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LAW ADVOCACY FAMILY FINANCE A monthly newsletter providing your family with insight about the law and finance (with an occasional dose of humor) from your friends and advocates at DuPont Wealth Solutions and the Law Offices of DuPont and Blumenstiel.
18 JLY
WHAT INDEPENDENCE MEANS
As we celebrate Independence Day this month, I’d like to take a moment to explore what independence means to our personal lives. Much has already been said about the values of life, liberty, and the pursuit of happiness by more eloquent writers than myself. But being the father of a teenager gives you a fresh perspective on the practical, everyday kind of independence we can sometimes take for granted. At the time of writing, my daughter Sophie is in the midst of studying for her driver’s education test. It’s incredible how fast time flies; the little girl I remember crawling around on the carpet will soon be taking herself to school, dance lessons, and wherever else she needs to go. Sophie has already had plenty of in-car practice, and I have full confidence she’ll pass with flying colors. That’s more than her old man can say. During my driver’s ed test, I failed to stop for a school bus that was picking up kids in the other lane. In my defense, this was before they had the fold-out, light-up stop signs you see on buses today. I had to retake the test the following week, which made things awkward because I was supposed to pick up a date the night of the first test. In that moment, being driven to our date by her mother made me really understand the independence I was missing out on. I passed the test the following week and was finally able to hit the road in my 1969 VW Beetle. I called it the “turquoise texture mobile” after its unique paint job. I never did get the air out of the brake lines, meaning everybody knew when I was pulling up to a stop sign. It wasn’t exactly a hot rod, but I was able to take myself around town. But with this newfound freedom came new responsibilities. As the eldest child at home at the time, I was tasked with ferrying my siblings to and from school and to whatever extracurricular activities they had going on. Meanwhile, Sophie is an only child and can enjoy significantly more independence from her license. She won’t be screeching to a halt in a turquoise bug, either. Since I first bought my current car, Sophie has had “dibs” on it. It’s a Nissan Pathfinder with plenty of armor and airbags. When I first drove it off the lot, I already had the day that Sophie would get her license in mind.
duty between work and getting Sophie to and from school. This independence gets Sophie out of the house more and more. But it’s also bound to give my wife and me a hint of what’s to come.
Soon, when Sophie goes off to college, it will be just Julia, me, and the
“AS SOPHIE CONTINUES HER JOURNEY INTO ADULTHOOD, I AM REMINDED THAT INDEPENDENCE CAN BE BOTH A BLESSING AND A CURSE.”
puppy. She still has a few years of high school left to get us used to the idea, but it’s sure to be quite the transition. Currently, Sophie
plans on going to an in-state college, and she may even stand a chance at becoming a Buckeye like myself! Of course, Ohio State is a very different animal
than when I attended. The irony of having an alma mater that has done so well for itself is that the bar is significantly higher for your child to get in than it was for you. As Sophie continues her journey into adulthood, I am reminded that independence can be both a blessing and a curse. Gaining that newfound freedom means you have to be willing to make sacrifices and take on new responsibilities. Just like our independence as a country, we need to earn our freedoms every day by embracing the challenges and changes that come with them. I wonder if this feeling of excitement and uncertainty for the days ahead is anything akin to what the Founding Fathers felt in the years following their revolution? While not as titanic as the founding of a nation, Sophie’s first steps into the adult world are nonetheless important, scary, and wonderful. It’s these moments in life that remind me of the real, practical value of those ideals first enshrined in the Declaration of Independence.
Happy Fourth of July,
Our daughter’s independence also gives Julia and me a break from being her chauffeur. Julia in particular has been pulling double-
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HOW MUCH SUNSHINE IS TOO MUCH? KEEP YOUR FAMILY SAFE
To many people, summer is all about heading outside to enjoy the weather. But getting too much sun can be dangerous. To have a fun- filled summer with your family this year, remember that it’s essential to protect yourself from harmful UV rays. COVER UP Covering your skin is one of the best ways to avoid skin damage. Wide- brimmed hats, long-sleeved shirts, and long pants or skirts can protect your skin from direct exposure to UV rays. While this tactic protects you from the sun, it offers poor defense against the heat. So, if you opt for cooler attire, it’s important to cover all exposed skin with a copious amount of sunscreen. Be sure to reapply every two hours for maximum skin protection. SPEND LESS TIME IN THE SUN If you’re planning to spend a significant amount of time in the sun, consider your environment. Will there be plenty of shade? Will you have to bring your own? What’s the best way to step out of the sun for a few minutes? Wearing sunscreen and protective clothing are great ways to shield yourself from UV rays, but it’s important to avoid being in
direct sunlight for long periods. Taking a break from the sun gives your body the time it needs to recuperate and helps prevent sunburn and heatstroke. COMMON MYTHS ABOUT SUN EXPOSURE Many people think that a tan is better than a sunburn, but the result of tanning is still sun damage. When your skin tone changes due to the sun, regardless of whether it tans or turns red, it’s a result of the epidermis reacting to damage caused by UV rays. Both are symptoms of harmed skin. While vitamin D is important, the sun does not contribute to its creation as much as you might think. Doris Day, a NewYork City dermatologist, explains that if your skin were to constantly produce vitamin D from being in the sun, it would reach toxic levels. Vitamin D is the only vitamin that your body can produce on its own, through a common form of cholesterol or 7-dehydrocholesterol. Spending time in the sun does help vitamin D form, but you need far less exposure than you think.
Knowing how to protect yourself from UV rays is the first step to having a safe, fun-filled summer!
WHEN IT COMES TO ESTATE PLANNING
Know Your ABCs
ARCHIVE To ensure your estate wishes are carried out, you need to have a clear written record of your wishes. This is why a will is the basis of all estate plans. Ensuring that your wishes are well-documented, precise, and thorough will guarantee that your beneficiaries receive what you intend. This key stage in the process is where having an estate planning professional on your side can make all the difference. They will listen to your goals, help you plan, and ask questions you may not have known to consider. inheritance? Would you want your children’s spouses included in your estate? If your estate was affected by a divorce or the death of a child, how might your wishes for the distribution of your assets change? Having a clear answer to these delicate questions, archived in writing, is essential to create a strong will. For instance, would your minor children or grandchildren be able to manage an
BEQUEATH Of course, you can’t plan your estate without knowing whom it is going to pass to. You should name the beneficiary or beneficiaries of your insurance policies, retirement accounts, and any other assets. Contingent beneficiaries should be set up in the event of any complications. Most importantly, you need to name an executor to oversee the fulfilment of these wishes. CALCULATE Once the basic outline of your will is in place, you need to calculate the possible impact of estate taxes on your assets. Depending on the dollar value of your assets and your relationship to the beneficiaries, taxes can impact your estate plan. Certain tools can be used to fund the payment of estate taxes, such as life insurance policies and trusts. To find the option that suits your estate and your will, it’s best to seek the guidance of a qualified tax and legal professional. Call us today to get answers to your estate planning questions.
Estate planning is one of those steps in life everyone feels they “should” get a head start on, but few people get around to it. Part of the problem is that many folks don’t know where to begin and what factors to consider. So our estate planning professionals have broken down the basic ABCs for crafting a plan that ensures your last wishes are met.
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ENSURING YOUR LIFE MATCHES YOUR LIFE INSURANCE
To be effective, your life insurance needs to be a living document.Your policy shouldn’t be sitting in a drawer for years, gathering dust; it should be growing and changing along with you.You should review your policy on a regular basis, especially when you reach the following milestones. MARRIAGE Congratulations!You’ve just brought someone in your life in a big way!You should make sure your policy reflects this by checking that your coverage is still adequate.You may also consider getting insurance for your spouse, adding them to your beneficiary list, and including any name changes. GROWINGYOUR FAMILY Whether through birth or adoption, the added responsibilities of caring for a child may make more coverage necessary.The skills of a child’s primary caretaker are not easily replaced, and child care can be expensive. As with marriage, this is a great time to update that beneficiary list! HOME OWNERSHIP If you’ve purchased a new home or have refinanced your mortgage, extra coverage may be necessary.You need to ensure your beneficiaries can continue meeting mortgage requirements after you’re gone. SAVINGS GOALS Your family’s financial goals, such as funding a college education or saving for retirement, may be affected by your death. Insurance proceeds may be used to help make these goals attainable. Also, if your policy allows
for loans or withdrawals, you can supplement retirement income or tuition during your lifetime. Use these loans and withdrawals sparingly.They can reduce the cash value of your policy and increase the chance the policy will lapse.
CHANGE OF EMPLOYER
If you change jobs or become a small-business owner yourself, it’s important to know how this transition will impact your policy. For starters, you need to factor in the loss of your old employer’s benefit plan.
Then, if you have a new employer, you can add their benefits. If you are your own boss, consider ways your policy can be used as a tool to help your business, including naming business partners as beneficiaries. ESTATE PLANNING Life insurance is included in almost every estate plan and serves as a source of support, education-expense coverage, and liquidity to pay death taxes, pay expenses, fund business buy-sell agreements, and sometimes to fund retirement plans.
SUDOKU
CHARRED CHILI-CHEESE CORN
You’ll find all of the flavors of elote, Mexican street corn, in this dish, without any of the mess. It’s the rare side that can outshine any main course.
INGREDIENTS
•
4 ears of corn, husked
•
1/4 cup fresh lime juice
•
4 tablespoons high-smoke- point oil, such as canola or vegetable
•
2 ounces fresh cotija cheese (or feta), crumbled
•
1/4 cup cilantro
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1 large shallot, thinly sliced
•
Salt and pepper, to taste
•
1/2 red chili (such as Fresno) or jalapeño, thinly sliced
DIRECTIONS
1. Heat grill to medium. 2. Brush corn with 2 tablespoons oil and grill until visibly charred, 10–12 minutes. 3. Cut kernels off cob and combine with shallots, chilis, lime juice, cheese, and remaining oil. 4. Season with salt and pepper, garnish with cilantro, and serve.
Inspired by Bon Appetit magazine
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INSIDE
Thoughts on Independence PAGE 1
Battling the Summer Sun!
Estate Planning ABCs PAGE 2
Life Insurance Milestones
Charred Chili-Cheese Corn PAGE 3
Songs of the Summer in History PAGE 4
SONGS OF THE SUMMER DOMINANT JAMS OF THE WARMER MONTHS
Music is always changing, but one thing’s for certain: There will always be a “song of the summer” when the heat starts rolling in. To be crowned the true song of the season, a track must be everywhere, stuck in everyone’s heads — whether they like it or not — and have a certain
complicated career, “I Get Around,” “Fun Fun Fun,” and their other hits from the early ’60s virtually wrote the blueprint for future songs of the summer. They’re sunny, annoyingly catchy, and filled with youthful exuberance. 2003: BEYONCÉ, ‘CRAZY IN LOVE’ Even before she led Destiny’s Child to international success and branched out on her own to become the de facto world queen of pop, it seemed Beyoncé was destined to change the musical landscape. Though she’d secured numerous smash hits before, “Crazy in Love” was, to many, the calling shot that signaled her eventual ascent to the throne. With her thrilling, powerful vocals backed by enormous horn samples and undeniable hypeman Jay-Z, it’s arguably the apex of contemporary pop. NME even goes so far as to call it “the best song of the millennium.” TODAY’S CONTENDERS This year’s contenders seem to be slow out of the gate, making it difficult to declare the victor just yet, but there are some promising options. First, we have Drake’s “Nice for What,” which is riding high on the Billboard charts but isn’t quite as sing-along friendly as others. Though his “One Dance” dominated the summer of 2016. Other options include rap dynamo Cardi B’s spicy “I Like It” — the perfect song to play at a summer cookout — or the boilerplate EDM uplift “The Middle” by Zedd, Maren Morris, and Grey — the perfect song to play over the loud speakers at Target.
je ne sais quoi that makes it part and parcel of the warmer months. Here are two summer slammers (and three contemporary
options) that typify this vital trend.
1963: THE BEACH BOYS, ‘I GET AROUND’ There’s a good reason that when BrianWilson was asked whether there were any great summer songs that he didn’t write, he answered “No, not really.”Though there are certainly better jams from the Beach Boys’ tangled,
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Back To Basics #1: The 7 Most Important Retirement Dates
Michael Jordan, perhaps the greatest basketball player who ever lived, once said: “Winners don’t just learn the fundamentals, they master them. You have to monitor your fundamentals constantly, because the only thing that changes will be your attention to them.” But fundamentals aren’t just about succeeding on the court. They’re crucial for your financial success, too. Understanding the basics of financial planning can be the difference between achieving all your goals or none of them. For that reason, I have started a new series of monthly letters called “Back to Basics.” Each month, we will examine one of the basics of financial planning. This month, we’ll look at the ages you might retire at and the consequences of each.
1. Age 55. When you turn 55, you can start making penalty-free withdrawals from your 401(k). Withdrawing money before this is possible, but it usually results in some pretty stiff fines. That said, making withdrawals at age 55 is usually not recommended. It’s better to keep your money where it is or roll it over to an IRA. Unless you are retiring at a very young age, chances are you will have far greater need for that money later in life. While making withdrawals is not generally recommended, this is often a good source of funds for repositioning your savings for overall tax management. This is often a good time to start a Roth conversion plan or otherwise shifting your contributions from traditional IRA to Roth IRA. If your employer offers it, you should also consider a Roth 401(k) contribution. A little tax pain now can yield significant lifetime benefits. 2. Age 59½. This is when you can make penalty-free withdrawals from both your 401(k) and your IRA accounts. Again, I recommend holding off unless you plan on retiring right away or you are repositioning for tax management. 3. Age 62. This is the earliest you can receive Social Security benefits. That said, your benefits will decrease if you receive them early. Are you noticing a pattern here? 4. Age 65. Age 65 is when you can sign up for Medicare. Tip: Applying 3 months before you turn 65 may help you save money on certain costs, like prescription drug coverage. This is also when people born before 1943 reach their full retirement age , or FRA. More on this in a moment.
If you take benefits at age …
Your benefits will be reduced by around …
62 63 64 65 66 67
30% 25% 20%
13.3%
6.7%
No reduction
6. Age 70. While waiting until your full retirement age ensures unreduced benefits, waiting even longer can help maximize them. As the Social Security Administration puts it, “Retirement benefits are increased by a certain percentage (depending on date of birth) if you delay your retirement beyond full retirement age.” 2 However, this only lasts until your 70th birthday. Once you hit the big 7-0, there’s no point in waiting any longer, because your benefits won’t go up. 7. Age 70½. This is the age at which you must take required minimum distributions , or RMDs, from any pretax retirement accounts like your 401(k) or IRA. This means you must start withdrawing money from these accounts to help pay for retirement. If you fail to withdraw at least the minimum amount, you will be required to pay a penalty. This penalty can be massive — up to 50% of what you were required to take. Many people have no idea how much you are required to take as RMD. Here is an example: Assume you are 55, have accumulated $400,000 in your 401(k), make no further contributions, and earn a 6% rate of return until you have to take RMD. First of all, your account balance would grow to approximately $1,000,000. Your RMD would be approximately $35,000. So if you failed to take the RMD, the penalty would be $17,500. To make matters worse, you have to pay income tax on the entire $35,000. So if you were in the 25% tax bracket, you would get to keep a whopping $8,750 ($35,000 – ($35,000 x .25) – 17,500).
5. Age 66-67. Those born from 1943 to 1959 reach their FRA at 66. For those born in 1960 or later, the age is 67.
What Is Your “Full Retirement Age”?
The Social Security Administration defines your full retirement age as “the age at which a person may first become entitled to full or unreduced retirement benefits.” 1 As mentioned, you can start receiving benefits at age 62, but the amount will be reduced. On the other hand, if you wait until your full retirement age, you will receive the full amount of benefits to which you’re entitled.
It’s important to remember these dates because they can help you avoid penalties and maximize your savings.
Next month, we’ll continue this series by going over some important financial terms everyone should know.
1 “Full Retirement Age,” Social Security Administration, ssa.gov/planners/retire/retirechart.html 2 “Delayed Retirement Credits,” Social Security Administration, ssa.gov/planners/retire/delayret.html
PLANNING FOR RETIREMENT DOESN’T HAVE TO KEEPYOU UP AT NIGHT.
In our brand-new report, you’ll find answers to your most pressing questions and actionable steps to make your goals a reality.You can download “RetireWorry Free” at DupontWealthReports.com, or give us a call at 614.408.0004 and we’ll send you a copy!
Indexing Illustration – The Benefits of Downside Protection Below is a comparison of $100,000 invested this century in stocks reflected by the movement of the S&P 500® total return including dividends (red line) and the interest credited under an Indexingmethod using the S&P 500 © witha hypothetical capof 13% anda floor of 0% (green line). 2 This comparison does not include any charges for the mortality costs of life insurance nor any stock investment fees, so theactual comparative valuesmayvary fromwhat is shown.
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$332,996 6.91% average annual return
$40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 $220,000 $240,000 $260,000 $280,000 $300,000 $320,000 $340,000
13.00%
9.54%
11.39% 0.00%
21.83%
13.00%
13.00%
11.96%
12.78% 0.00%
13.69% 1.38%
13.00%
32.39%
$257,799 5.40% average annual return
13.00% 3.53% 0.00%
16.00%
8.99% 3.00%
13.00%
15.79% 5.49%
15.06% 2.11%
0.00% 0.00% 0.00%
-9.10%
26.46%
10.88% 4.91%
28.68%
-11.89%
-37.00%
-22.10%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 AnnualChange in theS&P500®w/GrowthCap (13%)andGrowthFloor (0%) AnnualTotalReturnof theS&P500®
Source:Yahoo FinanceGSPCHistoricalPrices,Wikipediaand StandardsandPoors.com
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1 Thishistoricalperformanceof theS&P500® isnot intendedasan indicationof its futureperformanceand isnotguaranteed. Thisgraph isonly intended todemonstratehow theS&P500®,excluding dividends,wouldbe impactedby thehypotheticalgrowth capof13%and thehypothetical floorof0%,and isnotapredictionofhowany IndexedUniversal Life Insuranceproductmighthaveoperatedhad it existedover theperioddepictedabove.Theactualhistoricalgrowthofan IULproductexistingover theperioddepictedabovemayhavebeenhigheror lower thanassumed,and likelywouldhave fluctuated subject toproductguarantees.
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