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C.H. Robinson

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Keeping 401(k)s Reaped Big Rewards After Market Crash

Written by Summit Wealth on .

A study conducted by the Employee Benefit Research Institute and the Investment Company Institute indicated that adults who hung onto their 401(k) s fared much better than those co-workers that abandoned them following the financial crisis of 2008. The study indicated that those workers that maintained their asset allocation and continued to contribute to their accounts had a 67% higher average account balance at the end of 2012 than those that quit contributing.

The study also found that older 401(k) participants shied away from equities more than younger workers did. The share of 50- and 60-year olds with more than 80% of their 401(k)s in equities declined from 32.6% in 2007 to 23.5% in 2012, while the number of younger stock lovers dropped much less, only from 60.2% to 57.8%.

What this study tells us is that sticking to a good asset allocation plan and continuing to dollar cost average into your portfolio really works. It also tells us that making emotional decisions regarding your investing habits (and attempting to time the markets) doesn't.


Long-Term Care – When Your Spouse is the Caregiver

Written by Summit Wealth on .

Taking care of an ill spouse can be very demanding and hard on the caregiver both mentally and physically. It can also add a lot of stress and be an emotionally draining time. In a perfect world, we would all be prepared for this situation by having excess financial reserves set aside to pay for assistance to come into the home or, better yet, have a long-term care policy in place to help defray some of the cost of getting medical assistance. However, we don't all live in a perfect world and serious illnesses can happen at any time.

It's important that the caregiving spouse have a "care team" in place to provide them with breaks so they can take time for themselves and to get away once in awhile. Whether its medical professionals, family, or friends that can provide such breaks, the caregiving spouse needs time away to take care of their own well-being.

It's also important that a couple is financially prepared for the costs involved in caring for themselves. This cost can cause considerable financial harm to the couple's finances, to the point where the surviving spouse may have to make considerable lifestyle changes after their husband or wife passes away.

If you or someone you know is in this situation, please let us know as we are experienced in helping families prepare for this stage of life and can offer some assistance.


List of Top Cars for Parents Worried About Their Teenage Drivers:

Written by Summit Wealth on .

I just finished reading an article in Financial Advisor magazine about the top cars for teenage drivers for parents worried about their child's safety (which likely includes every parent).
While some parents can afford to buy their teenager a brand new car, a national phone survey conducted for the Insurance Institute for Highway Safety found that 83% of parents bought their teenager a used, rather than new, car. Unfortunately, older cars can be associated with higher accident rates. Here are a few tips that were highlighted in the article:

  • Young drivers should stay away from high horsepower cars.
  • Bigger, heavier vehicles provide better protection in a crash.
  • Electronic stability is a must.
  • Vehicles should have the best safety ratings possible.

Here are the recommended used, mid-sized vehicles for teens priced under $10,000:

  • Saab 9-3, 2005 and later
  • Volkswagen Passat, 2006 – 2008
  • Audi A4, 2005 – 2008
  • Volvo S60, 2007 – 2009
  • Suzuki Kizashi, 2010 and later
  • Mercedes Benz C Class Sedan, 2005 – 2008
  • Audi A3, 2006 – 2007
  • Volvo S40, 2007 and later
  • Acura TL, 2004 and later
  • Saturn Aura, 2009
  • Mazda 6, 2009 and later
  • BMW 3-Series Sedan, 2006 and later
  • Subaru Legacy, 2009

Are You Wealthy Enough?

Written by Summit Wealth on .

I have been helping clients design financial plans for about 15 years now and the question above is certainly an interesting one. We've all seen the commercials where the guy is following the green arrow around as it guides him to the "promised land." Another commercial features people walking around with an orange number in their hands, as if achieving that portfolio total will lead them to a happy retirement life. At SWA, we have a different view of what wealth is and how it should be used.

  • Wealth is something you accumulate over your lifetime that will allow you to do many of the things you want, when you want. It certainly doesn't mean you forgo living life along the way so you can quit at an earlier-than-others age.
  • We feel it should be viewed as a mechanism that allows you the freedom to transition from a full-time, stress-filled work life to a slower-paced, perhaps more rewarding goal-based life. That could mean you:
    • Work part time
    • Volunteer with charitable organizations
    • Coach your children in sports
    • Travel
    • Pursue hobbies
    • Or do whatever your heart tells you to do.

It's a fine line we all walk, whether to save more than we do now. My belief has always been to be disciplined and save as aggressively as is comfortable but also to make sure I am creating memories with my family along the way. We all get one trip through this life and I can't imagine that anyone wishes in the end that they had worked more.

If this is a topic you or someone you know has been struggling with, and you'd like to talk to someone about it, please reach out to us as we are happy to help.


Should You Be Purchasing Longevity in Your Retirement Account?

Written by Summit Wealth on .

A new Treasury ruling clears the way for participants in Traditional IRAs, 401(k)s, 403(b)s, 457 plans and qualified defined contribution plans (but not Roth IRAs or defined benefit plans) to purchase longevity insurance within their retirement account. So the questions are, what is longevity insurance and why should I consider purchasing it? Let's take them one at a time:

  • Longevity Insurance is an annuity contract designed to pay the purchaser a benefit if he/she survives to a pre-established future age. The benefit is typically paid in the form of a guaranteed income stream for the remainder of an individual's life and helps to protect one against an unusually long life.
  • You should consider purchasing this type of coverage (according to the insurance companies selling them) if you are concerned about outliving your money. These contracts must start to pay the owner by age 85 but can start paying benefits prior to that age. The idea is that if the investor runs out of money by living "too long," the longevity insurance will kick in.

However, these contracts are not without potential negative ramifications. For example:

  • If the investor does not reach age 85, they may not have received any payments from the contract (and, obviously won't in the future).
  • The monthly benefit purchased is in today's dollars and not future dollars. This means that if you purchase a $1,000 monthly benefit in 2014 and begin to receive that $1,000 / month benefit in 2034, it will not be worth $1,000, due to inflation. In other words, this product is not an inflation-adjusting annuity.

If running out of money in retirement is a concern of yours, please contact an SWA advisor today and we can discuss the pros and cons of longevity insurance and whether it is a fit with your retirement game plan.

North Metro: 763.355.5873
227 East River Parkway
Champlin, MN 55316-5873

South Metro: 612.987.9112
5871 Crossandra Street SE
Prior Lake, MN 55372-3337

West Metro: 763.639.3425
322 Greenhill Lane
Long Lake, MN 55356

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