Thursday, August 25, 2011
PENSION DOCTOR EVALUATES HIS PATIENTS’ RETIREMENT PLANS; HAVE YOU EVALUATED YOUR OWN?
3:13 PM | 
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pensionfinancialservices |
STILL HAVE A SEP? DRINK A LOT OF WATER AND CALL US IN THE MORNING
It’s easy to see why SEPS were attractive at one time – before so many retirement planning vehicles had been developed – and because they were free. They were simple. You didn’t need a lawyer or run into funny words like “fiduciary.”
The scenario in our last blog shows the numbers and the numbers never lie, just like the numbers on your blood count don’t lie either. Helping you choose the right plan and organizing all of your paperwork (which we do for you) will reap a better outcome – rather than taking an easy route that will not provide you with maximum benefits in the long-run.
As for those confusing words like fiduciary – that’s what we’re here for – to explain them to you. Our efforts in your planning are 100% transparent and have always been at Pension Parameters. That’s why we’ve been in business for more than 30 years. Wouldn’t you rather have a retirement planning advisory that shows you all of your options in the beginning, reveals all associated fees, and helps you see a scenario of how it will all look, given market conditions, in a few years than not attend to your ultimate financial health?
And what about the market? Given current economic conditions, no time like the present truly applies. While many business owners believe that a fluctuating market will lead to more gloom and doom, the law of averages at funds with experienced managers and a long track record of personalized service shows the opposite.
This is why you must choose a pension management company that personalizes its business carefully. Our advisors routinely take the temperature of how much risk any client is willing to endure during any given year. Conservative clients are invested in very low risk funds. And whether conservative or aggressive by nature, small business of all types stand to benefit from opportunities in this bear market, which will, no matter what translate to significant tax saving opportunities.
Six reasons for you or your client to start their plan right now:
- You need to build your own nest egg…when you have a small business; ultimately you’re the one at the helm who is taking care of yourself and your employees.
- In many cases, small business owners do not realize just how much their incomes will shrink when they retire and begin collecting Social Security, which can start at age 62. A retirement plan, will, of course, bolster and supplement this income so that business owners will have the satisfaction of creating extra income for those years.
- Speaking of Social Security, there is nothing ABSOLUTE right now, given the new discussions that have arisen in Washington. You may not collect at age 65; perhaps you will begin collecting at 67. Are you certain you will be able to work until then? The nest egg takes on new importance.
- Because of the stock market today, small business owners have the chance to “buy low, sell high!” This year offers numerous unique opportunities for fund growth and long-term asset building.
- Some people say compound interest is one of the wonders of the world. Compounding $1 today could mean $100 in years to come.
- Dollar Cost Averaging is a strategy in which an investor places a fixed dollar amount into a given investment on a regular basis. An investor's returns will be determined more by the overall trend in a given stock as opposed to the investor's specific purchase price. It helps investors reduce their cost basis on securities that decline in value.
Today, whether you are a sole proprietor or a small professional practice you will need to decide which type of plan works best for you. A sole proprietor might consider adopting a 401(k) plan which will allow tax deferred savings up to $16,500 annually. If you will reach age 50 by year-end, an additional $5,500 for catch-up contributions may be contributed.
For the owner/employer, adopting a New Comparability Plan may be more advantageous than a 401(k) plan. New Comparability is a profit-sharing plan design that seeks to maximize the amount contributed to a select group (typically the owner and other key employees) while minimizing the total cost of employee contributions. In 2010, adopting a New Comparability Plan would permit an owner/employer to contribute up to $49,000.
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