Planning

TIC exchanges may have the ability to be customized to fit into a real estate strategy. For instance, you may be able to increase your cash flow by exchanging a piece of raw land and investing in one or more income-producing properties. Or you could possibly decrease your current tax liability by exchanging a fully depreciated property and using those gains to buy more leveraged property, thereby increasing your depreciation expenses.


TIC exchanges may be a particularly important part of an estate plan in which the primary asset is a single piece of property—for instance, a family farm that future generations don’t want to maintain. The owner can exchange that land and then divvy that money up into several smaller properties. After the owner’s death, each heir will inherit their own piece of property that they can manage as they see fit. And with the death of the owner, the heirs receive a one-time step-up in cost basis, effectively erasing the deferred tax liability.


As with any valuable asset, managing the exchange of real estate tax efficiently is a complex undertaking. But with a 1031 exchange you may be able to diversify your holdings without any current capital gains tax liability.


David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.


A 1031 Exchange is available to accredited investors only. ($200,000 yearly income and $1,000,000 net worth). A 1031 exchange may be subject to special risks including illiquidity. A 1031 prospective investor should consult with their own legal, tax, accounting and financial advisor before investing as tax advantages may be lost if not executed within established time constraints. A 1031 exchange prospective investor should carefully consider the charges, expenses and risks of a 1031 exchange and whether it is appropriate for them based on their financial situation, objectives and time constraints.


Any discussion pertaining to taxes in this communication (including attachments) may be part of a promotion or marketing effort. As provided for in government regulations, advice (if any) related to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based upon their own particular circumstances from an independent tax advisor.


David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.

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David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit PlannerConnect.


Source: http://www.articletrader.com ]]>