Guarding Your Gold

By Max Valavani

Working and saving for a lifetime may very well result in a comfortable retirement lifestyle. Millions of senior American citizens have made sacrifices so that one day they will never need to worry about the “next dollar.” Disappointingly, misfortune may strike and eliminate all or most of the gold stored in your “Fort Knox.” Against popular belief, almost every opportunity for loss can be avoided entirely. Herein are just a few of the ideas the wealthy and informed use to guard their gold.

      Protect your principal.  Alarmingly so, most seniors are unaware of the simple ways to earn a fair return and still protect their principal investment from market losses and inflation. With certain market-related investments, your principal can be 100% guaranteed. CDs and money markets hardly keep up with inflation, so safe alternatives include Equity Indexed Annuities, Traditional Fixed Annuities, short-term corporate and government bonds (not bond funds), and well-diversified portfolios. You don’t have to accept unnecessary risk or below-average returns. With a little professional guidance, investing wisely is not a daunting task.

      Stop trying to double your money.  When time was on your side, your tolerance for investment risk may have been relatively high. Back then, you could weather a drop in the markets since retirement wasn’t near, and you still commanded a weekly paycheck. I often ask my clients, if they could double their money this year, would they change their lifestyle? Then I follow with the opposite question, if they lost half their money, would they change their lifestyle? If you are still trying to double your money, be prepared to lose half of it.  

      Appropriately title your assets.  If still married, titling assets jointly most likely is the best deal. If single, widowed, or divorced, it’s a different story. Once you place a non-spouse (i.e. child or sibling) as your assets’ joint owner, you reduce your control and protection. The legal process to satisfy creditors, judgments, and collections may attach assets that you jointly own with others. Making this mistake with your principal residence can be costly and may also result in the loss of your Florida homestead exemption protection. Take a good look at how you title all your assets.

      Prepare for Long-Term care costs.  Most seniors have not addressed this potential financial disaster. Long-term care is defined as the necessary assistance with the activities of daily living. Medicare does not cover these long-term care expenses, nor does Medicare supplement insurance. Those in retirement must either own long-term care insurance, self-pay, or qualify for Florida Medicaid. Privately paying for this potential cost can be monumental, with monthly costs typically eclipsing $4,000. Yet, some seniors enjoy substantial and predictable income, allowing them to absorb this cost fully. Others are not so fortunate, so planning is the key.   

      Eliminate probate.  Assets pass at death in three ways: by will, by law, or by contract. A testamentary will is useful for smaller and simpler estates, but most wills addressing wealth are probated and costly. Florida Law affords the use of a Living Trust as a powerful wealth management tool. A Living Trust allows for the transfer of wealth with reduced costs, publicity, delays, and paperwork. But the most attractive feature of the Living Trust is the elimination of probate. Probate fees typically range from 3% to 6% of the total estate. Additionally, assets transferred to a beneficiary through an annuity, IRA, or life insurance policy qualify as contract payments, evading probate. Just remember, if it contractually names a beneficiary, it will avoid probate.

      Secure reliable and professional advice.  Virtually, on every street corner of life exists the opportunity for financial loss. Who you listen to, and most importantly, whom you trust will determine the outcome of your financial decisions. Seek experienced and qualified advisors before you release the key to your treasures. Remember, you and only you are ultimately responsible for guarding your gold.

Max ValaVanis is a co-owner of Valavanis Financial in downtown Melbourne and in Rockledge. Max specializes in lifetime income planning for Retirees while protecting principal.  Max can be reached at 321-956-7072.