Buck Naked Politics

ROTH Conversion Considerations

posted by Chris |  Over the next few months, you will start to hear and read about ROTH conversions.   I thought we could address the topic with a broad based overview. 

In 2010, Congress has allowed owners of traditional IRA’s to convert them into ROTH IRA’s.  You may recall that a ROTH IRA allows for tax free withdrawals at retirement, no required minimum distributions and they are funded with after tax, (non deductible) contributions.  Obviously if you convert, there is a catch – you either pay the taxes in 2010 or split the tax bill evenly in 2011 and 2012 (at the 2011 & 2012 tax rates). 

One of the considerations to convert is whether you think that your federal income tax bracket will be higher at retirement than it is presently.   A linchpin in the decision making process is the ability to pay the taxes ‘out of pocket’ rather than out of the traditional IRA.  

Chris on Beneficiary Designations

posted by Chris |  As you go through the various stages of life, it is important to periodically update your beneficiaries on your life insurance, annuities, IRA’s and other qualified retirement plans.

We have all heard stories of the ex-spouse receiving the current spouse’s benefits upon the death of person who DID NOT change their beneficiary designation.  Did you know that utilizing your beneficiary provisions for philanthropic donations ( while a great idea ) can cause your other natural person(s) beneficiaries to lose their ability to stretch their payments from an IRA or qualified plan?

Insurance that People Love to Hate: Long-Term Care Coverage & How to Choose it

posted by Chris |  Perhaps the most perplexing issue I encounter as a financial planner is the response to the question of long term care insurance.  The range of emotion that people express when I question exactly how they will pay for their care as they age, is surprising.  Life, auto, health, and homeowners insurance are all necessary and purchased accordingly.

Long term care is generally defined by an individual’s inability to perform the normal activities of daily living (ADL) such as bathing, dressing, eating, toileting, continence and moving around.  THe need for long term care can result from conditions such as spinal cord or head injuries, stroke, AIDS, mental illness, Alzheimer’s disease or other forms of dementia, or physical frailty due to advancing age. 

Long term care is essentially room and board – not physician, therapy or nursing care.

Federal Government Rescues Fannie and Freddie

by Deb Cupples |  Friday, I talked to Chris Conner (Buck Naked Politics' guest blogger on finance and investment issues).  Chris predicted that the federal government would do something over the weekend (before the Asian markets opened) to help Fannie Mae and Freddie Mac -- two quasi-governmental mortgage companies that seem to be in far more trouble than one federal regulator had led us taxpayers to believe.  Not surprisingly, Chris was right.

Today's New York Times reports:

Thumbnail Primer on “Permanent” Life Insurance

posted by Chris | Contain your joy as I complete the life insurance topic!   I am frequently asked about term insurance vs “permanent” insurance.  Permanent insurance policies can be Variable Universal Life (VUL), Universal Life (UL), and Whole Life.   

As we discussed last week, term insurance is pure insurance.  It is the cheapest type of insurance as it contains no ‘savings’ or ‘cash value’ component.  Many pundits on television are quick to tell their viewers that they should always buy term insurance in lieu of permanent insurance and invest the difference. 

Thumbnail Primer on Term Life Insurance

posted by Chris | Hold back your excitement as you read this missive! 

Seriously.  Most people need life insurance for either protecting their families (or business partners) or for estate planning.  There are several types of life insurance policies including universal life & variable life ( aka, permanent insurance) and term insurance. 

Some policies include a savings component and some do not.  Today we will concentrate on term insurance.

The State of Female Retirement

posted by Chris |  Below are a few statistics about retired women:

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- 20%: the percentage of older women living alone in poverty.

- 6 : the average number of years that women live longer than men.

- 58%: women’s median retirement income as a percentage of men’s

- $800: average monthly Social Security benefit for women ($1,177 for men)

Market Musings

posted by Chris |  The first quarter of 2008 has mercifully come to a close with the S&P 500 posting a 10% loss. Much to our chagrin we have experienced back-to-back negative quarters with the 4^th quarter of 2007 losing approximately 5%. 

Indeed the bull market that we enjoyed didn’t end with the classic large cap stock run up and along with profound investor glee, but rather with multiple shocks coming from the catastrophe that is the credit markets.