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Showing posts from April, 2012

Roth IRA vs. Traditional IRA

Individual Retirement Accounts (IRA) come in two types, Roth and Traditional, and there are several basic differences between them. 
The biggest difference between these two types of IRAs deals with how the distributions are taxed.  Traditional IRAs allow the IRA holder to take a current tax year deduction for the amount which they contributed to the IRA up to an annual limit.  When the IRA holder takes a distribution out of the IRA during retirement, however, each dollar of the distribution is taxed as income in the year it is withdrawn.  Thus any investment earnings in the traditional IRA are taxed deferred until withdrawn. Earnings in a Roth IRA, however, are tax free when withdrawn, but do not provide a current tax year deduction. 
For those covered by an employer sponsored retirement plan traditional IRAs have income limits pertaining to the amount that the account holder may deduct on their taxes; however, anyone can make a nondeductible contribution regardless of income.  Co…

Annuities. Good, Bad or just Ugly?

We are regularly asked if an Annuity is a good or bad thing for clients, and like most answers in our business and in life, the answer is, “It really depends!”
At its most basic level, an annuity is a life insurance product designed to pay some level of income to the annuitant.  The investor gives the annuity product life insurance company a certain amount of money, called the premium, and the life insurer agrees to pay the annuitant a certain amount.  These amounts can be monthly, quarterly, annually for life, for a certain minimum period or both.   This is an example of a fixed annuity.  There are also indexed and variable annuities where the value is tied to some kind of stock or bond investments. There are literally thousands of different annuity products with thousands of variations.  As with any financial product, whether the product is appropriate for a particular client depends on exactly what the client’s needs, sophistication, financial situation and risk tolerance are.
The…

What to consider when choosing a financial advisor

We are often asked what people should consider when looking to hire a financial planner or advisor. 

The most important criteria is whether you feel comfortable with that person and are able to share with them very personal and sensitive information.  If you cannot share this kind of information with your financial advisor, the value that they add will be very limited.

They should have earned the Certified Financial Planner designation and have been doing financial planning full time for at least five years. 

It is very important that your advisor is a great listener and able to explain very complex issues at the clients’ level. 
They should be independent from any entity that sells financial products, such as banks, brokerage houses, or insurance companies.  However, they should be overseen and regularly audited by an independent entity to ensure they are compliant with all rules and regulations. The way that they are compensated should be flexible (i.e., flat fee, hourly, produc…

Helping clients determine if they can retire

This week we completed an analysis for a husband and wife who were referred to us by one of our best clients.  After checking with our references, they hired us to help them manage their retirement portfolio, but more importantly to help them determine if the husband could afford to retire.  The wife was retired and wanted her husband to retire from the University of Michigan where he had worked for almost thirty years.  They wanted to spend more time each year traveling and living outside the U.S.  The bulk of their retirement assets were in the University of Michigan Fidelity and TIAA-CREF retirement plans.  They were very diligent about saving for retirement and budgeting, however, they did not have confidence that they could achieve their income and travel goals if he retired, or at least not for very long.  This is a very common client concern we see over and over again.  Luckily, our analysis opened their eyes to several factors they did not consider in theirs, such as the effe…
Founded in 2001, White House Financial & Settlement Consulting helps families live an easier and less stressful life through the proper management of their financial resources.We do this by acting as our clients’ trusted advisor providing a personal touch customized to the client’s needs!Please visit our web site at www.whitehousellc.com for more information!

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