Broker Check

Client Scenarios

Joe and Marie, Getting Ready to Retire

Joe, 64, has been with his current employer for over 15 years, and would like to retire within the next five years. His wife Marie, 63, has worked at a local hospital for almost 30 years. Joe has retirement plans that he has left behind at his previous employers, and he has a 401(k) plan where he is now. Marie has a 403(b) plan and a pension from the hospital. They would like to retire in five years.

Joe and Marie look at the stock market’s substantial decline in 2008 and 2009 and they are scared that it could happen again in the future. They want to have a strategy in place to create a predictable income stream for their retirement. They also think consolidating their various accounts and retirement plans is probably a smart idea.

At our first meeting with Joe and Marie, we learned about their backgrounds; their children and grandchildren, what it was like growing up, and that both their parents lived into their late 80’s and 90’s.

At our second meeting, we suggested a strategy using a diversified investment program with a guaranteed pension-like income benefit attached. During the next five years until retirement, the client will be able to know what their future income will be - based on a predictable accumulation of income - and at retirement, be able to guarantee income for both spouses for life. They liked that strategy. We did all the necessary forms to consolidate old retirement plans into an IRA rollover with the predictable income accumulation benefit and future income for life Joe and Marie.

Tim and Maureen, Already Retired with Unpredictable Income

Tim and his wife Maureen are both in their late 60’s and already retired. They have substantial cash in the bank, but it is earning very low, taxable interest. Tim and Maureen feel they can do better with the money they have, but the income that comes from the money has to be predictable. And they would like to use some of that additional income from their assets so they can travel – both on their own and with their children and grandchildren.

Tim and Maureen wanted to structure things so that each spouse would get their own income. They had been told for many years that they would be paying very low taxes at this point. In reality, they are paying very high taxes, as they no longer have retirement contribution and mortgage interest deductions. Thankfully, they are both healthy and have very few medical expenses to deduct.

We suggested and implemented a tax-deferred investment strategy that has a future guaranteed income benefit attached and would pay income to both spouses. Because of its special tax treatment, more than 50% of the future income - which is guaranteed - will also be tax-free income, as they already have pension and social security income and very little, to no itemized deductions. They will be able to make additional deposits into the plan.

Tim and Maureen like knowing that they will now have predictable income. They like doing much better than the bank and they like the fact that they are betting on longevity to provide lifetime income for each spouse.

Felicia, Doctor, Seeking to Maximize Future Tax-Free Retirement Income

Felicia, 59, a physician, is a high-income professional that wanted to put an additional plan in place to provide a future income stream during retirement. We learned about Felicia’s background, practice, and her description of an ideal retirement. She wanted as much future tax-free income as possible, expecting her taxes to be higher than they are now.

It became clear to us that she would not be a good candidate for a traditional qualified retirement plan, with its associated withdrawal restrictions and taxable payouts.

We suggested an individually controlled, completely portable plan into which the practice makes a 100% deductible contribution that results in a slightly more than 50% taxable income charge to the individual. This plan also provides for tax-free accumulation and tax-free distribution to the individual.

Felicia didn’t know such an option was available to her, and was very pleased when we explained this to her. Felicia implemented the plan and is now well on her way to a comfortable retirement.

Local Company Seeking Deductible Key-Person Enhanced Retirement Benefit Program

Many corporations and closely-held businesses today face multiple challenges, obstacles and restrictions when developing enhanced benefit programs.

We met a local company after being referred to them by their certified public accountant (CPA).

They had existing traditional retirement plans in place and wanted to implement an additional retirement benefit to supplement those plans for specific key and high-producing employees and associates.

After obtaining an overall picture of their existing retirement benefit, we presented a strategy that would, under current tax law allow the company to bonus specific individuals and obtain a 100% business deduction for that bonus.

For the individual, they would be granted an additional benefit that would allow for tax-deferred accumulation, access to plan values before age 59-1/2 with no penalty, and future tax-free income at a retirement age, based on design.

The plan allowed for installation provided some basic requirements are met. The local business was extremely pleased to hear this idea and implemented the program with all of the oversight during the process by their certified public accountant.

The end result was another pleased company in our community that was able to benefit from an independent organization like The Financial Group of Philadelphia after receiving a personal introduction from their long-time certified public accountant.

Medical Practices Facing Changes

Knowing there is an enormous amount of change occurring in the medical community nationwide, even local medical practices are attempting to stay ahead of the curve of change.

We were recently introduced to two local medical practices:

One medical practice is a specialty medical practice that has approximately 50 staff and seven partners.

The seven partner physicians wanted to find out if they could install an additional supplemental plan that would allow for retirement and separation from the practice after the minimum tenure was met. The existing traditional retirement plans, because of various age differences, did not allow for maximization of future retirement values.

After being introduced by the certified public accountant, we were able to implement a strategy that allowed for an additional plan which provided substantial tax-deductible contributions for each of the physician partners in the six figure level contribution amount for each partner.

The CPA was pleased as it provided a substantial tax-deduction and the physician partner was pleased because those large tax-deductible contributions put them all closer to their future retirement income goals.

Across town, another medical practice was recently purchased by a local health system.

As part of the transition, the existing staff and physicians of the medical practice needed to make decisions relating to their existing retirement and benefits of the private practice since their new benefits would be provided and offered by the health system. We were introduced to this medical practice by one of our existing medical practice clients.

The medical practice was extremely pleased that we were able to help not only the physician partners but all of their staff relating to decisions and options about their existing retirement plans and benefits done all on an individual level.

Being an independent firm gave us the flexibility to serve all of the desires and wishes from the office receptionist up the senior physician. They were also pleased that we are available to provide financial education and assistance with choices relating to new benefits offered by the health system which will now be their employer.

Everyone concerned was pleased that our firm was able to help both of these practices as they entered different stages of their life.

Case studies on this page are hypothetical examples of the various approaches that can be taken to assist clients with their insurance planning needs. The results depicted within this communication are unique to the hypothetical cases presented and should not be construed as a guarantee of future results.

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