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Destination: Retirement

Some options for your golden years.

Ryan Fishman

Special to the Jewish News

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f you've ever played a sport, you've
likely had a coach who told you "prop-
er planning prevents poor perfor-
mance Inevitably, preparing financially
for retirement involves a lot of planning
best done long before you start picking
out gold watches.
"Most people are
not fully prepared for
retirement, and they're
underfunded on their
long-term needs," says
Howard Rosen, senior
vice president of invest-
ments at UBS Financial
Services in Farmington
Howard Rosen
Hills.
Rosen says the best
time to start thinking about retirement is
in your 20s, after securing a first full-time
job. But what if you're a little closer to
retirement?
"Building or rebuilding retirement
plans requires professional help:' Rosen
says.
Good professional help starts with
a roadmap. Lowell Weiss, a financial
adviser at Weiss Wealth Management
of Raymond James in Farmington Hills,
recommends beginning with a complete
financial assessment.
"We believe it is important to not just
identify goals, but also needs. A lot of
times clients say everything they want is
a 'need: but it's really important to differ-
entiate between true needs because those
are things you have to actually plan foe
Weiss says.

to change your mind. There are provi-
sions for getting back that initial pay-
ment," Rosen adds.
Weiss advises this route for the average
baby boomer: "There are only so many
workers that provide this type of care, and
demand is stretching the market thin.
Costs will go up, and you can mitigate it
with an insurance policy.

Annuities

Annuities are another form of "insur-
ance." They are actually a contract with an
insurance company where earnings are
tax deferred. With other types of invest-
ment strategies, annual capital gains are
taxed at that year's end as a taxable event.
Gains within an annuity are only taxed
when the money is drawn out.
"Annuities can be a safety net," Rosen
says. "Income annuities, for example, can
automatically step up in value whether
the markets go up or down, and you can
borrow against that value. It's guaranteed
income and prevents your borrowing
power from going down in a negative
market."
The downside is the cost, which can
be much higher than other investment
strategies.
Weiss agrees that the fees and costs
associated with an annuity can raise a red
flag. "We use other asset tools outside the
insurance realm if our clients are really
looking to create an income stream;
Weiss says.
Alternatives he recommends include
preferred stocks and dividend paying
stock without the same costs associ-
ated with pulling your money out of the
investment.

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Long-Term Care
Insurance
Both Weiss and Rosen
recommend research-
ing a long-term health
care insurance plan,
commonly referred to
AO,
as LTCI. In its simplest
Lowell Weiss
terms, LTCI covers
the costs of long-term
health care not paid for by health insur-
ance, Medicare or Medicaid.
"This is a great option for people
around 55. The older you get, the more
expensive it becomes. About 60 percent
of individuals over age 65 will require at
least some type of long-term care services
sometime in their lifetime. You want to
buy while you are in good health and
insurable Rosen says.
These plans can be purchased with an
annual premium or with a lump sum pay-
ment up front.
"If you can afford the lump sum, it has
its benefits, in terms of the amount of
care you are entitled to and the flexibility

Reverse Mortgages

"I have never recommended a reverse
mortgage Weiss says. "You're taking a
loan out that your estate has to cover."
The reverse mortgage is essentially a
loan available to a homeowner over the
age of 62 that grants access to a portion of
the home's equity.
"The only time I would consider using
a reverse mortgage is for somebody who
is elderly, at least 75, and has very little
income other than social security:' Rosen
says.
At best, Rosen explains the home is
a hard asset you can use to draw on for
income, but, at worst, the reverse mort-
gage can decrease the equity in your
home. There are upfront costs, ongoing
costs and loan origination fees that can all
be higher than a conventional mortgage.
These are only a few of the financial
vehicles to consider as you plan for your
financial future. Meeting with a profes-
sional adviser is your best bet to make
sure you have the money you need to
enjoy retirement.

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