section 1 - The American College Online Learning Center

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c. If the policy is term coverage with the conversion option, a disability wouldcertainly be a circumstance where the conversion privilege ought to be used.16. Disability income or long-term care policiesa. Identify a representative payee(1) Agent under power of attorney(2) Guardian17. Implementing a plan (checklist of tasks)a. Statement of objectives should be reviewed with the clientb. Identify and ask others who will take on trustee/power of attorney role and givethem the opportunity to receive advice about their responsibilities.c. Identify professionals and discuss their roles.(1) Attorneys(2) Professional trustees/investment advisors(3) Daily money managersd. Execute documentse. Transfer assets as required to facilitate the use of durable power of attorney, livingtrust or guardianship.4.41
Assignment 5EVALUATE RETIREMENT RISKS AND OFFERALTERNATIVE SOLUTIONS TO ADDRESS THESE RISKS5Assignment 5SECTION 1: THE RISK OF RUNNING OUT OF MONEY AT THEEND OF RETIREMENTLO 5-1-1: Analyze the risks associated with running out of money at theend of retirement1. Overview: There are four risks embedded in every retirement income plan that couldlead to the disastrous result of a client lacking the income needed in the later years ofretirement. These risks apply to both married and single clients and also apply to everyclient for which you need to plan regardless of his/her financial status. These include:a. Longevity riskb. Excess withdrawal risk (also called portfolio failure risk)c. Inflation risk (also called purchasing power risk)d. Timing risk (also called point-in-time risk)2. Longevity risk is the possibility of outliving resources by living longer than planned. Yourclients should be concerned about living too long for a variety of reasons:a. Since no client can predict how long they will live with certainty, the retirementincome stream must last for an unpredictable length of time. This complicatesplanning since the client has to secure an adequate stream of income for anunpredictable length of time.b. Planning Point: The planning horizon for retirement income is indefinite andunknowable. Planners, however, need to create a proxy for longevity when theyput together a retirement income plan.c. According to some mortality tables the average life expectancy for a 65 year old is18 years. However, this is an unacceptable proxy since planning for the averagelife expectancy will be wrong for 50 percent of clients!d. Probabilities of living to a certain age are another possible predictor of a lifeexpectancy proxy.(1) The probability of living from age 65 to a specific age:(2)Age Male Female70 94% 95%75 85% 88%80 73% 79%85 54% 64%90 33% 34%5.1
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Huebner School SeriesHS 353 STUDY O
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THEAMERICANCOLLEGE.EDUThrough The A
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c. But it is more comprehensive bec
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(3) Work part-time during retiremen
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SECTION 2: UNDERSTANDING RETIREMENT
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d. Solutions(1) The model considers
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. Other sources of retirement incom
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c. Another option for solving cash
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(b) Net worth statements that ident
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d. Be ready to reengage with the cl
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(b) In financial planning(c) In inv
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j. Planning Point: Planners can use
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e. We also need them to have a bett
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Assignment 2IDENTIFY RETIREMENT INC
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(2) Income4. Determining risk toler
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collaborative experience which focu
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6. Asset allocation and risk tolera
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c. How long will the income last?d.
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. Durationc. Reliabilityd. Other6.
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c. Supplemental Security Income (SS
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. An unused emergency fund can supp
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5. Inflation(2) The expense method
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Assignment 3CHOOSE APPROPRIATE STRA
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. Save as a percentage of income an
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(1) Note that 38% of second income
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(4) The AARP website has a national
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4. Contributions to IRAs and Roth I
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carve out the nondeductible contrib
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(2) Plus salary deferrals (for an i
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a. Example:(1) Save $10,000 in 25%
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(a) This requires knowing four fact
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. Solution(1) Li and Lin Lin are bo
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(1) The increase in dollar amounts
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Page 75 and 76: 2. Reverse mortgage basicsa. Almost
Page 77 and 78: 5. Planning considerations(b) Keep
Page 79 and 80: (2) Some funds that are promoted as
Page 81 and 82: (1) Berstresser, Chalmers, and Tufa
Page 83 and 84: RESOURCES FOR COMPETENCY 3: CHOOSE
Page 85 and 86: (2) From the previous employer(s) p
Page 87 and 88: 8. IRA funded plans (IRAs, SEPs, SI
Page 89 and 90: . Does the distribution election fi
Page 91 and 92: 6. Net unrealized appreciation rule
Page 93 and 94: a. Tax-exempt plans include Roth IR
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Page 98 and 99: (2) Exception: If there are separat
Page 100 and 101: 5. Impactc. Tax rates are low in ea
Page 102 and 103: (7) Based on ordering rules, identi
Page 104 and 105: 7. A married couple who file jointl
Page 106 and 107: (1) Needed to provide the appropria
Page 108 and 109: 13. Transfers at deatha. Wills(2) A
Page 110 and 111: (1) The Retirement Equity Act manda
Page 112 and 113: (2) Beneficiary designation of bene
Page 114 and 115: 13. Overview14. Types(2) The donor
Page 116 and 117: (1) Charity needs only to payout in
Page 118 and 119: c. Access should be granted to an a
Page 120 and 121: nightmare of living probate might h
Page 122 and 123: (6) Powers to represent their princ
Page 126 and 127: e. Factoring personal and family he
Page 128 and 129: problem. On the other hand, we can
Page 130 and 131: d. Adding a cost of living adjustme
Page 132 and 133: g. Planning Point: Sometimes a high
Page 134 and 135: (2) Clients may not be able to “a
Page 136 and 137: c. Ensure that the client is receiv
Page 138 and 139: a. Example: Because of physical and
Page 140 and 141: options about where to get his/her
Page 142 and 143: (2) Facilities, monthly fees, and s
Page 144 and 145: 8. Other strategies that help to co
Page 146 and 147: standard deviations of the returns
Page 148 and 149: a collapse in the real estate marke
Page 150 and 151: a. In a later competency we will di
Page 152 and 153: years of service with the employer)
Page 154 and 155: a. Planning Point: Planners should
Page 156 and 157: (2) If you have locked in food, ren
Page 158 and 159: (4) Loss-of-spouse risk—Deferred
Page 160 and 161: (1) Excess withdrawal risk—The us
Page 162 and 163: (5) Frailty risk—Managing assets
Page 164 and 165: 7. Practice good career management:
Page 166 and 167: Assignment 6CHOOSE APPROPRIATE STRA
Page 168 and 169: c. Example: Chuck and Sarah divide
Page 170 and 171: e. The bucket approach can be thoug
Page 172 and 173: 3. Understanding systematic withdra
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(1) The time horizon used in the ca
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12. Four percent is not the number.
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markets have declined by a specifie
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(2) Annuities and long-term care an
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anticipates ramping down her activi
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c. Each of the three portfolios wil
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SECTION 4: THE ESSENTIAL VERSUS DIS
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d. Clients give up investment contr
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geared toward long-term growth. Thi
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. Trade-offs involve:(1) Irrevocabl
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(1) Rate at which banks lend to the
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. Dollar-denominated liabilities of
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(a) Dividend taxed in year paid out
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4. Taxationtheir return generating
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. Close ended(1) IPO style launch(2
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(3) Tax control17. Conversations in
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(3) Mutual funds provide lower cost
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way to obtain increasing payments t
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protection from the downside risk w
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6. Today’s annuitization rates ar
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h. Planning Point: Markets are very
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a. The client may not be clear abou
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a. Problems with implementation are
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c. Product solutions work together
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(1) A problem is that if the client
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(b) A traditional fund company(c) A
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d. Evelyn is in great health and he
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RESOURCES FOR COMPETENCY 7: INTEGRA
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