weekly blog posts from Richard C Moldenhauer will be posted every Wednesday

Doing it Right

When it comes to your financial planning, doing it right is very important. 

After 40+ years in the business of helping people protect what they love…families, their businesses, important charities, etc., what I see is people not planning properly. The results often include: family infighting, businesses being shut down or sold for less than true value or taxes being paid unnecessarily. None of this has to take place if only people cared enough to do things the right way. 

When you own a home, you insure it for replacement cost. Car insurance is required by law to protect strangers. When I bought my last cell phone the insurance cost almost as much as the phone. Ask yourselves what you insure. 

Unfortunately, the things that people underinsure most frequently are their most valuable assets. For your spouse and children, it is you. For your business, it is your key personnel. If you support your college, your church, or another important charity your donations disappear with your death. 

If you take this seriously, you will often discover that evaluating your budget, your deductibles and your improperly designed retirement accounts can free up the funds needed to do your financial planning the “right” way.


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A New Year…A New Attitude

A New Year…A New Attitude

I recently had a couple visits from old friends and it was certainly nice to see these folks again. We are all getting older and we are looking at the future in different ways.

One of these people, in his mid-70’s, is still enjoying running his small business. He is happy and looking forward to the future. The second man is retired and has led a major not-for-profit organization and is also enjoying life. It was nice seeing these folks and how great their attitudes remain.

Each year, no matter what our age, we have a choice. Do we look toward tomorrow with enthusiasm or do we view the future negatively. No matter which direction we choose to travel we will be correct.

Each year I try to consider and appreciate the good things that have occurred in my life. My advice is to try doing that. It will make you feel better about things.

Then I write down my unreasonably outlandish objectives for the coming year. It is crazy, but it’s fun. If you try it you might be surprised how exited you become about the future.

Good luck!

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Taking a Look at the Pension Enhancement Option

Sometime in the late 1970’s we developed a concept that allowed people who had certain types of pension benefits to take the maximum payout option instead of the “Survivor Options”. It worked very well for the client if the client purchased an adequate amount of life insurance.

The benefits of this were…

  • More income while the two spouses were alive.
  • Insurance that replaced the spousal option if the retiree died.
  • The policy contained a cash account that could be used if needed.
  • If the spouse predeceased the retiree, the policy could be surrendered for cash value or could be used to create an inheritance for children or grandchildren.
  • Proceeds from the policy were tax free if paid to a named beneficiary.
  • In any case, the biggest asset the retiree had was now inheritable unlike the pension payout.

 Many people have forgotten this idea. There are still many defined benefit plans and there are still retirees that make the wrong decision at retirement. For most people when an ill-formed option is exercised it cannot be undone.

 If you have such a plan or know of a friend with such a plan, email me at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Time Goes By....

I noticed that I have not written a blog for a while. Actually, I have been dealing with quite a bit of soul searching lately. I’ve also been in and out of WNY a couple times working on several projects.

The business is growing, but truthfully, 95% of what is happening has little to do with my contributions. I guess I have discovered that the complexity of modern technology is hard for me to keep up with. If your anywhere over age 50 you must see and feel this as well.

When I compare the business to what it was a couple decades ago, I see little similarity. People communicate differently and think differently.

Back to my soul searching… I have learned what I always knew to be true and it is true to this day. Actually, it is truer than ever.

  • People do what they want when they want.
  • What they want is not usually what is best for them.
  • Some people solve problems and then create new, bigger problems.

I could go on, but it is more important to share how my observations will affect my future:

  • As an advisor, I am here to help clients who are serious and want my personal assistance.
  • I am here to assist advisors who need my guidance.
  • As a businessman, I am here to assist the firm continue its growth and development.

Beyond those points of involvement, I will tackle several non-business challenges. It is my time to explore the bigger things in life. As I get to them I’ll share some of the things I learn along the way.



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Remembering Veterans at Christmas

I try not to think about this, but another friend and Vietnam Vet just passed away. He was one of the lucky ones. He had a nice family and a successful career as an attorney.

Unfortunately, many veterans from the Vietnam and Iraq eras never have been able to get their lives on track. If they died or sustained severe injuries as a result of combat, they were cast aside and quickly forgotten. Many who returned home in one piece were unable to acclimate to normal life. Society has not been fair to these people.                     

If you know a veteran or have the opportunity to cross paths with one over the holidays, wish him/her well. Many have given all they had to give and the world has discounted their sacrifice. Tell them that you do appreciate their service and wish them well.

Thank You



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Do They Understand?

Most of our ancestors came to America for freedom of one kind or another. Our Bill of Rights guarantees many of these Freedoms and the Constitution expanded and enumerated these Rights and Freedoms.

Where our parents and many of our generation fought to preserve those Freedoms, there seems to be a proliferation of unhappy people and complainers in our country.

I was thinking about this while I watched an overpaid quarterback kneel during the National Anthem. I was going to say how this made me feel, but instead, I thought about my time in Vietnam. I am not referring to myself, but about the soldiers and Marines I served with who never had the chance to come home and enjoy the Freedoms all Americans are entitled to, simply because they are Americans.

Perhaps America will refocus during the future. We do have the freedom to become what our dreams allow us to believe we can become.


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Visit to Duke

As I write this article I am at Duke Medical for my semi-annual evaluation and tune-up. As most clients and friends know, 3 years ago I had a double lung transplant. That was difficult but the first 18 months of recovery and rehabilitation were extremely difficult.

During visits to Duke, I have numerous conversations with my doctors. When I deal with a new doctor one question always comes up…”Rich, what did you do before the operation?” As we talk, I explain that I returned to work after rehab. Once they understand the history of my career, they all agree that staying active is one of the keys to my recovery.

It has been an encouraging visit. My commitment to being the best at what I do was reinforced and I am even more encouraged about the future.

Attached is a picture taken just before I left for Duke. Being with my little granddaughter, Ruby, seems to make me feel better and younger.


rcm and ruby

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I Was A Little Discouraged….

I wasn’t sure anyone was really reading the newsletters, but over the last few weeks dozens of clients and friends have mentioned that they have been following my writing. Thank you. I will attempt to improve both the quantity and quality of what I am writing. Please let us know if our messages are of value.

As you know, I write about several things, including the business and its progress, my health and the steps I take to set an example for people dealing with serious medical issues and recovery. A few other topics near and dear to me also find their way to my Blog.

It has been a very nice summer for the family and living at our summer house on the lake has been pleasant. While the fishing has been up and down due to the lack of rain, the bass have been active lately. Our sons have been out to the lake over the summer and we have seen all of the grandchildren.

Last week, Matthew and Hannah were up from South Carolina. They became engaged recently and we are all excited about Hannah becoming part of the family. She and Matt make a great couple and they have a lot of common interests. Matt has been a very good marathon runner and triathlete, and Hannah is an excellent runner herself. After getting engaged they went sky diving for the first time.

As summer winds down and we prepare for the trip to Duke and our return to Charleston, it is important for me to say that I am grateful for the past three years since my operation. I recognize each day is a gift and each day I work hard to show my appreciation.

Few of the people who know me best thought I’d be here and who could blame them. Close to 4 years ago, my companion became an oxygen tank. Each step was laborious and few things were going well. However, since the operation I have received many blessings among which are 3 new grandchildren, watching my sons grow into successful men and enjoying my life with Kathy. A high point was being honored by Ameritas. Traveling to many places including this year’s trip to Alaska has been gratifying. And very importantly, the privilege of returning to work on my own terms has been high on the list, not to mention being able to fish as I once did.

I’ll talk about my recovery more at a later time but, for now, I think I’ll take Brett’s 2 year old fishing. Have a great day.         

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A Summer to Remember

I am not writing this about what has been one of the warmer summers I have seen, but a summer when many sad events have occurred in our world. The changes have created a very unstable economic environment.

The events in Europe have been shocking and have caused the stock market to go through a volatile month. What will be the long term result of the Brexit breakup? Only time will tell.

The shooting of police officers has caused civil unrest in much of the country. It seems that our politicians are more concerned with being politically correct than creating an environment where both the police and our citizens can feel safe. And, of course, there is ISIS and the attacks in Europe and now in the homeland.

No sooner does one event end and another occurs. How will these events effect the coming election and, more importantly, the world of tomorrow?

As a nation, we are looking for strong leadership that will create an environment of safety and security. We need to improve the economy and, in particular, the “job market” for young and old alike. The events of the next few months will affect the election and the world we will inhabit in the future.

Pray for America.

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Procrastination and the Business Owner

I often address the topic of Financial Messes and Procrastination. The subject is deep and wide. It seems that almost every day I meet a client who is dealing with one or both issues.

I recently met a successful business owner who asked: “Where were you 20 years ago?” He is in his mid 60’s and has yet to develop a succession plan or a retirement plan. He is definitely in trouble.

I am certain there was someone like me 20-30 years ago that made suggestions that he failed to heed. It probably seemed that there was an infinite amount of time to put those suggestions into a workable plan. But, time does fly by when we are busy doing something else.

My advice to this person was to get busy and accept the fact that this is job #1! Until it gets resolved, other challenges should not be accepted. He agreed, reluctantly, to get started.

It would have been smarter and less of a financial inconvenience to have started at a younger age. Procrastination, it seems, is similar to the Ostrich putting his head in the sand. 

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Why Your Life Insurance Needs Periodic Updating

 Most people simply do not commit to keeping their life insurance in line with the purchasing value of the dollar. Most people are happy to get a raise or make more money, but they do not discipline themselves to periodically update their life insurance programs.

This is one of those topics you do not like reading about and I would prefer not addressing. Perhaps, because it is an uncomfortable subject to think about. But, the following reasons should be considered:

  • Protecting your family’s standard of living and “preserving the things you want to do”; like your children’s education or your spouse’s retirement.
  • Putting together a large enough emergency fund. Most people save far too little. Much of what they do save is in their 401(k) and should not be touched until retirement. You will find that the cash value account of a good life contract creates a lot of cash that can be tapped for the big expenses of life.
  • You can learn to be your own banker. I’ll tackle this in my next “blog” article.
  • We insure our cars and homes for full value….why not our lives?

Look at the cost of protecting those you care for, it will be less than you think.

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Get Involved---Get Informed

As citizens of this great nation you have a right and a responsibility to be informed. Where is the country headed? Who do you think has the right approach? What are your concerns? An informed citizen can make knowledgeable, educated decisions and your vote will count.

As an American History major in college, I like to think that I have a grasp on the direction America should go. However, we each have an opinion but most people have not taken the time to become informed.

Whether you are a Democrat, a Republican or an Independent, study the issues and make your vote count.

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What I Would Like To Tell My Grandchildren about Life and Money

As I raised my children I attempted to share lessons about life with them. They were raised with many advantages but I tried to share with them why they should work hard and plan for their futures. I guess I attempted to share with them the lessons I learned from my younger years. I am talking more about the “School of Hard Knocks” more than my formal education. I think you know what I mean.

If you know my sons you probably agree that they successfully learned those lessons. While they might joke about my methods, I know they are the best sons I could have raised. But, chances are I will not be here to teach their children. I am certain they will do an even better job, but let me lay out a few of my premises:

  • Always work harder than the next guy---you’ll get noticed.
  • Never quit. Quitters cannot be winners and winners never quit.
  • Most breakthroughs occur just before you are broken.
  • Address each problem first with a smile. You’ll confuse the competition and you will like yourself more.
  • Start saving money at a young age. Most people don’t do it so you’ll be more successful than at least the majority of the people that you know.
  • If you save a little while you are young, you’ll learn about self-discipline. Later in life, that will pay big dividends.
  • Dream big dreams.

There is more that I could write on this topic and I promise I will. It makes me think---how about you?

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A Time for Caution

Recently, I had a conversation with a client who is a small business owner. A question about taking chances in this economy was brought up. I mentioned that I have been concerned with the political environment and the over regulation that will create trouble for virtually all smaller business owners.

The low interest economy will have several negative affects as we move forward in time:

  • People are borrowing more than they will be able to pay back.
  • Savers are eating into their principle because their savings are not earning interest.
  • Big businesses will displace smaller business owners.
  • Fewer jobs will be created and technology will replace many “people” jobs.
  • While some new employment will occur, it will mostly be in a non-traditional structure.

My advice to the business owner was to proceed with caution. Perhaps it is time to wait and see what happens over the next six months.

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A Statement on the Fragility of Health in America

Each day I continue my fight to regain and retain good health. Perhaps I am lucky because I have led a life of personal discipline.

It concerns me that most people seem unconcerned with their personal well-being until something bad happens to them. At my age, I am seeing past friends and acquaintances develop medical issues they never dreamed of and some of those issues are very serious.

Whatever your present state of health, do not let another day go by without developing a plan of moderate exercise and better quality in eating habits. Perhaps you’re thinking: “Rich is not a Doctor, why should I listen to him”?

I firmly believe that each day we awake in the morning is another gift from God and, like all gifts, should be savored and appreciated.

Consider what you have to lose. I think we should all learn to take 5 minutes each day that we devote to being grateful for what we have. Hopefully, we can all find 30-60 minutes a day to exercise our most important muscle---the heart.

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Legacy Planning for Loved-Ones

We all have the ability to leave various legacies. However, few of us take the time or use the opportunity. While I have been discussing various legacies with clients for years, this article is about creating a financial legacy for those you love.

Why create a financial legacy? Many wise people believe Social Security may not be available in its present form when our children retire. Pension programs are changing and, in certain cases, even disappearing altogether. Without these two sources of income, most people will have a difficult time retiring.

If the predictors are correct, 401(K)s, IRAs along with personal savings and investment will be what people will need to rely on for retirement. That said, will your heirs be able to retire without help?

The tools are available to transfer wealth and leverage existing assets. So, consider the following facts. Most people pass away with assets in IRAs and 401(K)s. Furthermore, many people leave behind investment programs that will be taxed either as income or as estate taxes. Also, many people’s assets will be taxed in the same ways. For some, this means an IRA or 401(K) may only net an heir 30 percent of the original asset’s value. This is a sad but rarely explained reality.

Assets can be used to fund proper trusts and/or second-to-die insurance. The net effect can be dramatic. An asset that would normally be cut in half can be multiplied. The end result might be that a very modest inheritance can become a significant inheritance and may even be tax-free! That inheritance can create a retirement benefit for a child where, perhaps, none would otherwise exist.

This type of planning is not new. In the past, only the super-wealthy took the time to consider it. Today, people of all economic strata are looking at leaving legacies for their children and grandchildren.

Seek out a financial advisor who is well versed in total financial planning, not simply investment planning.

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We all have them, opinions, that is. When I work on estate planning I have opinions that I have developed over the past 45 years.

My first opinion has to do with the way I live my life. While I am not attempting to bestow a philosophy on anyone, that old Christian adage sums it up; treat others as you would have them treat you. In a world that seems to be making less sense each day, I’ll stick with my philosophy.

I think we appreciate that which we earn more than that which we are given. Yet, when my day is done, I want my children and their children to benefit from the effort I expended chasing “the American Dream”. I hope I have taught those I care most about to appreciate that which they have earned themselves compared with what they might be given. I want them to protect and preserve rather than waste and dissipate.

While I have paid millions in taxes over my career, I would like to teach people how to pay less and keep more. To do this legally is challenging but doable. I would have liked someone to have taught this to me when I was young and starting out. Unfortunately, no one shared these simple concepts with me. For this reason, I share the ideas about preserving wealth with people who ask. Still, unfortunately, most people seem to have a difficult time with deciding to grow their assets when they are young.

When people become mature (my word for older) I try to share with them ideas on estate enhancement and preservation. This, too, has to do with tax planning. People can leave their lifetime’s unspent net worth to those they love or to others. Abdication of responsibility ultimately leaves most assets to the tax man and others we’d probably not want to enrich.

I just read about the entertainer, Prince, who died without a will. At least half of his estate will go to the government of Minnesota and the United States, which, in his case, could be half a billion dollars. The rest of his estate will be shared by obtain a will.

My best advice is not to be like Prince. Do not wait until it is too late to do “tax-smart” investment accumulation. If you have waited to middle age or beyond, start doing your estate and retirement planning now. attorneys, accountants, creditors and distant family. The distant family will be left with a minor share when the dividing up is done. He missed the opportunity to minimize taxes, decide where his assets would go and he missed the chance to help charities he might have cared about. All because he did not

If you have serious concerns related to doing “Tax Smart Planning”, call David or Sharon at my office and arrange an appointment.

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The Value of Relationships in a Technology Driven World

Everywhere we go technology has replaced face to face communication. Computers and portable phones have replaced verbal communication and talking with each other. Most people get their news from the “Web” or from cable TV.

For example, I was in an airport recently and as I looked around while waiting for my flight, I noticed that everyone was concentrating on the screens of their smart phones. No one was talking to the people around them. In my opinion, that is rather weird behavior.

As I sat there, I decided to order a few new books. So, I opened my computer and ordered the books. I also wanted to check the weather in Buffalo, so my smart phone was helpful there. This is using modern technology in a positive way.

So now, let’s look at it from another point of view. Recently, I had a medical appointment. A computer called to verify the appointment and when I had to speak to the doctor’s office to change the appointment, I was put on hold, again, by a computer for twelve minutes and then it disconnected. It took six calls in the span of an hour to get in touch with a “real” person to reschedule the appointment. At the doctor’s office, I again found myself registering via a computer. And so it goes.

What is missing here? I think the answer to that question is….people. We need people to communicate with. We need people to ask questions, and people to get to know me and appreciate me as a person.

Some folks say they are happy dealing with technology in similar situations. I would say to them….wait until you have a problem. You will wish that you had a relationship with your doctor, your car repair shop and, yes, even with your financial advisory firm. When I have a medical question, for instance, I want to talk with an expert. I want that expert to care and I want his/her help.

Years ago, when I designed the core elements of Moldenhauer & Associates, I wanted our clients to know our staff, our advisors and I wanted their time in the office to be a positive experience. I tell my staff to always treat our clients like they would want to be treated, only better. I hope we measure up most of the time.

We are always looking for new ways to serve our clientele. How can we make their lives easier and add some joy to the experience? So, I hope when you come to our office you will let our staff know if their service is up to your expectations. If they drop the ball, even a little, tell them. This is the only way we can be certain that we are creating new value for our clients.

We want to be the place that you are happy to visit. We want to be the company that you enjoy working with. Most certainly, we do not want to be another piece of technology that makes your day more difficult.

Thank you.

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The English Language

The English Language is said to have more words than any other Western language. Unfortunately, the vocabulary of most people is limited.

Occasionally, I read where financial people have a difficult time explaining concepts to clients. Perhaps we use the wrong words. After all, words can be confusing. After 40+ years I still have a challenge explaining certain concepts to clients.

A thing we should all remember is patience and creating clarity is important in any dealing. In today’s world, most people gain what substitutes for wisdom from 30 second sound bites. These sound bites are often read by attractive people from a teleprompter on television. Often the reader does not even get the words correct. Often the sound bites were written for someone with a preordained agenda and by the time the 30 second sound bite gets to the listener, confusion sets in.

The listener has more than a dozen concerns to deal with at that moment. Does the listener really hear what was said? Was what was said actual fact or was it opinion?

As I talk to our staff about serving our clients I encourage patience, clarity, under promise and over deliver, and ask the client to verify he or she understands what was said.

Words matter and if your financial person uses words or concepts you do not understand, ask for clarity. Be certain you understand before the meeting ends.

I hope this suggestion gives you something to think about as you meet with your advisors whether they are financial or in any other service areas.

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Leaving A Legacy

Even the person with modest wealth should consider leaving a financial legacy. Whether it is to a family heir or a worthy charitable concern, leaving a legacy is within the capability of most people.

We live in an uncertain time and people are finding financial stability later in life than their mothers and fathers. Our children face an even more uncertain future. People carry more debt earlier in their lives and they carry it longer as they find career stability later in life.

Oh, I still hear some people say—“I want to die broke”, “I intend to spend all my money”, “nobody left me anything, why should I…” These and several other rationales are what I hear many days.

But then I hear people tell me that they would like to leave a meaningful inheritance to children or grandchildren. Some say they’d like to leave money to their church or a hospital. Often the question asked is “how can I accomplish this”?

For most folks the answer is to use the leverage of special life insurance packages. If set up properly, they never fail. There is always significant leverage when life insurance is applied properly. A few dollars become many dollars and those inherited dollars pass to the heir tax free.

There are many purposes and many methods to accomplish this planning. If you have a question, consider sending me an email at This email address is being protected from spambots. You need JavaScript enabled to view it. with your question.   I will respond without any obligation on your part and I can share what other people are doing in this confusing environment to maximize their legacies.

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The Future of Moldenhauer & Associates

We are expecting an exciting 2016 here at Moldenhauer & Associates. Our staff is busy serving our clients and because of the relatively mild winter, the first quarter has been busier than normal. Since our Planners and Para-Planners are moving forward professionally, we are creating added opportunities for two new Financial Planners. As always, we are most concerned with bringing on talented people who are looking for a real career.

We are not in a hurry to hire. We are more interested in finding the best and the brightest in adding to our professional staff. It is vitally important that we keep the correct ratio of advisors to clients so that clients are well served.

These days, we are finding that many people are concerned about the economy, market volatility and the attrition of advisors that serve our communities. Our best advisors and staff have been, in general, referred to us by our clients, friends and members of the community that are familiar with our commitment to providing our clients with the exceptional service that they deserve.

If you know of a financial advisor with another firm who may be ready to take his career to the next level, then Moldenhauer & Associates may be his/her next destination. Our excellent reputation speaks for itself and we want the best now and into the future. Please refer anyone that you feel is capable to me, personally, by emailing information to This email address is being protected from spambots. You need JavaScript enabled to view it. .

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The Difference

Last night, I was watching my favorite college basketball team play. For most of the game, they were in the lead and looked in control. But, in the last couple minutes of play, they let the lead slip away and eventually lost the game. While they, for the most part, played better than their opponent, the final score will, in reality, be the only lasting memory of the game.

In life, what happens in the last few moments is often what is most important. For those that give up before the race is over, they will never be the victor. They cannot be, they gave up early.

I was asked why I continue to make an effort to improve myself. Why do I work? And why do I exercise as hard as I do? Why am I attempting to put thoughts in writing that might inspire the reader?

I guess I learned to utilize the “extra effort” approach at a young age. I could site several times when this approach benefited me.

One that comes to mind occurred in 1971. The previous fall I had returned from Vietnam with the intent of returning to law school. But unexpected events required me to seek employment. I chose the financial industry. I quickly learned that most of my peers relied on friends and family to get through the most difficult early days.

I knew almost no one in WNY, so I did things like call strangers on the phone each day until 9 p.m. I knew I had to work twice as hard as other people.

Because of the extra work, I survived and attained some degree of early success. The harder I worked the better I did.

I have seen others apply this technique and attain similar success. I have seen people with natural connections fail for lack of work.

At the end of the lesson is the fact that the difference between success and failure is the real effort put forth. Good results will occur if the person involved will put forth the extra effort.

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Financial Screw Ups

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Most people think that persistent people are a pain. The truth is that persistent people are the people who accomplish the most whether it is at work, in athletics, or in any other activity.

Think of any activity and you will realize that the most successful people are the persistent people.

Let me give you a few examples from my life:

  1. As a young person I had a stutter. It was enhanced by stage fright. As a young officer I was asked to demonstrate a few simple techniques to a group of draftees. When I got on the stage I was so nervous I fainted. Yet, with practice I became one of the top instructors in the 2nd Armored Division. As time went on I became capable of speaking to audiences as large as 1,500 people.
  2. When I entered the financial business I was terrible at building my business. I decided that I would work twice as hard as the other trainees. They had 10 appointments per week, I had 20. After a while my skills improved and I became one of the most successful young advisors in New York State.
  3. When I contracted what was described as a terminal lung disease, probably connected to my military service in Vietnam, I was told that my only chance at living depended on exercise and taking the most awful medications. It was painful and made me sick. I did what was asked and then I did more exercise. It has been 13 years since I was given 2 years.

Persistency works. It works in so many ways. Accept failure and you are a failure. Be persistent and you will out preform everyone who does the minimum or gives up. It is simple math.

Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

Securities are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC.  AIC and Moldenhauer & Associates are not affiliated.  Additional products may be available through associates of Moldenhauer & Associates that are not offered by AIC.


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America's Future

America’s Future

Ours has always been a noble country. Our country’s reason for being was based on “Freedom”. Today “Freedom” is under fire not from just afar, but from within.

Our middle class is eroding. Good jobs are hard to find for young and old. For skilled and unskilled. I am particularly concerned for young people. Not so much for the well-educated, or the well-connected, but for those people with a high school education, a junior college education or trade school education. They need jobs that are not being created in adequate numbers. They need these jobs so they can support their families and so they have a chance to be part of the middle class.

These are the same people that are severely affected by taxes of all types. They pay FICA and Medicare tax to support the seniors on SSI. When prices go up they pay more sales tax than their older countrymen. Their homes are more expensive because of inflation (the real hidden tax), etc.

This group fights the wars, fight our fires, and police our streets. They do the heavy lifting in our factories and in cities. They have the least political influence, and yes, they have the hardest time earning a good living.

Much of the negativity in our country would be resolved if these people could find good employment. It is time to ask the political class for specifics on how they would propose to solve this problem.

How can we be asked to vote for people when they promise something and never deliver? It is time for term limits and to end the influence of big money. As a people we must stop the divisiveness that is espoused by the media and many of the political class.

I share this opinion, but we should all be concerned with where we are going as a country. RCM


Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

Securities are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC.  AIC and Moldenhauer & Associates are not affiliated.  Additional products may be available through associates of Moldenhauer & Associates that are not offered by AIC.


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Making 2016 Your Best Year


What is the most important year of your life? It is this year.

The past is a prologue and the future is uncertain. This is “the year”. It matters and you should start by making a decision that it will be your very best year.

The decision to be happy starts with you. Years ago I started to work on this by doing two things each day:

  1. Decide on what important things I will accomplish today.
  2. At the end of the day find one thing I am grateful for and write it down.

It is personal for me and it should be personal for you.

When I came through my illness, operation, and rehabilitation it was all I could do it keep a positive attitude. It was day to day. I promised myself that if I made it through, I’d face the rest of my life with a renewed optimism.

There will be good things for each of us in the coming year. Those good things will be given to us in proportion to the effort we put into living. No effort no reward.

If you doubt my belief, think of the times in your life when you experienced the most joy. Perhaps the birth of a child, the receipt of good grades when in school, being recognized for doing well for someone or at something. Perhaps, a promotion at work, or winning a competition... you get the idea.

Consider setting slightly outlandish goals. Age and health are not relevant. If you are older and not in great physical health, set a goal of walking each day or if walking is not good, chose another activity. Then do it.

If you have always wanted to travel, do it now. Whatever you want, make a decision. That decision will trigger excitement. Others will get excited and you’ll feel better. Life will get better.

Each day I wake up knowing that my day will be very good. Each day my days get better.

At the end of your day write down what was good about your day.  We all have something to be grateful for if only we think about it.

Try this during 2016---it will be your best year. Rich



Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

Securities are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC.  AIC and Moldenhauer & Associates are not affiliated.  Additional products may be available through associates of Moldenhauer & Associates that are not offered by AIC.

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From the Desk of Richard Moldenhauer

I have always had an interest in writing. It may go back to my youth, but the desire became more important when I was preparing for my lung transplant in early 2013. I found myself writing to friends and family, to clients and on a regular basis for the Moldenhauer & Associates Newsletter.


I seemed to have more to say than a medium through which to say it. Among the things I wanted to write about were my mortality, the concept of family, how my business and those I met through and because of my business effected my life. I wanted to write about the other people who for good or bad influenced my life. There were moments of reflection and consideration of times, events and things that have been part of or molded my life. Some were historical and some current. Stick with me for a while and let me know your thoughts.


My weekly blog post will come out on Wednesdays of each week.


Thank you.


Richard C. Moldenhauer

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Bridge the Gap with Executive Compensation

According to a The New York Times article about small businesses, “… most owners put off getting a valuation until a sale is imminent.” And when owners try to get a valuation, says The Times, few seem to know how to make a good guess. If you own a small business, do you know what it’s really worth? If you want the sale of your business to fund your retirement, a deferred compensation plan could help bridge a potential savings gap to your goal.

Executive deferred compensation plans let a person earn payment in one year, but receive the dollars in a future tax year. The Internal Revenue Code regulates nonqualified deferred compensation. And as long as you meet the government’s regulations, your compensation isn’t taxed until it’s distributed.

If you own a business and no longer qualify for a Roth IRA, then a deferred compensation plan can be a way to shelter income. While there’s no contribution limit for plans such as variable universal life, or VULs, the optimal minimum monthly premium payment we suggest is $500. If you’re contributing less than $500 on a regular basis, it’s likely not the plan for you.

The benefits of a deferred compensation plan for employers include …

- setting aside money beyond what the government traditionally allows, and

- retaining key employees, without having to spend money to fund a companywide benefit plan

The risks of executive deferred compensation plans include …

- losing money allocated as deferred compensation

If you have questions about executive deferred compensation, email This email address is being protected from spambots. You need JavaScript enabled to view it.

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What benefits, if any, are there to retiring overseas?

Interest in retiring overseas seems to be growing. For example, the print subscribers of International Livingmagazine, a publication for professionals wanting a luxury retirement, grew from approximately 39,000 in 2009 to 100,000 in 2014. And the Social Security Administration’s 2014 statistical supplementreports 605,166 people in foreign countries as beneficiaries up from 467,846 as reported in the 2011 statistical supplement.

Data shows it can be cheaper to retire in a place like Panama or Costa Rica (please know I’m not advocating for either country) than it is in the U.S. And a number of savvy Central American countries now market to U.S. retirees. According to Viva Tropical, a web site highlighting life in the Latin Tropics for U.S. expats, filet mignon can be had for $5.50 per pound. But that’s local beef, not something flown in from Nebraska. Viva Tropical’s writers note that if you want all the conveniences (and foods) of home, you may spend more than you would retiring in Florida.

Some countries offer tax incentives to U.S. expats. Many of these countries have communities of expats; so that, U.S. citizens can socialize with their fellow citizens abroad. Some countries (e.g., Costa Rica) offer a level of universal health coverage.

Retirement planning research is a must, though. Some foreign countries have a history of political instability and regime-change. And other countries may not honor a U.S. will or trust for the disposition of foreign assets. So it’s important to determine if you need to draw up a will or trust in whatever foreign country you choose to retire in and own assets.

When one of our clients retired, the couple chose to live six months of every year overseas. The arrangement required them to travel a couple of times per year. But they found the lifestyle too difficult as they grew older.

I wouldn’t call overseas retirement a mainstream idea, yet. Yes, it’s attractive to think you’ll just connect with family and friends via social media tools or video calling when you miss them. But as people age, they typically realize they need their family for support. Sometimes, it’s as simple as not wanting to miss sitting down with the kids or grandkids.

If you have a question, please send it to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Once you retire, is it best to shift your investments to a bond-heavy allocation versus stocks?

A customer recently asked me if it were a good rule of thumb to make the percentage of his portfolio invested in bonds equivalent to his age. I don’t believe that’s a good rule. Relying too much on fixed-income investments isn’t any better an idea in retirement than it is before retiring. 

With the interest rates we’ve seen since the “Great Recession,” an investor just can’t make it to retirement successfully with a bond-heavy allocation. Consider this:  The returns on equities versus bonds during the last two decades has been 9.5 percent and 4 percent, respectively. The market has enjoyed a bull run during the last six years. So, many people like the idea of being more growth oriented with their investments. That’s a corollary to the investor who becomes too conservative as they enter retirement. But there’s no reason to ratchet back or dial up with your assets in stocks. Rather, look at the numbers. What do you believe you’ll need to live comfortably in retirement? That number is different for everyone.

As I’ve written in past blog posts, the key to retiring successfully is sticking with a plan that doesn’t shift like a weather vane with every economic gust.

Once you’ve arrived at the calculation of how much you’ll need to retire comfortably, look at what a bond portfolio might yield for you. Assume a 2 to 3 percent annual rate of inflation. You may quickly find that overinvesting in bonds will over time become a money loser, even though it sounds conservative to rely on a greater percentage of bonds than stocks.

Let’s also consider Social Security. Gallup regularly polls Americans on their expectations about Social Security. Interestingly, about 50 percent of non-retired Americans say they expect Social Security to be a minor source of their income, or no source at all. Yet, about 60 percent of retired Americans in the same surveys say Social Security is a major source of income.

That’s quite a perception gap. Remember to factor in what you expect to get from Social Security as well as when you plan to begin collecting benefits. Once you begin collecting Social Security benefits, you may even decide to become a little more growth oriented with your portfolio. 

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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What's your financial plan if you don't want to retire?

In a Federal Reserve reporton the economic well-being of U.S. households, 51 percent of those surveyed ages 55 to 64 planned to keep working (either full- or part-time) after traditional retirement age. According to research from the Kauffman Foundation, nearly 25 percent of people ages 55 to 64 started companies in 2012; that’s up from 14 percent in 1996. If you aim to forego retirement, put a plan in place for managing your nest egg and consider these factors:

If you’re part of an employer plan and still working for that employer, you don’t need to take a distribution at 70.5 years of age and older (as long as you remain actively employed). But, you do have to take required minimum distributions (RMD) from your other qualified accounts (e.g., plans from former employers, as well as IRAs). 

Here are some thoughts for managing what you don’t have to take as a required distribution:

1)      Manage your money for the eventual beneficiary of your nest egg. For example, if you’re age 70 and working full-time and want to leave your money to your teen granddaughter, you could take a more aggressive approach. That’s because there’s plenty of time for the money to recover from downturns in the market.

2)      Manage what you’ve saved based on your age. Regardless of how you intend to use your money, you could increasingly limit your investment’s exposure to risk. In other words, play it very safe but sacrifice some returns.

3)      Consider one spouse retiring and the other not. You may need to develop two, separate financial plans in this case. But there could be a common source of funding for both plans.

4)      Manage 50 percent of your retirement account for growth (even aggressive growth) and manage the other half conservatively. You benefit from the growth potential of the markets with a long-term mentality. You also shield the other half of your assets from some volatility, which is good for money earmarked for an RMD, medical reasons or an emergency.

If you don’t have a retirement plan, get started today. And even if you have a plan in place, review the performance of your plan two or three times per year to ensure it’s taking you where you want to go.

Please send me your questions or comments at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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What is tax-loss harvesting?

Tax-loss harvesting is the practice of buying and selling in a portfolio with the goal of reducing the tax consequences of investing. For example, an investor may sell an investment at a loss simply to offset the gains from another investment. Here are three things to keep in mind with tax-loss harvesting:

First, the problem with tax-loss harvesting is that it can mean selling a holding that may be good in the portfolio, but perhaps hasn’t performed well recently. The assessment for when to sell depends on the short- and long-term expectation of the holding, and the benefit of “realizing” the loss.

Second, this is a strategy that’s most often undertaken at the end of the calendar year; the intent is to increase the “net” rate of return within a portfolio. Reason:  A portfolio may sell off “losers” throughout the course of the year. So the amount of gains that may need to be offset is often apparent later in the calendar year. You can carry losses forward into the next tax year, but there’s a limit to how much of a carried loss can be used each year.

Third, tax-loss harvesting only affects non-qualified, after-tax accounts or money. If someone is comfortable investing their own portfolio, tax-loss harvesting should be a technique they are familiar with. The challenge is deciding when to sell a holding that has significantly appreciated and choosing the appropriate account to offset this appreciation. 

Remember, begin your research about what to sell at least a few months before the end of the year. You don’t want other year-end pressures and commitments to cause you to make hasty decisions about your finances.

Do you have a view on tax-loss harvesting? Send your comments to  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Should you use a trust to reduce estate and gift taxes?

People most often rely on trusts to protect assets from bad decisions made by heirs who are ill-prepared to handle an inheritance. Families rely less on trusts to avoid taxes. A trust helps you put conditions on when or in what way your assets are divvyed up among your heirs when you die.

A trust can own a business and rapidly appreciating assets in order to avoid or reduce estate tax consequences. But the federal estate tax is now over $10 million, or $5 million per person. Even New York State has increased the base amount that would be subject to New York State death taxes from $1 million to $3,125,000, as of April 1, 2015. Gift tax limits at the federal level are the same as the estate tax limits (i.e., greater than $5 million per spouse). And in New York, there is no gift tax regardless of the amount. So, there can be some benefits to gifting assets to children in the State of New York. Gifts to trusts on the federal level count toward the excludable amount. 

As for the cost of creating a basic trust plan, it can run anywhere from $1,500 to $4,000 or higher. Cost is a function of complexity. The plan ought to include a healthcare proxy and a will, too. Other costs include changes made to the trust if it’s revocable and paying someone to administer the trust after you die.

Families sometimes create trusts to protect assets from nursing homes in the event certain variables are met. But more commonly, parents create trusts to put in place rules on how, when and why money would be distributed to children or grandchildren. It’s a way to keep parenting even after you “have shuffled off this mortal coil,” as Shakespeare wrote.

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Does your retirement savings plan include a SEP account?

In my opinion, a Simplified Employee Pension (SEP) plan is among the very best retirement accounts for small businesses with one to three employees, where the owner is the “rainmaker” and has lower income employees.

Sales can vary greatly from year to year for a small business owner or sole proprietor. But a SEP gives a business owner the ability to change contribution levels to meet business conditions.

So what is a SEP? According to the IRS, a SEP gives business owners a simplified way to contribute to their employees’ retirement or their own retirement savings. The IRS says SEP-IRA accounts follow the same investment, distribution and rollover rules as traditional IRAs.

SEPs are very easy to set up. And they’re easy to administer, much more so than a 401(k). You’ll fill out some basic paperwork to set up a SEP with a broker or a bank, and you’re up and running. The IRS does not require any annual reporting, either. SEPs also have higher contribution limits than many other types of plans. For example, the 2015 SEP-IRA contribution limit is $53,000; whereas, the IRA contribution limit is $5,500, or $6,500 if you’re over 50 years of age.

SEP contributions are based on a percentage of someone’s income. If a business owner has employees, then the owner has to contribute a percent of the employee’s income to the SEP. The owner also has to do that for every other eligible employee. There are no employee contributions. So this limits what an employee can put away for themselves. 

As good as SEPs are, I still meet business owners who delay creating a SEP or fail to fund it adequately. The reasons include:  “I’m investing in my business, so I can’t invest for my retirement,” or “My business is my retirement plan,” or “I have more control over investments and return on revenue in my business than I do with a SEP.” Thinking like this tells me that people really haven’t investigated SEPs or their retirement planning strategy may need a second look.

What’s been your experience with SEPs?

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Should I try and time my retirement with the market?

During the last six years, we’ve enjoyed a bull market. A bear market (defined as a 20 percent or more drop from the market’s high) will undoubtedly come. So people often wonder if they can (or should try to) time their retirement to anticipate the expected trajectory of the stock market.

I say no. In spite of marketing that tells investors to accumulate a nest egg of a certain size prior to retiring, I meet a lot of people who retire when the “pain” of working outweighs a shortfall of income. For example, I recently met a 60-something client who said she felt she still didn’t have enough money to retire. But she quickly added how unhappy she was with her work. Her income hovers around $70,000. And with her savings (plus Social Security), we calculated she’ll have a retirement income of approximately $32,000.

Ultimately, she is willing to sacrifice the additional income she would earn from staying employed for a better emotional quality of life.  So, no, I don’t think someone should wait for a recession and then retire. I don’t think they should wait to retire when they feel the economy is enjoying good times, either. If someone actually knew which way the market was headed, then they would surely have millions of dollars in their 401(k) plans from having successfully timed the markets. 

Instead, people tend to time their retirement around other factors such as buyout incentives, paying for a child’s wedding or providing for an ailing spouse or parent. It’s a perfectly valid strategy to time a retirement to coincide with one of the aforementioned events.

Similarly, most people sell their homes when they need to, instead of trying to divine market conditions, which nobody can definitively predict. From my experience, nearly 60 percent of today’s retirees felt they would work for a longer period of time than they ultimately did. This is because the circumstances of life or economics or both pressured them to leave the workforce earlier than planned. With this in mind, it’s best to begin saving sooner or (to the extent you can) increase your saving to ensure you’re comfortable when events beyond your control occur.

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it.

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How can you use a life insurance policy for cash?

Cash flow keeps a business afloat and allows a business owner to purchase new assets. It’s not much different for an individual. Cash flow enables you to pay your bills and invest for the future.

Some life insurance policies, such as whole life, have a built-in savings element, since you pay premiums and build up a cash value within the policy. A cash build-up can keep the premiums level as the policyholder ages and his or her mortality charges rise. There are tax advantages to building up cash, and some people use life insurance to keep, grow and tap cash benefiting from some of these tax advantages.

Why tap into your life insurance policy for cash?

Some people use the cash for college tuition, emergency home repairs or buying a car. I’ve used my policy for a down payment on a home. You can access cash from a policy by taking the money as a loan.  Good financial planning, of course, dictates you pay your loan back. Some policies (e.g., whole life) enable you to direct the dividends to pay off the loan and/or loan interest. 

What are some pros and cons of this strategy?

You access the cash value quickly (e.g., usually one or two weeks) compared to four or five weeks to process a Home Equity Line of Credit.  You can access the funds without creating tax consequences (in most instances). But tapping your cash can jeopardize the longevity of your policy, as the main purpose for the cash is intended to offset future mortality costs.

Is this a strategy for someone who is a young investor as well as a mature one?

It’s a great strategy for investors of all ages, as long as people understand how to use it properly. For young people with income and tax burdens, overfunding their insurance can create a legal tax shelter. A good thing. For older people, cash-value policies become important in the long term because they often need cash value to keep the insurance in force. Plus, other retirement planning benefits can come such as protecting defined pension income for a surviving spouse and replacing retirement nest egg assets that are spent.

Please send me your questions or comments at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Riders for the Storm

In the classic rock song “Riders on the Storm,” Jim Morrison sings, “The world on you depends; our life will never end.” And while our loved ones do depend on us, we all know our years will end. With that in mind, many people see the need for a permanent insurance policy to protect their loved ones. But sometimes insurance policies have other benefits for the owner of the policy.

What if a “storm” of another kind strikes? Think of someone diagnosed with a terminal illness; a family becomes financially strapped. What then?

Some insurance companies add an accelerated benefit rider (ABR) to policies to provide benefits such as critical illness care (similar to an accelerated payout for a nursing home stay). Policyholders aren’t always aware of this or don’t know to ask their financial advisor. The State of New York has been slow to permit much of this. That’s because New York wants to be sure companies aren’t using riders to reduce liability (e.g., charging high interest rates on the accelerated payout). But ABRs do add a layer of value to an insurance policy. These riders can benefit people who have insurance, but don’t often have long-term care insurance or money saved beyond their retirement funds.

Should you pay for an ABR, or have the insurer deduct its costs and fee from the benefit?

Most companies do not charge for the rider, but they may attach an interest rate to the benefit. If, for example, you have a $200,000 policy and the insurer pays you $100,000, then the insurer would charge a nominal interest rate deducted from the remaining death benefit.

Why would someone object to having an ABR on their policy?

There is no reason, unless the insured was paying for the rider along the way. If the ABR costs nothing, but is there if you qualify and need the money, it is all good. Ultimately, it’s something the insured would elect to have paid out.

How common is it to use an ABR for a terminal illness?

It would be more common if people understood their policy had it. If the insured or his or her family doesn’t need the money, then they wouldn’t enact the rider. If they were facing an illness and racking up big expenses, then they could likely use the benefit.

How does an ABR differ from a viatical settlement?

With an ABR you receive payment from your insurance company for some or all of your death benefit. But, you can leave a percentage for your beneficiary. With a viatical settlement, a viatical company will buy your life insurance policy and pay you a percentage of your benefit upon request. The company will then pay your remaining premiums and become the beneficiary of your policy.

Whether you ever choose to use an ABR is your decision. But it’s important to know that an option exists should you face an unexpected storm.

Do you have questions I haven’t answered? Contact me at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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What are the top 3 mistakes young people make with regard to retirement planning?

Mistake #1:  Waiting to save. Young people (folks in their 20s) tend to be focused on hobbies, travel and entertainment. There are so many things they think they need. Saving is a low priority if it’s even thought of. There are exceptions, of course. And young people who do save (even a little) for retirement take advantage of a powerful tool – compounding interest. Money you invest early in your career will have more time to grow.  

Mistake #2:  Cashing out a retirement plan. According to a Bureau of Labor Statistics survey reported on by The Wall Street Journal, workers between the ages of 18 and 42 have held, on average, 10.8 jobs. Because of the frequency with which young people change jobs, they are apt to cash out their retirement plans. Instead, young workers should roll over their plans to retain the same tax status for retirement purposes.  

Mistake #3.  Dipping into your retirement plan. This one and mistake #2 are related. Young people who’ve set up a retirement plan sometimes tap these plans to buy a house or a car. The provisions in some plans allow for this. But, when young people do this, they are fundamentally forgetting why they saved the money. Earmark money for different purposes and avoid drawing on it unless it’s part of your original plan. See our post below titled, “Should you tap into your retirement plan before you retire?”

One last thought:  When the market swings for a big loss, investors see their money lose value. It’s depressing, sometimes scary. Young investors can put the market’s gyrations into perspective by jotting down their near- and long-term goals. This might be the first time they’ve ever written down their financial goals. That’s okay. It doesn’t have to be overwhelming. Even a casual planning session can put people on their way to better understanding their situation. Having short- and long-term goals helps young people avoid the top 3 mistakes described here.

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Going Out of Business, With Liquidity

Most family businesses are either bought by outside parties for a fraction of what they are worth or shut down. This scenario caused me to once again look at how owners think about their businesses. Most see a small business as their personal investment. This kind of thinking creates both a problem and an opportunity for a closely held business.

Let’s say you own a landscaping business. Your business generates around $300,000 per year, and you have $500,000 worth of equipment. You estimate the business is worth $1 million. If you have $20,000 on hand, you opt to buy more equipment, instead of investing, for example, in a 401(k) plan. Ultimately, recurring revenue and used equipment are the only things you really have. To get the $1 million you think your company is worth, you have to make sure the business will remain a going concern and plan how you’ll exit the business.

Most small business owners that successfully transition from one proprietor to another (whether family members or not) essentially finance their own buyout. To do this, you need someone who’s capable of taking over the business and a way to do the buyout in the most tax-efficient way. If, for instance, an owner wanted to leave her business in 10 years, she might consider giving 10 percent of the business to a key employee each year for 10 years. The owner could pay premiums on a life insurance policy for the employee who would report it as bonus income. The employer’s payments would be tax deductible. The employee, in turn, would have a life insurance policy on the current owner because the owner is making payments toward the employee’s purchase of the business. After ten years, the employee can draw cash from the policy for a down payment on the purchase of the business. During the transition, the business stays healthy with the oversight of the original owner. If, however, you rely on a traditional account to stockpile cash, what happens if one of the parties dies? What if the company is sued? What if the market crashes? Life insurance is not an attachable asset; that means nobody or no entity can take its worth from you in one of the aforementioned scenarios.

If you want to make the most of your investment, plan a way to unlock the liquidity in your business before events overtake you. When owners fail to plan their exit, three scenarios usually occur:

·         The owner taps the business for cash, until there’s essentially no business left.

·         The owner works diligently until death, but there’s no succession plan; if the owner has built a very successful business, the family sometimes can’t afford the estate taxes without selling.

·         The business owner slows down, grows tired of the endeavor or fails to maintain profitability and must shutter the company’s doors.

Whether you decide to transfer ownership to the next generation, sell to your managers or court an outside buyer, you want to make sure the company maintains its value. You can read our blog post “Thinking for Generations to Come” to learn how one company stayed in the family.

Have you planned how you’ll leave your business? Share your thoughts with me at  This email address is being protected from spambots. You need JavaScript enabled to view it. , and I’ll consider writing about it in a future post.

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Machines as Investors

Robots are in the news these days. The Feb. 25, 2015, edition of The Wall Street Journal reports that experts are rethinking what robots are capable of. One interviewee said robot-driven cars were just a couple of decades away. And two new movies, “Chappie” and “Ex Machina,” explore the boundaries of artificial intelligence. Could robots become investment advisors? To some extent, they already have. “Robo-advisors” are supposed to disrupt the market with technology and lower costs. The idea is to primarily rely on algorithms, instead of advisors.

In general, the “robo-advisor” is a good concept. Anything that leads to lower fees and better opportunities for clients and investors is good. But robo-advisors work best for someone in their late 20s. Here’s why:  The robo-advisor is strictly about management of an account. Robo-advisors simply provide a strict asset allocation. In comparison, a human would take a strategic approach wherein they do research and come up with a set of educated assumptions as to why it’s advantageous to favor one market sector versus another at any particular time. By answering some basic investment questions, robo-advisors place you into a pre-set slot. If you are getting started with saving and investing and have a small account with a long-term horizon, then robo-advisors can keep costs in check for people who don’t need customized advice.

Robo-advisors might also be a good fit as a “bolt on” to 401(k) plans. Most 401(k) participants don’t receive the guidance they desire, and a robo-advisor could increase the availability of at least some basic advice. If, however, you’re in your late 40s or older, then a robo-advisor likely won’t be of much (or any) value. As you close in on retirement, your retirement planning ought to be supported by customized advice tailored to your current and future needs. The value of a good advisor goes beyond portfolio management and is in how well they prepare, educate and understand their client. Just like the dynamic conditions that challenge a robot trying to navigate a car through traffic, robots haven’t, yet, mastered the nuances of retirement planning advice.

Until robots do take over, you can send me your comments at  This email address is being protected from spambots. You need JavaScript enabled to view it.

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Is $1 Million Enough to Retire On?

Last year USA Today columnist Rodney Brooks wrote “… you’ve banked a cool $1 million for your retirement years.  Think you’re set? … you still might be short.”

I disagree with Mr. Brooks. Here’s why:  Success comes from understanding what you’ll need in income (i.e., discretionary income vs. fixed income) the year before retirement. You’ll also want to know how you’re generating income from your assets at least one year before your first distribution. The further in advance you can determine these things, the more confident you will probably be with your planning.  

Retirement planning isn’t about the size of the nest egg; it’s about the income someone can expect from all sources. This is where to begin your retirement planning analysis. Calculate what you’ll be generating, and cross-check that with your expected budget.

Successful businesses rely on budgets. Think of your retirement like a business. Build a budget. Your budget will tell you if $1 million is a goal you need to reach.

How far should your budget project? In 2013, the World Health Organization pegged overall life expectancy for Americans at 79 years, 77 for men and 82 for women.

Someone who retires at 65 with $500,000 saved and a Social Security retirement benefit of $2,000 per month, plus a spousal Social Security retirement benefit of $1,400 per month and a pension of, say, $20,000 per year could reasonably expect an annual income of $80,000 at the start of their retirement. That’s comparable to an income of almost $110,000 for a couple putting 15 percent into their 401(k) each year during their working years. So you don’t necessarily need $1 million nest egg to comfortably retire. 

I realize $80,000 per year may not be everyone’s idea of comfort. But many American retirees would be happy with that income. Have you analyzed your anticipated retirement income?

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Stretch Your IRA

Coaches and athletes say stretching is good for you. Turns out, stretching is also good for your finances. If you’ve ever heard someone talk about a “stretch IRA,” it’s not a new product. It’s a method of making your wealth last longer. With some planning, I believe you can make an IRA last for a generation or more.

In most cases, someone who owns an IRA has to begin drawing on it, or taking required minimum distributions called RMD in finance-speak, when he or she turns 70.5 years old. The amount the IRS requires you to take out is based on the U.S. government’s life expectancy table, which you’ll find here

Let’s say John Smith holds a traditional IRA worth $100,000 on Dec. 31, 2015. John dies on Jan. 1, 2016. If his wife Jane was 74 in the year prior to John’s death and his sole beneficiary, then Jane would take an RMD of $7,092.20. If, instead, the sole beneficiary was John’s son Mike, age 50 in 2014, then Mike’s RMD would be $2,923.98. If grandson William, who’s 25 years old, were the sole beneficiary, then he would take an RMD of $1,718.21.

The formula is simple:  Younger beneficiaries take less RMDs. With the right planning in place, John’s beneficiaries can stretch out the value of his bequeathed IRA. He may decide to designate grandchildren as beneficiaries, instead of his spouse or even children, so the value of his IRA can reap tax-deferred growth for a longer period of time. Whoever inherits the IRA will see that stretching out the IRA distributions increases the opportunity for additional tax-deferred growth. Remember, IRAs can be estate-planning documents. So make your trusted advisor (whoever he or she is) aware of what you have. And consult with them. If you inherit an IRA, speak with a knowledgeable advisor before you tap the funds.

Finally, there’s been talk in Congress of trying to eliminate the stretch IRA because it wasn’t meant to be an estate planning tool. According to Congress, the point of the IRA was to benefit the people who earned it, not the retiree’s children and grandchildren. What Congress is proposing is this:  If you don’t use your IRA during your lifetime, then it must be cashed out within five years. That’s a proposal, not a law. But if Congress were to make it law, then there are still strategies you can deploy to help your heirs.

Do you have questions about stretching your IRA? Contact me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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All in the Family

“’You’re still too young to run this business,’ said the father to his sixty-something-year-old son,” recalled Niagara University Family Business Center Director Vince Agnello as he reflected on succession planning. According to Vince, the father “just couldn’t give up control.” Vince and Family Business Center Program Coordinator Gerry Catalano invited me to speak in December about family business succession planning at an NUFBC breakfast seminar. The audience consisted of operators of family run businesses. Some of these owners were second- and third-generation family members.

I was impressed by the attendees and their questions for me. For example, one attendee wanted to know:  How do you decide which sibling serves as CEO when several want the role? Another asked me: When did your father know you were ready to become CEO of your firm? A third person wondered: How can an owner protect a family business if a successor divorces?

The answers to these questions and many others stem from four succession planning principles:  communication, funding, transfer and support. Communication is about addressing both the owner’s concerns as well as the successor’s concerns. In my case, my father wanted me to have, among other things, professional experience (e.g., getting knocked down and around) before I stepped from college into the family business. There was no place in my father’s office for a sense of entitlement. I wanted assurances that my role wouldn’t change if other relatives joined the company after me. 

As for funding, that entails planning for how you’ll look after your asset (i.e., the family business) if faced with a lawsuit, divorce or sibling rivalry. Next, there’s the need to develop a payment schedule for transfer from owner to successor. And the last point we’ve already touched upon – support. That includes defining roles for the new owner as well as the retiring owner.

What makes a CEO great, said Peter Drucker, is the leader’s ability to choose a successor and get out of the way, so the successor can run things. As Vince Agnello remarked, sometimes all the planning in the world can’t overcome an owner’s refusal to simply step aside.

If you’re interested in this topic or any other family business issue, please visit the Niagara University Family Business Center.

If you’d like my succession planning checklist, contact me at  This email address is being protected from spambots. You need JavaScript enabled to view it.

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Does your financial ''house'' need cleaning?

If your financial files have taken on the look of a “paperstorm,” the thought of organizing yourself can feel overwhelming. But tax documents, estate plans and financial statements are simply tools. Keeping them sharp and in one place gives you (or a trusted someone) a way to apply them when needed. Here are three simple steps:  First, determine what you need to keep; second, understand how long you need to hold onto your paperwork; and, three, decide where you’ll file your important “papers.”

What should you keep track of?

Any file is a snapshot in time. Its value hinges on you keeping the information up to date. Here’s a partial list of the essential items your file should contain:  will, health care proxy, power of attorney; financial statements (e.g., investment accounts and bank statements); life, disability and long-term-care insurance; credit card statements, real estate deeds, and loan documents. 

How long should you keep a copy of your financial documents? 

In general, keep the first statement you receive on a new account, then keep each year-end statement plus the most current quarterly statement. Most financial institutions will send older statements upon request. A good guide for gauging how long to keep your documents is at, where the U.S. government provides a tablefor managing this kind of thing. If you keep your financial statements on a computer, then make sure someone you trust has your password(s).       

Are there secure software packages for tracking the performance of financial holdings?

We give our clients access to software (including an online vault) that aggregates their accounts and financial data. This creates a more dynamic, secure tracking system than what you’d get from a paper or manual system, although some people still want an old-fashioned accordion file. There are also web-based tools, both paid and free, that a person can use to organize bills and online statements. For example, recently named FileThisamong its 50 Best Websites of 2014, and U.S. News & World Report suggested MoneyStream.comas a free service for organizing bills online.   

The key to being organized financially isn’t neatly filing every piece of correspondence that crosses your door or inbox. Organization is about having access to relevant, current information when you or a confidant need to make a decision. If you’d like help getting organized or simply don’t have the time to do it yourself, contact us.

Most clients say the best way to stay financially organized is meeting annually, semi-annually, or quarterly with an advisor. There’s nothing like a pending meeting to focus your mind on preparation.

If you have a suggestion or question, email me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Estate planning for the 99 percent

Even if you believe you have a modest net worth, without an estate plan, your assets could be dispersed in ways you never imagined. And your heirs would find it difficult or impossible to get what you intended for them. Estate planning documents such as wills, trusts and healthcare directives cover more than money. They stipulate how you want your assets spread and how you’d like to be cared for if you’re incapacitated.

Assume you have $200,000 in your 401(k) plan and bank accounts. You can preserve that for your children with a will – the first step in estate planning. Without a valid will, you’ll die intestate. And that gives the government the right to divide what you have left behind.

Estate planning for someone of modest means may be more critical than for the extremely wealthy person. Why? The margin for error is much less.

What can dying without a valid will mean? Assume you have no children or spouse at death. Your assets will go to your parents if they’re alive. If they’re in poor health, your assets could be confiscated for their health care. If, however, you have a will, your assets could be directed to another person or charitable entity; your parents would not inherit your assets, and they might even qualify for Medicaid. For a few hundred dollars, you can draft a will and decide where your money goes.

Here’s another example:  Let’s say you have $300,000 to give your only child who is 21 years old. But if you die, do you want him to inherit the money in one lump sum? Seventy-five percent of inheritances are completely gone in five years. You want to leave your child with a head start on growing a large asset. But you need a distribution plan for him or her.

Unfortunately, most wills give children who are 18- to 21-years-old a substantial sum of money. Most young adults aren’t mature enough to manage a large inheritance. When I ask people why they’ve structured their will in this way, they often say, “Our attorney told us to do this.”

So find an attorney or financial planner with estate-planning experience. Ask them what their philosophy is about passing wealth to children.

A good law firm or financial planning firm will really listen to you; they’ll put your interest ahead of their service. Ask whomever you meet with to provide three or four references before you begin working with them. Anyone who truly wants to help you will not balk at sharing the names of people they have helped.

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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How can I protect my assets from the next economic meltdown?

Collapse and meltdown are attention-getting words. The collapse of Lehman Brothers in 2008 nearly brought the financial system to a halt. In hindsight, experts say, the crisis of 2007-08 was brought on by things like bundling and selling sub-prime loans.

Investors and financiers were taking greater risks for higher returns in a low-interest-rate economy. Some call that aggressiveness or creativity, others say greed. Remember collateralized debt obligations, or CDOs? Sub-prime loans were put together and used to back securities, which were dubbed CDOs. These “new” investments were given a triple-A credit rating, but the foundation on which they were built was shaky. The only new thing was how complex investing in debt had become.

Protecting your assets requires limiting risk. Simple, right? Fundamentally, a lack of discipline hurts investors in a market. Someone who exercises bad timing or a bad strategy or panics in the face of market shifts or news reports will likely end up losing assets.

According to, from 1871 to 2013, “the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.” If you look at the period from, say, 1988 to 2013, the annualized return rate was 7.57 percent. And from 2005 to 2008, the number was pegged at -7.66 percent. So, yes, there have been peaks and valleys. But return rate has been positive over the long term.

So if you want to protect your assets, determine how you feel about the risk and volatility in the market. The market, over time, will still be the best place for the average person to invest.

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What's a realistic rate of return for the money I'm now putting away for retirement?

Some expertssay you can get a 12-percent return on your mutual fund investments. But, in an article titled “Is the 7 Percent Return for Stocks Extinct?”, U.S. News & World Reportwriter Chris Gay states, “Since 1926, the S&P 500 has produced an annualized total return (including capital gains and reinvested dividends) of 6.6 percent, after inflation."

I take a slightly different viewpoint. Since the Great Depression, big events have happened to shape the U.S. economy. From 1941-1945, we fought World War II. From 1966 through 1981, the Vietnam War, rising inflation and a couple of oil crises saw stock market returns behave sluggishly. The dot-com era saw stocks take off, and the 2008 financial crisis shocked the market. And big events will likely happen during the next 60 years.

But some events have hugely influenced the stock markets. For example, the increasing prevalence of 401(k) plans and the reduced number of defined benefit pension plans. These examples are the clearest signs anywhere that average Americans must save more for their personal retirement.

Here’s another factor to consider when looking at the rate of return for retirement planning:  During the last 30 years, the Treasury Bond Yield has steadily declined. According to Crestmont Research, the yield in 1983 was around 10 percent and in 2012 it was near zero. The yield curve is a benchmark for debt such as mortgage rates and bank lending rates.

So, with this data as context, the shorter answer to the question is:  Plan for a six- to nine-percent rate of return.  If I’m wrong, you’ll have more money than you will need in retirement. If I’m right, you may be one of the few people who have enough money to retire the way many people only dream of.

Please send me your questions or comments at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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Is your retirement plan based on your home's emotional equity?

Your home’s equity should be part of your retirement plan. But, first, think about what a home means to you. When you retire, do you want to remain in your current home because of its memories, convenience or community? Would you move to a neighboring town or even another state to take advantage of lower property taxes?

It’s enticing to think of paying off a mortgage, selling a home and retiring with a profit that fills an income gap. CNNMoney reported last October that Bill and Sheri Pyle sold their three-bedroom home in Chicago for $185,000 and moved to Tennessee where they bought a $128,000 four-bedroom ranch house. The Pyles say they lowered their property tax from $7,000 to $500 per year and paid off a car loan. And, for now, the couple says they haven’t had to touch their $400,000 in retirement savings.

But downsizing could mean less cash in retirement than you think. For starters, people generally aren’t realistic about the costs they’ll incur when they move. For example, you may buy a smaller home; but, a smaller home can be more expensive than the property you sold if you’re relocating to a popular area. You could have far less square footage and property to care for. But you could be paying for community assessments and association dues if you purchase a condo. And if you retire to a golf community, you can incur monthly minimum charges for things like dining.

Some couples also assume that the equity in their home will pay for nursing care should a spouse become sick. But remember, selling your home in a rush to unlock equity still leaves you with a question:  Where will your healthy spouse live?

The reality is most people have a hard time selling their home. Emotions get in the way of objective planning. Or they realize too late that they aren’t going to get the price they feel their house is worth.

While owners put a premium on the good feelings a house provokes, buyers don’t.  The current working generation doesn’t believe a home is one’s greatest asset. Many people in their 20s, 30s and 40s with whom we meet don’t seem to fall in love with a home the way past generations have. So they’re less likely to stretch their financial resources to pay the price a seller believes his or her home is worth.

So what’s the best way to factor your home’s equity into your retirement plan?  First, realize your home is only worth what someone is willing to pay for it. Next, define the property you’re looking to retire to and add up the costs. A 1,500-square-foot condo in a beachfront community could easily cost more than your spacious four-bedroom home on a five-acre lot. Third, create a spreadsheet outlining, for example, what it would cost to hunt for a new home, sell your home with a real estate agent and move the furniture you want to keep.

This will help you deduct your home’s emotional equity from its financial equity, so you can make a realistic retirement plan.

Please send me your questions or comments at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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How Much Should You Expect to Spend in Retirement?

Expect, on average, to spend 70 to 80 percent of your annual, pre-retirement income when you retire. I know clients who spend more in retirement than they did when they worked full-time. So, the answer differs for everyone. I’ve seen younger retirees with hobbies that cost more than anything they had time for prior to retiring. Retirees often live with very little debt. Their homes are generally paid for, and their children, if they have any, are usually out of college.


To determine what you should spend in your retirement, build a model. A simple one is okay for starters. There are a number of 401(k) plans that have tools that try to project retirement income. I’m not advocating for a particular plan or tool, but I’ll offer some examples you can explore.

First, look at the U.S. Labor Department’s web site. It offers an income calculator at And CNN provides a simple tool at that allows you to adjust for savings, current income and potential contributions. These tools can help you see the trajectory you’re on.

Once you know how much you need to save, look at your portfolio and make adjustments. For example, many 401(k) plans have a default savings rate of 3 percent for newly enrolled participants. Saving 3 percent likely won’t meet your needs, unless you’re relying on something other than your 401(k) plan. These default settings also include default investment options. Check these, too, because many plans require a participant to opt out of them.

As you near retirement age, consider some not-so-obvious expenses that will arise in retirement. First, think of travel. A lot of retirees talk about visiting different parts of the country or even the world. But if you retire to a place away from your children, expect to start traveling to see them and your grandchildren. It’s nice to think the children and grandchildren will visit you in, say, Florida. But how often can a young family afford to visit you? Your travel budget could grow by 100 percent or more.

Inflation is another not-so-obvious expense for retirees. Calculate the effect of inflation as you build your nest egg. It will give you a sense of what you really have saved. Saving is always a great first step. But saving with a detailed plan in place is the way to prepare for retirement.

Please send your comments to me at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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How do you pay your financial adviser?

Do you understand how advisers charge for retirement planning services and products? The financial adviser industry earns its keep from clients through a variety of payment models. However, not all advisers offer a range of models to clients. First, let’s list some models to look for: 1) asset-based fee, 2) commission-based, 3) hourly fee, and 4) retainer.

The traditional model is the asset-based fee. Each year, an adviser will charge a percentage of the assets you have under management. This fee can range from 0.5 percent to 2 percent. According to FA Insight, the asset-based fee model is the most common arrangement advisers strike with their clients; it’s a model used 85 percent of the time by advisory firms. In concept, the model encourages the adviser to work as hard as he or she can for you. That’s because growing client assets equal more revenue for the adviser.

The model doesn’t make as much sense for someone with assets under, say, $100,000, though. Here’s why: Let’s say a client makes a one-time $25,000 investment. The client never makes another deposit. But the annual management fee is one percent, so over the next nine years the investor has paid $250 per year, or $2,250 (i.e., assuming no growth, or more if the account was greater in value each year than the initial $25,000 deposit). If, instead, the investor chose a commission-based model, he would have paid a one-time fee of, say, 5 percent on the $25,000 initial investment, which is $1,250.

While a commission-based model can be good, it’s also quite easy for someone to purchase financial products on their own, without paying a commission. And some advisers who also work as brokers (i.e., someone taking a commission on the sale of financial products) may find it easy to justify the sale of one product over another, in part, because of the higher commission.

Some advisers offer clients a pricing model based on an hourly fee. It’s as simple as it sounds. You pay only for the time you believe you need from your adviser. The issue with this model, however, is that it may discourage investors from thoroughly discussing options with their advisers. And some less than scrupulous advisers may look for ways to set the clock in motion and keep it going to earn more of a fee.

The retainer model isn’t commonly offered. But here’s how it works. An investor would pay his or her adviser a set annual fee. The fee would include the adviser developing a customized financial plan, an agreed upon number of planning meetings, assistance with asset management, periodic consultations by phone, and interactions by email or text message.

Each payment model has its pros and cons. But whether your retirement planning needs involve transactions or services, the best adviser is the one who offers you two things: First, your adviser ought to offer an array of payment models because no single model is best for all clients, at all times. Second, your adviser’s value should come from his or her guidance, ability to educate you about options, and commitment to helping you succeed, not how you pay them.

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