Editorial: Plan for retirement, safeguard wealth
The 1930s had its Great Depression and, for the 2000s, it’s been the Great Recession.
The time is now to ensure the money to live comfortably in retirement will be there. It’s also time to protect assets in the event of a lawsuit.
Anyone planning for retirement, regardless of their age, needs to take the changes wrought by the Great Recession into account, according to financial advisor Phillip Rousseaux. Having everything in either stocks or short-term savings is a bad idea, Rousseaux says; instead, he advises spacing investments so they’ll come due as they’re needed, planning some to be available in the short-term, for emergencies, and others to be available as one ages.
Here are more suggestions:
—Don’t take risks that can’t be afforded. The bulk of assets shouldn’t be put into anything making the principal vulnerable. Gambling to win big on the market, or any other investment, means also risking losing big. A portion of any investment should have a guaranteed return.
—Seek guidance from independent financial advisors. Such advisors aren’t marketing their own products, so they have no conflict of interest. Independent advisors can also devise creative, innovative solutions to meet the needs of individual clients. Conversely, those working for big companies aren’t free to think outside the box. That’s especially important in this new, post-recession economy.
—Consider alternatives to the stock market. There are a number of great, safer alternatives to Wall Street. One of those is fixed, indexed annuities. Money is being loaned to an insurance company and it guarantees payments over a specified length of time. These annuities have a minimum and maximum interest payment that’s linked to a common index, such as the Dow. When the Dow goes up or down, so does the interest rate, but it never goes below the guaranteed minimum or above the guaranteed maximum.
While it helps to have the assistance of a lawyer who specializes in asset protection, there are many things a person can do to protect assets themselves. A prime action is not having any non-exempt assets in one’s own name, according to Hillel Presser, author of “Financial Self-Defense (Revised Edition).” The goal is to “own” nothing, but control everything, Presser says.
The author suggests the following to safeguard wealth in the event of a lawsuit:
—Inventory wealth. Figure out how much assets there really are (most people have more than they think). Take stock of valuable domain names, telephone numbers, intellectual property, potential inheritances, and other liquid and non-liquid assets. That way, efforts can be made to cost effectively keep them safe.
—Set the goal. Setting an asset protection goal should be the first step. For example, plan to execute an estate plan or set up a trust for children. Decide what assets need to be protected and a realistic timeline for implementation. Then—and most importantly—stick to the plan.
—Protect the home. Find out how much of the home is protected by state homestead laws and then encumber the remaining equity. To do this, record a mortgage against it, re-finance a current mortgage or even take out a line of credit using the home as collateral. Another strategy to protect the home is to transfer its title to a protective entity such as a limited liability company (LLC), trust, limited partnership, etc.
—Get everything out of one’s personal name. This is the worst thing that can be done as far as exposure. Work on moving assets out of a personal name and into the name of protective entities such as LLCs, trusts, limited partnerships, etc.
—Buy adequate insurance. Protect loved ones by making sure to have adequate insurance coverage in the event of job loss, natural disaster or even tragic loss of life. Those include—but aren’t limited to—car, home and other valuables.