Life Planning, 2013

lifeplanningG U I D E 2 0 1 3

The $23,000 Mistake:What You’re Doing Wrong – and How to Get it Right!

ABC’s of Retirement Planning

Is Your Nest Egg a Goose Egg? Catch Up on Saving

Improve Your Financial

Standing Today

Life Insurance for Beginners

Rules of the Road: Auto Insurance

Healthier and Wealthier?

Pop Quiz: Money Matters

How to Get Smart Quick About Money

When Home Alone Isn’t

Enough

How can you safeguard and grow your family’s financial health? Everyone worries about money regardless of his or her net worth. Here’s the secret: Knowledge is power.

A smart fiscal roadmap begins with understanding your finances, terms and options. Unfortunately, Americans trail behind Brazil, Mexico and Australia in financial literacy according to the 2012 Global Financial Barometer.

It doesn’t have to be overwhelming. Find a financial advisor or mentor to recommend useful news you can use. Join an investment or financial book club. Sharing financial wisdom, espe-

cially how others survived hardships, can help you make good decisions. Start reading your local paper, Wall Street Journal, Investor’s Business Daily, Smart Money, Worth, Fortune, Working Woman, Business Week and watching CNBC.

Learning to understand money and investments helps you make informed and effective decisions. Books, newspa-per articles, online resources, maga-zines and workshops can help you and your children prepare for the future. According to the Council for Economic Education, many schools and colleges now include personal finance education programs in their curriculum. By doing this, you can avoid the old adage pitfall: A fool and his money are soon parted.

“Most local vocational high schools and community colleges offer a per-sonal finance course where you can learn how to establish a personal bud-get and gain an understanding of dif-ferent investments,” says William Mahnic, associate professor of banking and finance at Case Western Reserve University in Cleveland. That’s “a lot of bang for your buck,” he adds.

Get Smart Quick About Your Money

So, you’re no Warren Buffett. But even the average Joe – and Jane – can develop the know-how to make smart, informed financial decisions. Here’s how.

BY NANette WiSer

financial literacy

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Ask yourself how financially literate you – or your children – are. Do you know how to craft a budget and stick to it? Do you understand the basics of credit and debt? Are you saving enough for retirement – or your child’s college education? When filling out your tax return, are you taking advantage of every deduction you deserve? Do you know how to protect your portfolio from volatility in the markets?

Make it your business to understand the 101 of banking services, credit terms, checking accounts, how to track your money, how to rebuild credit, how to keep your identity profile safe, even the pros and cons of home ownership vs. renting. If you’re looking to invest, it’s important to understand the stock market, mutual funds, bonds and other investment terms. Know the wealth words (trade confirmation, proxy) and read the annual report of companies before you buy the stock.

Financial advisors come in all shape and sizes. Do you need a tax preparer, stockbroker, a CFC, CFP, LUTCF or FC? Just because they have initials,

doesn’t mean they should plan your investments. Research the advisor, get references, check their credentials and always make sure they empower you with knowledge to make good deci-sions. Check and double check all of your financial documents and resources and learn to comparison shop, from banks to credit cards. Read the fine print on all disclosure documents from your bank, your credit card and your investment group. Understanding the important details about interest rates, late fees and how much cash advances cost helps you avoid unforeseen charg-es and determine if your financial insti-tution is right for you.

Set up a budget and learn to track your spending either with paper and ink or software such as Quicken, Microsoft Money or Mint.com. Make files for bills and financial records. Get a handle on how many accounts you have, how much money is in each and what rate of interest you are earning. It doesn’t pay to have cash sitting there, earning nothing.

Learn the basics such as living within

your means and preparing for retire-ment. Develop good habits, such as consistently saving, putting aside 10 to 20 percent of your earnings. Plan for your tax bracket bite and review the benefit of pre-tax direct paycheck with-drawals to a 401(k), perhaps one with an employee-matched contribution.

Teach your children well. Get them involved early in saving for things they want and earning money through chores and small jobs, like raking leaves for neighbors and selling cookies. Help them create a budget based on their annual allowance. Take your child on

shopping trips and discuss what makes things too expensive or visit your bank so they can learn to prepare deposits or balance checkbooks, even start a sav-ings account.

The challenge is to create a genera-tion of smart savers and savvy inves-tors. There’s even a Financial Literacy and Education Commission working with the Department of Education to develop financial literacy modules for school. Call the toll-free hotline (888-MYMONEY) to order a package of information.

© CTW Features

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1. More than half of consumers think sav-ing for retirement is more difficult than:A Training for a marathonB Learning a new languageC Hitting a hole-in-oneD Quitting smoking

2. What percentage of U.S. adults do not have a savings account?A 27 percentB 57 percentC 77 percent

3. What percentage of people 65 to 74 require personal assistance to manage some

activities of daily living, such as using the telephone, shopping, meal preparation or managing money?A 35 percentB 45 percentC 55 percentD 65 percent

4. Fifteen years ago half of all non-retirees said they expected to retire before age 65. About what proportion of non-retirees has that expectation today?A One-thirdB One-quarter

Pop Quiz: Money MattersKnowledge is power. Grab a pencil and see what you know – or don’t – about some numbers that shape your life.

5. Which of the following is the biggest contributing factor in the calculation of your FICO Score, the measure of consumer creditworthiness?A Payment history; consistently

making payments on timeB Keeping low revolving balances

low; never maxing out your cardC Never using credit cards at allD Having multiple credit cards with

high balances

6. A year’s stay in a nursing home is less expensive than a year’s tuition at Harvard University. True or false?

7. What is the average American’s life expectancy?

8. Which age group expresses the greatest doubt that they will have enough to live on in retirement? A 35 to 44B 55 to 649. Households headed by adults 35 to 44 lost the most wealth in the last decade. By what percentage did this group’s wealth decline from 2001 to 2010?

10. What percent of people with a 401(k) retire-ment savings account that allows loans have bor-rowed from it?11. Medicare covers approximately what percentage of the cost of health care ser-vices (not including long-term care) for beneficiaries 65 and older?A 40 percentB 50 percentC 60 percentD 70 percent

12. Social Security pays benefits that are – on average – equal to what percent of pre-retirement earnings? © CTW Features

LCCU

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Two-thirds of middle-class Ameri-cans say they have made at least one “really bad” financial decision, and nearly half have made more than one. The average cost of these blun-ders was $23,000, according to a study issued by the nonprofit Con-sumer Federation of America and Primerica, a financial products and services vendor.

Consumers defined “really bad” in their own way, but it is probably the case that “many of the bad deci-sions involved taking on too much debt, especially credit card and mort-gage debt, and not saving enough” versus making risky investments, says Stephen Brobeck, CFA’s execu-tive director.

Indeed, most experts agree that the two costliest mistakes are start-ing too late and saving too little for major goals like education and retire-ment. Studies notwithstanding, it’s difficult to put a dollar amount on these lost opportunity costs, says Stuart Ritter, a senior financial plan-ner with T. Rowe Price.

“The best time to start saving is when you’re 22,” he says. “The sec-ond-best time is right now.”

Even getting a late start with sav-ings, people can avoid further losses by sidestepping or correcting these five common saving and investing mistakes.

1. Paying hidden or high fees for financial Products or services. “Expenses impact returns. Reduce your investment fees, and you increase your take-home pay from your retirement account even if you do absolutely nothing else to it,” says chartered financial consultant John Graves, author of “The 7 Percent Solution: You Can Afford a Com-fortable Retirement” (Safe Harbor Publishing, 2012).

Generally, “it’s better to pay an adviser a flat fee for advice instead of working with someone who makes a commission on sales,” says attorney Robert Louis, co-chair of the Personal Wealth, Estates and Trusts Group at the Philadelphia-

based law firm Saul Ewing.Ask about fees, especially those

applied to annuities, which The Mot-ley Fool considers “oversold, fre-quently misrepresented and totally inappropriate for most folks.”

Nevertheless, “there’s been a big push toward annuities, but what people don’t realize is there are fees associated with them, paid to the agent,” Louis says. “Sometime they are reasonable, and sometimes they are really high.”

saving and investing

the $23,000 Mistake What you’re doing Wrong – and how to fix itcreating a wise savings, investment and retirement plan is the work of a lifetime. avoid these 6 pitfalls along the way

by daWn KlingensMith

almost two-thirds of U.s. adults with at least $100,000 in investable assets told pollsters they are on target or ahead of their retirement planning goals. Habits they cited:

habits of successful retirement savers

64%

“invest in employment retirement account”

“reduced debt”

“changed spending habits”

“Paid off mortgage”

72% 33%

46% 23%

Source: PNC Financial Services Group “Perspectives of Retirement Survey” of 1,038 respondents, July 2012

iStock Photo


2. Chasing rates of returns.“One of the biggest mistakes people make is jumping around with their investments based on a fund’s performance over an inappropriately short period of time,” Louis says. “Or, they drop a fund the moment it stops doing well, when it’s nor-mal for funds to go up and down.”

Mistaking expected costs for emergen-cies. The water heater bursts, the car breaks down, a tooth cracks. These are foreseeable operating and maintenance issues we should set aside money for as opposed to raiding our emergency fund of three to six months’ worth of expenses. “An emergen-cy fund is for job loss or a major medical event,” Ritter says.

A good rule of thumb for the average homebuyer is to set aside 1.5 to 4 percent of the home’s original cost for annual main-tenance expenses.

3. under funding your first home purChase. “People stretch themselves as far as they can for a down payment and closing costs,” Rit-ter says. But in short order, first-time home-

buyers find they need things like lawncare equipment, and with no money to buy them, they run up their credit cards.

A study by the home and real estate database Zillow reveals that 21 percent of new homebuyers spend $10,000 or more within a year on products and services related to their move.

4. equating finanCial aid for College with “free money.”Some parents are reluctant to save for their children’s education because they fear they won’t be eligible for as much financial aid. The truth is, “How much you’ve saved has very little impact on how much financial aid you get,” Ritter says.

Financial aid “is loans paid back with interest,” says Ritter, adding that it would behoove parents to substitute the words “massive debt” in its place. “You wouldn’t say, ‘I don’t want to save for my child’s edu-cation because then they won’t get as much massive debt.’”

5. having insuffiCient life insuranCe.

“People need way more than they think they do, and it costs a lot less than they expect,” Ritter says. “Term life insurance for healthy people is really, really cheap – probably less than you’re paying for cable.”

Life insurance needs change depending on age, life stage and circumstances. Re-evaluate and make adjustments to your cov-erage when you marry or divorce, have children, become an empty nester, and retire.

6. not starting at 22 – or anytime thereafter. All is not lost if you have not saved consis-tently over time. Try a decade of “power saving,” which can transform your retire-ment account, according to a recent Money magazine article. Saving at least 15 percent of their income, you can build a nest egg equal to 10 times or more of your annual pay. To take the sting out of decreased cash flow, time power-saving decades to coincide with periods when expenses fall, like when a grown child leaves the nest.

© Ctw features

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Getting your fi nancial and investment act together takes time and close attention to detail. With more responsibilities, the process becomes even more complex.

As Morgan Stanley Financial Advisors, we have access to a range of resources, advice and services to help you meet your needs.

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Retirement is supposed to reward a life well planned, but it won’t if you don’t have enough savings. Many of us don’t.

About four in 10 adults are more wor-

ried about their ability to finance a comfort-able retirement today than they were at the end of the Great Recession in 2009, according to a survey by the Pew Research Center.

Another study, by the Employee Benefit Research Institute, reports that 67 percent of workers feel behind in retirement sav-ings, and 56 percent don’t even know how much they’ll need.

If you’re worried about your financial future, now is the time to think and plan ahead.

The financial planning industry abounds with recommendations for how much

money it costs to finance a comfortable retirement: 80 to 110 percent of the annual salary you made during your peak earning years; 20 to 25 times your final salary for those who will rely solely on Social Security and personal savings.

These rules of thumb make general assumptions about post-work years, esti-mates that often aren’t much help for indi-viduals. That’s exactly the reason Leonard F. Valletta, CFP, of Albany Financial Group in Albany, N.Y., doesn’t like them.

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“It’s not a simple answer, as much as we’d like it to be,” Valletta says. “It differs for everyone and comes down to what your expenses will be.”

Retirement planning is a balance between financial resources and lifestyle, he says. For some people retirement dreams include having time to take long walks and live simply. Others might expand their life-style.

Valletta encourages all clients to enter retirement totally debt-free, if they can, but not everybody does.

In retirement, basic expenses can change. You may not need business cloth-ing, or as much insurance, and if you no longer have children at home, expenses such as education might go away. But home maintenance and health care costs may increase, and you may pick up new expens-es, like premiums for long-term-care insur-ance, he says.

To know how much you’ll need, add the cost of your desired retirement lifestyle to your expectations of basic living expenses.

If you want to determine if you can live on your projected budget, take it for a test

drive. If your anticipated retirement life-style included downsizing and you reduce your income, put the difference into sav-ings, Valletta says.

While most Americans will receive Social Security benefits, these payments were never intended to support a comfort-able lifestyle. The Center on Budget and Policy Priorities in Washington, D.C., reports that for people who worked all of their adult lives at average earnings and retire at 65 in 2012, Social Security benefits replace about 41 percent of past earnings, far less than even the lowest replacement ratio suggested by financial planning experts.

One of the best planning strategies is to start now, Valletta says.

Most employers offer tax-advantaged workplace retirement plans, which can be powerful tools to build retirement savings, especially if they offer matching contribu-tions. The amounts you’re allowed to con-tribute are significant, he says.

If you’re under 50, in 2012 the maxi-mum contribution level is $17,000 and $17,500 in 2013. If you are turning 50 in

2013, you can contribute an additional $5,500 in catch-up contributions for a total of $23,000, and it’s all pre-tax.

To clients who say they can't save any-thing, Bill Losey, CFP, owner of Bill Losey Retirement Solutions in Saratoga, N.Y., offers his 1 percent rule: Save 1 percent of your earnings each payday at a minimum. Got a raise of 3 percent? Save 1 percent.

Losey’s second rule is to make savings automatic, a habit that will improve your chance of savings success. If you don’t have a workplace plan, have money auto-matically paid from your checking account into an IRA.

Savings has a way of snowballing. “If you automate the process and you get in the habit of saving money, all of a sudden you actually start to feel better about yourself, Losey says. “As your net worth rises, so does your self-worth and your confidence, and you end up making more and saving more.”

© CTW Features

Where would you stash the cash? Here are the top 10 choices of adults asked to name up to three spending priorities in an online poll:

1. Pay off any existing debt/loans (59 percent)

2. Save for a rainy day fund/unexpected expenses (42)

3. Invest toward my retirement (33)

4. Go on vacation (19)5. Donate to charity (18)6. Buy a car (17)7. Treat myself to something I

would not normally spend money on (15)

8. Buy a house (13)9. Pay for my kids’ college (10)10. Go back to school (6)

Source: Harris Interactive online survey of 2,307 adults, August, 2012

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Percent of respondents who have any money saved for retirement:

18-24

25-34

35-44

45-54

55+

TOTAL

AGE 1997 2012

Saving for Retirement by Age

Source: Consumer Federation of America 2012 Household Financial Planning Survey

30%

63%

72%

73%

75%

64%

35%

55%

66%

64%

71%

61%There’s one query Terry Jandreau, certi-fied financial planner (CFP), hears from almost every client, and it usually starts off like this: “I just want you to look at my numbers and look at my assets and let me know if I can retire today.”

So the first vice president and branch manager at Wells Fargo Advisors in Albany, N.Y., goes through the exercise. He says it’s rare that he would tell clients they can’t retire today. More often, he tells them that to do it right now isn’t in their best interest.

“After people have been working for so many years, they get fed up,” Jandreau says. “They look at things and say, ‘If I cut back here, and I pull all of my income together, I can just about cover my basics.’”

Many people focus on the magic number needed to retire. Just because you can scrounge together enough to retire today, however, doesn’t mean you should or that your savings will last. Suf-

ficient savings is only one of several key elements of a smart retirement plan.

One of the most important retire-ment planning tasks is creating an income strategy. Even if you amass a siz-able fortune, in order to make it last through retirement, you’ll likely live off interest rather than tapping into the actu-al funds.

In the best scenario, Jandreau says, workers enter retirement with several sources of retirement income.

Fixed costs like food, clothing and shelter should come from guaranteed sources, like Social Security, corporate pension plans and annuities.

Remaining costs such as entertain-ment and travel are variable lifestyle expenses and should be financed from money accumulated in personal savings and investments, including savings accounts, mutual funds and IRAs, for example.

“It’s very, very specific,” says Jan-

dreau, who stresses that whether your retirement will consist of gardening, home dining and neighborhood walks with the dog or touring the world’s top 100 golf courses depends not only on the amount of money you sock away but also on how you manage it thereafter.

According to “Key Findings and Issues: Longevity,” a 2011 report con-ducted by the Society of Actuaries, most Americans underestimate longevity and fail to understand the potential conse-quences of living beyond their own planned life expectancy.

By age 65, U.S. males in average health have a 40 percent chance of living to 85 while females have a 53 percent chance, more if you’re healthier. Therefore, financial planning experts suggest pre-paring for 25 to 30 years in retirement to lessen the chance of running out of money.

A second risk is inflation, which can corrode the purchasing power of your savings.

“The income that one would receive today is going to fall way short 20 years from now,” Jandreau says.

The Bureau of Labor Statistics’ Con-sumer Price Index inflation calculator

retirement Planning

Planning for RetirementSufficient savings is only part of the equation. A smart retirement plan calls for patience and a sharp pencil.

by LORi CuLLEn

iStock Photo

shows a person who retired in 1992 with an income of $50,000 would need almost $82,437 to maintain the same lifestyle today.

Because of inflation, Social Security automatically factors in a cost-of-living adjustment; some pension plans do, too. However, these automatic increases may not be enough.

“There has to be a hedge against infla-tion and a continual income stream,” says Bill Losey, CFP, owner of Bill Losey Retirement Solutions in Saratoga, N.Y.

The author of “Retire in a Weekend”(Love Your Life, 2007) and former resident retirement expert on


CNBC’s “On the Money” television pro-gram advises clients to allocate a mini-mum of 30 to 40 percent of a retirement portfolio to stocks and stock mutual funds. These should be from larger, good-quality U.S and international com-panies that have a long-term history of not only paying dividends but also raising them annually at a rate that outpaces inflation.

Once you are all set with your smart retirement plan, all that’s left is to wait for your 62nd birthday to roll around so you can quit work, file for Social Security and hit the green, right? Not so fast.

Charles Jeszeck, director of educa-tion, workforce and income security at the U.S. Government Accountability Office in Washington, D.C., recommends that individuals delay receipt of Social Security benefits until reaching at least full retirement age and, in some cases, continue to work and save, if possible.

“Claiming Social Security benefits early may jeopardize your economic security because early claimants receive permanently reduced benefits,” he says.

For example, a person retiring today

who begins collecting benefits at age 62 instead of 66 will receive monthly pay-ments reduced by 25 percent.

If you can afford to wait even longer, do, Jeszeck says, as the monthly Social Security benefit rises by about 8 percent each year until age 70.

“One of the big mistakes I see people make in their 50s or 60s is that they retire or take an early incentive offer because they think they’re ready to stop working, but what they really wanted was a break,” Losey says.

He suggests they decrease the number of days or hours they work and take a corre-sponding pay cut.

But in Losey’s opinion, the ultimate in retirement planning is never to retire.

“When I meet with clients, I rede-fine retirement as making work optional,” he says. “If you find a career that you love or a calling that gets you excited to get out of bed in the morn-ing that generates cash flow, why would you give that up at age 60 or 65?”

© CTW Features

Who’s better at retirement planning? He is, hands down. Fewer women have completed any of the basic retirement planning activities and just one-third say they actively monitor and manage retirement savings, compared with nearly half of men.

She Plans, He Plans

Determined what your income will be in retirement

47%female 50%

male

Determined what your expenses will be in retirement

39%female 43%

male

Calculated the amount of assets and investments you will have available to spend in retirement

38%female 47%

male

Estimated how many years your assets and investments will last in retirement

29%female 36%

male

Identified the activities you plan to engage in and their likely costs

26%female 33%

male

None of the above

32%female 28%

male

Source: LIMRA survey of 3,763 U.S. adults, May 2012

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Don’t let economic bad news and dwin-dling assets prevent you from adopting a smart financial strategy. Make a plan, invest-ment professionals advise, and stick with it. Start fresh with no guilt: If you’ve made mistakes with money in the past, put it behind you. Focus on a secure financial future by embracing these ideas. do the mathTake a snapshot of your finances and

audit your worth. Review all financial statements (bank, credit card, mortgage, 401(k), brokerage account), income and expenses. Once you’ve got the big picture, make a budget and stick to it. Keep a log of everything you spend and tally it monthly. Look for ways to cut back. Research lower cost options for car insur-ance, health insurance, cable and phone.

Make sure your fiscal public profile is both current and secure. Check your credit report and review your credit history. Look for things such as credit card accounts that aren’t yours or accounts list-ed as unpaid that have been paid off. You are entitled to a free annual credit report from each of the three main credit bureaus. Your goal? An excellent score of

740 and up.

Save more, InveSt WISely“Pay yourself first: Save a set amount right away, before doing anything else,” says Christine Walker, vice president of Farmers & Merchants Bank. Use direct deposit for paychecks, pension and social security. Set aside a percentage of your paycheck for savings or investments. If your employer

offers a 401(k), it can reduce your taxable income and grow your nest egg. Any employer contribution is free money. Take it.

You can save in several ways. Consider setting up an IRA account with a bank, credit union, brokerage firm or mutual fund company to supplement your work-place retirement plan.

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Create a flexible spending account to cover prescription, medical visits or health insurance co-payments. Start an emergency savings account in addition to your retirement or paying-down-debt savings account. Get a high-yield savings account that is free of invest-ment risk, earns a return and is liquid so that you can tap it when you need it fast.

San Diego attorney and investment consultant Robert Weaver recommends sticking to a plan, staying on top of cur-rent trends and diversifying assets to meet your goals: “Develop a diverse array of asset classes – stocks, bonds, real estate (including a home), metals, commodities and your business. Except for home and business, it’s safer to use liquid vehicles to hold these assets – ETFs, REITs, MLPs and funds.”

Adopt a foolproof credit card strate-gy. Reduce credit card debt. Pay cash when possible. See if you can qualify for a balance transfer card that offers a low or 0 percent introductory interest

rate for the first six to 12 months. If you can get a good deal, move your high-rate debt to that new card.

Spend LeSSYou’ll never get ahead if you spend more than you are paid. A little cost-cutting can pay off in big savings. It’s not rocket science. Buy only what you need, not what you want. If it’s not on the must-have list, don’t purchase the item. Leave the cash and credit cards at home and window shop instead. Dis-counts and coupons are your best friends. Be a coupon queen. Double them up and buy when items are on sale.

Improve Your moneY IQGet smart and research personal finan-cial advice. Start with your local busi-ness section and the financial reporters who cover the money beat. Bookmark websites and magazines that offer great tips and advice. Visit the library to bone up on authors such as Suze Orman,

Dave Ramsey, J.D. Roth, Adam Baker, The Motley Fool or “The Complete Idiot’s Guide to Managing Money.”

Ask for advice from your accoun-tant, successful business people, friends and family who invest wisely and save well.

Be AccountABLe: Set FInAncIAL GoALSIt’s all about planning and housekeep-ing. Once you’ve set financial goals, be sure you are on track. By keeping good records and bills organized by month and type, you can review your status and claim your allowable income tax and deductions at the end of the year.

Don't be afraid to plan for the future. “Plan your estate. A will, possi-bly coupled with a trust, is an essential element of any good financial plan. Don’t procrastinate,” says H. Parker Evans, president & chief investment strategist of Florida’s Successful Port-folios LLC.

© ctW Features

Why We don’t Invest

“It’s hard for me to know who to trust for financial

advice”

“to me, investing

seems complicated”

“I’m worried about losing my money if I

invest it”

“Just don’t earn enough

money to save regularly”

52%

55%

50%

55%

Source: Consumer Federation of America 2012 Household Financial Planning Survey

Q: What comes first when money to save is limited: col-lege savings or retirement sav-ings?A: For many par-ents, especially those who had

children in their mid-30s and 40s, college and retirement savings are concurrent financial goals. If funds for savings are limited, people often wonder which finan-

cial goal should come first if they can only save for one. Experts almost always advise prioritizing saving for retirement.

For-profit employers often match employee retirement savings. This is “free money” that savers should not pass up. Assets in a tax-deferred retirement account (such as an IRA) do not affect a child’s ability to receive financial aid. And students can get loans for college but there is no such thing as a “retirement loan.”Source: eXtension. For more answers to your questions on financial security from your Cooperative Extension Service, go to www.extension.org/search

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9 Smart Questions Estate Planners Wish You Would Ask

What you don’t know can hurt. Just ask these estate planners.

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No question is a dumb question when it comes to your estate, but if these queries are on your mind, you may be ahead of the curve. We talked to the experts to find out what you should ask to avoid common pitfalls in estate planning.

1. WhAT ARE ThE limiTATionS of mY Will? Do i nEED A TRuST? Good news: we’re living longer. Bad news: we’re more likely to reach a state of mental incapacity while we’re here. In addition to a will, which only has power after death, every estate plan needs a health care direc-tive, for any time a person can’t speak for himself, says Bonnie Wittenburg, an estate planning attorney at Wittenburg Law Office, Minnetonka, Minn.

Also, wills cannot control the terms for which estate funds are distributed. Trusts, however, can set the ages at which children receive their inheritance and reg-ulate funds to go out periodically. “That way, if they make any foolish mistakes, they’ve only received part of it at a time,” Wittenburg says.

2. hoW cAn i mEET ThE REAl nEEDS of mY hEiRS? A key element of estate planning is the idea of “fair versus equal,” says Paul Gullickson, an accredited estate planner of Gullickson Group, Davenport, Iowa. Splitting up assets equally among sib-lings may not be the fairest way to pass on your estate. Perhaps one is in greater need of assistance because of a disabili-ty, greater family size or underemploy-ment. Also, if there is a business involved, consider which sibling gains more joy from managing the day-to-day operations, Gullickson says. Leaving a business to all the siblings could lead to family quarrels.

3. hoW Do All of mY ASSET DocumEnTS WoRk TogEThER? “Beneficiary designations actually super-sede anything you have in a will,” says Rus-sell McAlmond, an accredited estate planner with Portland, Ore.-based Ever-green Capital Management. Consequently, if only one child is a designated beneficia-

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ry on an account (IRA, 401(k) and the like) the funds will go directly to that child and not to all siblings, despite opposing wishes expressed in the will. It’s important to review estate-planning documents for any conflicts that could result in undesired distribution of funds.

4. Are my Assets titled into the nAme of my trust? “People sometimes think that once they set up a trust with the attorney, they’re done,” Wittenburg says. “They’re really not, because assets still need to be titled into the name of the trust.”

If assets are titled into any name other than that of the trust – even the estate hold-er’s name – a trustee has no legal right to manage or distribute them according to the terms of the trust. And, the estate will likely be subject to probate.

5. do i need more life insurAnce?It’s tough to conceptualize your own death and the impact it would have on loved ones. It may be best to ponder the scenario from a different perspective.

“Instead of thinking about how we would provide for our spouse, we should be thinking about what would be the benefits for us if we were the survivor,” says Chris-tine Fahlund, vice president and senior financial planner of T. Rowe Price Group, Baltimore, Md.

Thinking critically about personal needs for survival upon the death of a spouse and what can be afforded in premiums for life insurance can help a couple decide together what an appropriate plan would demand, Fahlund says.

6. WhAt of my estAte Assets Will be tAxed?It’s a common misconception that money in a revocable living trust is tax-free. Federal estate tax law is rapidly changing. In addi-tion, “each state has its own tricky tax rules for trusts,” writes author Rachel Emma Sil-verman in “The Wall Street Journal Com-plete Estate-Planning Guidebook,” (Crown Business, 2011). Working with a knowledge-able estate planner will help minimize what Uncle Sam will inherit from your estate.

7. WhAt’s All this tAlk About probAte? should my goAl be to Avoid it? Probate has a reputation for being a lengthy, expensive court process that holds assets in limbo instead of transferring them smooth-ly to heirs.

“I don’t think probate is the worst thing that can happen to you,” McAlmond says. This is another aspect of estate planning that varies state by state, but McAlmond cites two general cases when avoiding pro-bate should be a priority: if confidentiality is desired or if multiple properties are owned in different states.

8. is it A good ideA to Add my child As joint oWner to my bAnk Account or my home?Many folks do this as a matter of conve-nience, but there are many downsides to this plan.

“It’s not fair to the other siblings because technically the child who is the joint account holder owns the money,” Wittenburg says. Even if he or she plans to fairly distribute the assets to family members and organiza-tions designated in the will, there are other problems. The joint owner must report these assets in the event of a divorce, lawsuit and even a child applying for financial aid, which makes the estate vulnerable to credi-tors. What estate holders need instead is to appoint their child or another trusted indi-vidual as a durable power of attorney who can make decisions on their behalf.

9. hoW cAn i prepAre my heirs to receive their inheritAnce?Wayne Johnson, a certified financial planner and accredited estate planner with Syverson Strege & Company, West Des Moines, Iowa, tells his clients “it’s about passing along their values, not just their valuables.” To achieve this goal, Johnson suggests heritage planning, a process in which family members engage in projects and activities that build a culture of trust and communication and establish a form of family governance. It can be as sim-ple as regularly coming together to plan a family vacation or volunteering together.

“It doesn’t matter how good your estate planning is, how technically strong it is; if your heirs are not prepared, you will be dis-appointed with the outcome of your estate,” Johnson says.

© ctW features

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l e w i s t o n t r i b u n e s A t u r D A Y, J A n u A r Y 1 9 , 2 0 1 316lifeinsurance

The term “life insurance” can send a shiver down even the most resilient spine. It doesn’t matter that it’s a prod-uct that guarantees coverage and pro-tection of loved ones. For all the goodness life insurance provides, it means the insured must confront a chillingly inevitable prospect: mortali-ty.

In fact, more than 118 million adults in the United States age 18 and above don’t have any life insurance coverage – more than half the adult population (52 percent). In 2011, 51 percent of U.S. adults were uninsured,

according to a Genworth Financial survey of 25,000 adults.

Experts agree that life insurance is more than just paying the bills when time is up. It’s about providing stability for family members left behind.

“Life insurance is love insurance,” says Steve Leimberg, publisher of Leimberg Information Services, a Havertown, Pa., publisher and co-author of “Tools and Techniques of Life Insurance Planning” (National Underwriter Company, 2007). “When a breadwinner dies, an adequate amount of life insurance is typically

the major thing that determines whether his or her survivors will live with dignity or despair.”

Choosing life insurance is still a dif-ficult process, but understanding the basics is a good start. Here are some important points about life insurance to know before buying.

TypesLife insurance policies can be divided into two major categories: term and permanent.

Term policies are so named because they provide for a set number of years, typically 10, 20 or 30. It does not have an investment component and pays benefits only when the insured dies. A term policy must be renewed to keep it in effect.“No lifetime payments are possible with term contracts,” Leim-

berg says.Permanent – or whole – life insur-

ance is kept as long as the insured lives and the policy owner wants to keep it in force by paying premiums. It builds up cash value that can be borrowed by the policy owner or received upon releasing the insurer from its obliga-tion to keep the policy in force, according to Leimberg. The interest rate in a permanent policy is fixed.

There are different versions of term and permanent policies, such as universal life, variable life, guaranteed level term insurance and return of premium term insurance. These vary in cost.

Which To pick?The main reason to purchase life insurance is to protect your family from financial loss should you die. To choose the best plan, select an insur-ance agent who is qualified, choose a policy you understand and review your needs annually.

Term insurance is the less expen-sive option, usually only a few hun-dred dollars depending on health or other variables. It’s best applied to short-term needs, such as paying off a mortgage or other temporary debt at death.

Permanent insurance is more com-plex and more expensive. Unlike term policies, it provides more than a death benefit. A portion of the premium funds a separate, tax-free investment fund.

It’s not the type of life insurance that matters, but the dollar amount, argues Jack Hungelmann, author of “Insurance for Dummies” (For Dum-mies, 2009) and proprietor of Jack Hungelmann Risk Management & Insurance, an independent insurance agency, Edina, Minn. “When you die, your family isn’t going to care about the policy,” he says. “All they want to know is how much money they’re going to get.”

Hungelmann also notes that one of the downsides to cash value policies is that holders end up paying a lot in the

The ABcs of Life insuranceinsurance can play an important role in a family finan-cial plan – if only we care to think about it

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beginning so that rates stay level as he or she ages. “It’s good when you’re older, but it’s tough when you’re young,” he says. “Some people I’ve met are uninsured because they can’t afford to buy all the life insurance they need with that type of policy.”

HealtH MattersLife insurance isn’t as easy as picking up the phone. You have to qualify.

“They’re going to ask you ques-tions about your lifestyle, like ‘are you going to jump out of airplanes?’” says Theodore Affleck, an independent life insurance consultant with more than 37 years in the business. “If so, they might not consider you fit.”

Expect questions about personal medical history, family health and employment, too. After an assess-ment, candidates are placed into a risk-classification: super-preferred, preferred, standard and sub-standard.

“A preferred person will have a lower premium than a sub-standard,” Affleck says. He also points out that women will have lower premiums than men since they tend to live lon-ger, that an overweight person will have a higher premium than a mara-thon runner, and so on.

Smoking is also a significant factor; non-smokers are almost guaranteed a lower premium than smokers, Leim-berg says.

Plan accordinglyDespite the complicated process of applying and qualifying, experts stress that life insurance is still an important part of any family plan.

“There are usually far too many inappropriate, unsuitable replace-ments,” Affleck warns.

And don’t just buy it “because it’s the adult thing to do,” Hungelmann says. Make sure it’s done for the right reasons. He advises going back to the idea of family: “You don’t buy car insurance when you don’t have a car. Don’t buy life insurance when you don’t have someone to care for.”

© ctW Features

Marriage

Part of retirement plan

Birth of a child

Home ownership

death of some-one who did not have a life insur-ance policy

death of some-one who had a life insurance policy

college expenses

other

top reasons for Purchasing life insurance

18%

5%

8%

8%

19%

22%

25%

32%

Source: Northwestern Mutual Life Insurance Awareness online poll of 2,097 adults, 2012

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one of the toughest decisions many of us will face in our lifetimes is what to do when an aging par-ent can no longer live independently. Just ask theresa Duff of Joliet, Ill. her mother, Rita, already losing her eye-sight from macular degeneration, was fur-ther hobbled by a bro-ken shoulder and two shattered wrists due to a fall. “It was painful to see mom, who had raised a house full of kids, nursed her hus-band after his stroke and remained active into her 80s, suddenly become so frail,” Duff says.

As the population ages, the number of adults who need long-term care rises. About nine million senior citi-zens will need some form of long-term care this year, according to

the U.S. Department of health and human Ser-vices. While the depart-ment says family members and friends are the sole caregivers for 70 percent of the elderly, this may not always be possible or practical. “Mom wasn’t ready for a nursing home just yet, but none of the family members still living in the area had homes that could accommodate her limit-ed mobility,” Duff says. “We had to weigh our

choices carefully to address her needs, wishes and dignity.”

If a family member feels a parent who’s liv-ing on his or her own is on the decline and needs custodial assis-tance, he or she should consult with a medical professional. either way it’s essential to determine what level of care is needed. this can run from simple help with housekeep-ing and shopping to more acute levels of care such as health monitoring and physi-cal, speech or occupa-tional therapy.

Ultimately, this becomes a decision based as much on a

Take CarePeople age 60 and up are twice as l ikely to be the v ict ims of fraud and f inancia l scams. To register a te lephone number on the federal government’s nat ional Do Not Cal l Registry cal l (888) 382-1222 or go online at www.donotcall.gov.

22 f i n a n c i a l p l a n n i n g g u i d e

When Home Alone Isn’t EnoughFamilies face difficult choices when one or both of their parents can no longer live on their own

Jim GorzelanyCTW feaTuRes

isToCkphoTo.Com

one of the toughest decisions many of us will face in our life-times is what to do when an aging parent can no longer live indepen-dently. Just ask theresa Duff of Joliet, Ill. her mother, Rita, already losing her eyesight from macular degeneration, was further hobbled by a broken shoulder and two shattered wrists due to a fall. “It was painful to see mom, who had raised a house full of kids, nursed her husband after his stroke and remained active into her 80s, sud-denly become so frail,” Duff says.As the population ages, the num-ber of adults who need longterm

care rises. About nine million se-nior citizens will need some form of long-term care this year, ac-cording to the U.S. Department of health and human Services. While the department says family mem-bers and friends are the sole care-givers for 70 percent of the elderly, this may not always be possible or practical. “Mom wasn’t ready for a nursing home just yet, but none of the family members still living in the area had homes that could accommodate her limited mobil-ity,” Duff says. “We had to weigh our choices carefully to address her needs, wishes and dignity.”

When Home Alone Isn’t EnoughFamilies face difficult choices when one or both of their parents can no long live on their own.

by jIM GORZELANy - CTW FEATURES

one of the toughest decisions many of us will face in our lifetimes is what to do when an aging par-ent can no longer live independently. Just ask theresa Duff of Joliet, Ill. her mother, Rita, already losing her eye-sight from macular degeneration, was fur-ther hobbled by a bro-ken shoulder and two shattered wrists due to a fall. “It was painful to see mom, who had raised a house full of kids, nursed her hus-band after his stroke and remained active into her 80s, suddenly become so frail,” Duff says.

As the population ages, the number of adults who need long-term care rises. About nine million senior citi-zens will need some form of long-term care this year, according to

the U.S. Department of health and human Ser-vices. While the depart-ment says family members and friends are the sole caregivers for 70 percent of the elderly, this may not always be possible or practical. “Mom wasn’t ready for a nursing home just yet, but none of the family members still living in the area had homes that could accommodate her limit-ed mobility,” Duff says. “We had to weigh our

choices carefully to address her needs, wishes and dignity.”

If a family member feels a parent who’s liv-ing on his or her own is on the decline and needs custodial assis-tance, he or she should consult with a medical professional. either way it’s essential to determine what level of care is needed. this can run from simple help with housekeep-ing and shopping to more acute levels of care such as health monitoring and physi-cal, speech or occupa-tional therapy.

Ultimately, this becomes a decision based as much on a

Take CarePeople age 60 and up are twice as l ikely to be the v ict ims of fraud and f inancia l scams. To register a te lephone number on the federal government’s nat ional Do Not Cal l Registry cal l (888) 382-1222 or go online at www.donotcall.gov.

22 f i n a n c i a l p l a n n i n g g u i d e

When Home Alone Isn’t EnoughFamilies face difficult choices when one or both of their parents can no longer live on their own

Jim GorzelanyCTW feaTuRes

isToCkphoTo.Com

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If a family member feels a parent who’s living on his or her own is on the decline and needs custodial assistance, he or she should consult with a medical professional. Either way it’s essential to determine what level of care is needed. This can run from simple help with house-keeping and shopping to more acute levels of care such as health monitoring and physical, speech or occupational therapy. Ultimately, this becomes a deci-sion based as much on a family’s financial resources as it is on an aging parent’s needs. That’s because neither Medicare nor most supple-mental health insurance policies pay for long-term care costs. For many, in-home health care can be a desirable and reasonably af-fordable option. Those who require only modest assistance may have their needs served by a part-time

caregiver. Those requiring addi-tional help may require 24-hour live-in assistance. Aside from the cost, family members have to con-sider the effort involved in hiring a caregiver and following up regularly to ensure that proper care is being given. Another approach is to use the services of a licensed home health care agency, which is a necessity if an individual requires skilled nurs-ing care or physical therapy ser-vices. The National Association for Home Care & Hospice maintains a national database of such agencies with tips on how to choose and deal with one on an ongoing basis at www. nahc.org. If living at home proves to be par-ticularly difficult because of stairs or other hazards, placing an elderly parent in an assisted living facility may be best.

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Residents often live in separate apartments, enjoy communal meals and participate in planned activities. Costs usually depends on thesize of the living area, services required and where the facility is located, adding up to several thousand dollars a month.For those who require constant care, a nursing home may be the only option, albeit a costly one. Medicare pays for skilled nursing facility care for a limited period following a hospital stay for rehabilitative purposes, but not for ongoing care. State Medicaid programs will generally pay for basic nursing home services, but only after an individual’s personal assets are exhausted and he or she has no other means to cover the cost.All nursing homes that partici-

pate in Medicare or Medicaid are subject to annual inspections. In addition to personal vetting of any facilities under consideration, it’s a good idea to compare these inspection records by consulting the “Nursing Home Compare” resource at www.medicare. gov.So how did the Duff family finally decide to care for their mom, Rita? “We wrestled with our options and though the fam-ily would have preferred that she live out her final years at home, we finally settled on moving her to an assisted living cen-ter,” Duff says. “We didn’t have to worry about caregivers not showing up or being inattentive to mom’s needs, and it afforded her some independence and so-cialization without her having to be cooped up alone at home.”

© CTW Features

f i n a n c i a l p l a n n i n g g u i d e 23

family’s financial resources as it is on an aging parent’s needs. That’s because neither Medicare nor most sup-plemental health insur-ance policies pay for long-term care costs.

For many, in-home health care can be a desirable and reason-ably affordable option. Those who require only modest assistance may have their needs served by a part-time caregiver. Those requiring addi-tional help may require 24-hour live-in assis-tance. Aside from the cost, family members have to consider the effort involved in hiring a caregiver and follow-ing up regularly to ensure that proper care is being given.

Another approach is to use the services of a licensed home health care agency, which is a necessity if an individu-al requires skilled nurs-ing care or physical therapy services. The National Association for Home Care & Hos-pice maintains a nation-al database of such agencies with tips on how to choose and deal with one on an ongoing basis at www.nahc.org.

If living at home proves to be particular-ly difficult because of stairs or other hazards, placing an elderly par-ent in an assisted living facility may be best. Res-idents often live in sepa-rate apartments, enjoy communal meals and participate in planned activities. Costs usually

depends on the size of the living area, services required and where the facility is located, add-ing up to several thou-sand dollars a month.

For those who require constant care, a nursing home may be the only option, albeit a costly one. Medicare pays for skilled nursing facility care for a limit-ed period following a hospital stay for reha-bilitative purposes, but not for ongoing care. State Medicaid pro-grams will generally pay for basic nursing home services, but only after an individual’s personal assets are exhausted and he or she has no other means to cover the cost.

All nursing homes that participate in Medi-care or Medicaid are subject to annual inspections. In addition to personal vetting of any facilities under con-sideration, it’s a good idea to compare these inspection records by consulting the “Nursing Home Compare” resource at www.medi-care.gov.

So how did the Duff family finally decide to care for their mom, Rita? “We wrestled with our options and though the family would have preferred that she live out her final years at home, we finally settled on moving her to an assisted living center,” Duff says. “We didn’t have to worry about caregivers not showing up or being inattentive to mom’s needs, and it

afforded her some independence and socialization without her having to be cooped up alone at home.”

© cTW features

LonG-TermCare

resourCes

elder care services and facilities in the commu-nity, contact the state or city’s elder care agency. Find the contact infor-mation online at www.eldercare.gov or by calling (800) 677-1116.

health care agency at the National Association for Home Care’s web-site, www.nahc.org.Click on “Consumer Information.”

assisted living homes, consult the Assisted

America at www.alfa.org.

health-care agency and nursing home accredi-tation via the Joint Commission on the Accreditation of Healthcare Organizations at www.jointcommission.org.

records of nursing homes at www.medi-care.gov. Click on

© cTW features

• For help in identifying elder care services and facilities in the community, contact the state or city’s elder care agency. Find the contact infor-mation online at www. eldercare.gov or by calling (800) 677-1116.

• Locate a local home health care agency at the National Association for Home Care’s website, www.nahc.org. Click on “Consumer Information.”

• For information on assisted living homes, consult the Assisted Living Federation of America at www.alfa.org.

• Check local home health-care agency and nursing home accreditation via the Joint Commission on the Accredita-tion of Healthcare Organizations at www. jointcommission.org.

• Research inspection records of nursing homes at www.medicare.gov. Click on “Resource Locator.”

© CTW Features

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Retirement is idealized as a time of relaxation, reserved for fun and loved ones after all the hard work is done. And many seniors embrace the sunny notion. According to a survey done by the National Council on Aging, United-

Healthcare and USA Today, most older Americans expect better times ahead.

Some 75 percent of boomers (age 60 to 64) expect their health to get bet-ter or stay the same in the next five to 10 years. Twenty-five percent of those seniors also say their health is better than normal.

Yet fewer seniors report the level of physical activity and exercise that is required to insure a good quality of health. Little more than half (52 per-cent) of the surveyed seniors say they exercise or are physically active at least four days per week; another quarter say they are active one to three days per week.

health and wellness

Make Aging Well Part of the Life PlanPhysical well-being and fiscal fitness walk hand in hand. Sound exercise habits can be an important element of a life plan

by LindSey RoMAin

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About one in 10 respondents report that their exercise or physical activity is limited to just a few days each month, and 11 percent are never physically active

Confidence is fine, but “it’s important that this positive mindset doesn’t prevent them from taking the necessary steps to maintain optimal health,” says Rhonda Randall, chief medical officer at UnitedHealthcare. The survey of 2,250 U.S. adults age 60 or older examined seniors’ outlook and preparedness for aging.

Randall points to a figure from a Centers of Disease Control and Prevention survey that shows that 80 percent of older adults live with one chronic condi-tion, while 50 percent have at least two. She cites chronic conditions as the big-gest driver of cost and quality of life for seniors. “For people who are in poor health and getting ready to retire, monthly expenses will only increase with health bills, medications and other services needed to support them as they age, which can deplete their financial resources,” says Randall.

Investing in health from an early age is the easiest way to secure a promising post-retirement life. Randall says it’s never too late to take the necessary steps towards that healthier lifestyle. “Whether you’re 50 or 70, start today,” she advis-es.

Health extends beyond the obvious balanced diet and exercise routine – it’s about overall health of the body, mind and finances.

“Maintaining a healthy body will be significantly easier if you’re feeling good mentally and emotionally, so that’s why it’s important to stay engaged with family, friends and the community to keep mentally sharp,” says Randall. She suggests setting goals or writing a mission statement for your retirement years.

“You’ll be glad when you start to reap the rewards, such as weight loss, more energy, better mental well-being and lower health care costs,” says Randall.

© CTW Features

Go4Life, an exercise and physical activity campaign from the National Institute on Aging, says to focus on four types of exercise and activity for optimum fitness as you age. Mix up the activities to avoid boredom and prevent injury.

EnduranceBrisk walking or joggingYard work (mowing, raking, digging)DancingSwimmingBikingClimbing stairs or hillsPlaying tennisPlaying basketball

StrengthLifting weightsUsing a resistance band

BalanceStanding on one footHeel-to-toe walkTai Chi

FlexibilityShoulder and upper arm stretchCalf stretchYoga

Source: go4life.nia.nih.gov

Get Going!

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With the price of gasoline fluctuat-ing between costly and downright expensive the last few years, it’s not surprising that fuel economy consid-erations rank high among new-car

buyers. While motorists can indeed salve the sting they’re feeling at the pump by shopping for a vehicle that gets more miles per gallon, if they’re ignoring other long-term operating costs – including depreciation, financing and insurance – they might ultimately lose money in the process.

“When it comes to purchasing an automobile, consumers need to think long term to determine all of the costs associated with owning a vehicle,” says Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book in Irvine, Calif.

To wring the most value out of your ride you’ll have to work the bot-

auto insurance

Rules of the RoadAn automobile can be one of life’s great investments – or financial drains. To fit your ride into your financial plan, pay as much attention to long-term ownership cost as you do to mpg and colors

by Jim GoRzelAny

iStock Photo

Cost: $32,384 J.D. Power average price of a new car

What’s your Automotive bottom line?

toyota sienna Le minivan

audi r8 spyder Quattro

convertible

[loW] [HiGH]

$1,111 $3,384

insurance

What’s your Automotive bottom line?

Source: insure.com national annual averages for the least expensive/most expensive cars to insure in 2012

tom line like an accountant and think long term like an investment adviser when you go out shopping for a new car or truck. Fortunately, the Internet is a bountiful source of information that makes comparing projected ownership costs easier than scouring financial reports to pick stock-mar-ket winners. Car-information sites including Kelley Blue Book (kbb.com) and Intellichoice (intellichoice.com) track such costs for most new and past model-year vehicles.

One of costliest – and often over-looked – components of auto owner-ship is depreciation, which is the difference between a car’s purchase price and its resale value down the road. It always pays to choose a model that’s predicted to hold its value better over time, based on economic factors, historical data and plain old supply-and-demand issues, According to Intellichoice, large cars, luxury cars and minivans typically don’t hold their value as well these days as do compact passenger cars and sporty coupes.

For example, let’s compare two hypothetical models each having a purchase price of $30,000, which is close to the national average for a new car. The first vehicle is estimated to return 32 percent of its original value after a five-year ownership period, while valuation sources project the second model will be worth 5 percent more after the same period. Assum-ing both cars are kept in good condi-tion with average mileage, someone choosing the second auto would come out around $1,500 ahead at trade-in time.

Such savings tend to grow expo-nentially with the price of the car, simply because there’s more money at stake – a 5 percent difference in resale value after five years between competing $50,000 cars would be $2,500. However, differences in resale values among similarly priced

models tend to narrow the longer one keeps a vehicle, and resale value virtually becomes negligible if you’re the type of person who “runs a car into the ground.”

If you’re financing the cost of a new vehicle be sure to compare loan rates to minimize interest costs. As of mid-November 2012, Bank Rate Monitor cited a low of 1.49 percent for a 60-month new-car loan from a credit union in Chicago, with a high of 7.5 percent at a major bank. If you’re borrowing $20,000 toward the purchase price of a car, that’s a dif-ference of $3,279 in interest costs at stake over the life of a five-year loan. Some automakers offer zero-percent financing on select models, particu-larly near the end of a model year to clear dealers’ inventories, which are the best financing deals of all. Be aware, however, that the lowest rates are available only to borrowers with pristine credit ratings. If you have a blemished credit record you’ll likely pay more to finance a car.


Another major cost factor is the price of auto insurance. While rates are largely based on a person’s driving record, age, gender, credit rating, address and miles driven, some cars are inherently cheaper to insure than others based on their claims histories and repair costs. As a rule, expensive cars are costlier to insure than cheap-er ones, with high-performance sports cars carrying much higher pre-miums than family-minded models. According to a 2012 survey conduct-ed for Insure.com, the Toyota Sienna minivan was ranked the cheapest model to insure at a $1,111 average annual premium for a representative driver, while the Audi R8 Spyder Quattro sports car topped the list at $3,834.

Always consult with an insurance agent to gather price quotes for vari-ous models as part of the car-shop-ping process, and compare rates

among several companies to garner the best deal.

And, yes, choosing a more fuel-efficient car can indeed be a signifi-cant cost-saving measure. For example, with average gas prices hov-ering around $3.50 a gallon as of mid- November 2012, the annual estimated cost difference between a vehicle that gets a combined 25 mpg city/highway and one rated at 30 mpg would be around $750 (based on 15,000 miles/year) according to the Environmental Protection Agency. That’s a savings of about $3,750 over five years, with even bigger money at stake if fuel costs head back upward.

Ratings for current and past model-year cars and trucks, along with a cus-tomizable fuel-cost calculator and other related information can be found on the EPA’s website, fueleconomy.gov.

© CTW Features

autoinsurance

iStock Photo

Operating expense: $8,946 aaa cost to own and operate an average sedan (fuel, maintenance and tires)

Monthly loan payment: $462 J.D. Power average monthly loan payment on a car in 2012

What’s Your Automotive Bottom Line?

3 6 8 6 6 6 A S _ 1 3

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1 a: Training for a marathon (ING)2 a: 27 percent (Allstate Insurance)3 d: 65 percent (agingstats.gov)4 a: about one-third (CFPB)

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7 82 years (Northwestern Mutual)8 a: 35 to 44 (Pew Research Center) 9 56 percent (Pew Research Center)10 21 percent (EBRI)11 c: 60 percent12 40 percent (Department of Labor)

How do you rate?

Continued from page 5

Make Your Favorite Recipes Healthier

HEALTHYEATING

A healthy diet plays a significant role in a person’s overall health. Without a healthy diet, men and women are more susceptible to disease and other potentially harmful ailments.

METRO CREATIVE CONNECTION

MetroBut when many people think of a

healthy diet, a lack of flavor is often one of the first things to come to mind. That’s a common misconception, as a diet that’s healthy and full of nutrients can simultane-ously be flavorful. In fact, it’s easy to enjoy many of your favorite dishes in a way that makes them much healthier. Oftentimes, a few minor alterations to a recipe is all it takes to turn the dish from high-risk to healthy.

* Trim the fat. No one wants to eat fat, but fat isn’t entirely bad for you. Fat can help your body absorb vitamins A, D, E and K, and replacing fat with something like carbohydrates decreases how much these valuable vitamins are absorbed. In addition, dietary fat releases chemicals in the brain that make you feel full, reducing the likelihood that you will overeat.

Those are just a few of the benefits of dietary fat, which is an essential element of a healthy diet. But overconsumption of dietary fat can be dangerous, and many people simply need to trim some fat from their diets. One way to do that is to reduce how much butter, shortening or oil you use when cooking. For some recipes, you may be able to cut suggested portions of such ingredients by half without replacing them; however, for others, especially those for baked goods, these items may have to be replaced. In the case of the latter, find a suggested alternative to high-fat items, and only use half of the high-fat item list-ed in the original recipe. Chances are you won’t taste the difference, but your body will be better for it.

* Substitute healthier fare. Substituting items is another way to turn a favorite dish

into a healthier dish without altering the flavor dramatically, if at all. For example, instead of cooking with enriched pasta, purchase whole-wheat or whole-grain pas-tas, which are higher in fiber and lower in calories. If a recipe calls for using milk, choose fat-free milk instead of whole milk. Doing so reduces your fat intake by nearly 8 grams per cup.

Recipes can even be made healthier by simply cutting back on the main dish and adding more vegetables. Instead of using the recommended amount of meat or chicken, scale back and make up for it with additional vegetables, which reduces your caloric and fat intake while adding more vitamins and minerals to your diet.

* Change your methods. Certain cooking techniques are healthier than others. Frying foods or cooking with fat, oil or salt is not the healthiest way to prepare a meal. Some of your favorite dishes that call for frying or cooking in oil can be just as flavorful if you opt for healthier methods like braising, broiling, grilling, or steaming. When reci-pes call for basting foods in oil or drip-pings, forgo these unhealthy options and baste foods in vegetable juice or fat-free broth instead.

What you use to cook can also be healthy or unhealthy. Nonstick cookware won’t require you to use oil or butter to keep foods from sticking to the pan. This reduces the amount of fat and calories you will consume, and you likely won’t notice a difference with regards to flavor.

Men and women who enjoy food and cooking their own meals can take several steps to make those meals healthier with-out sacrificing flavor.

Using nonstick cookware when preparing your favorite meals can reduce reliance on oil or butter, cutting fat and calories from your diet.

L I F E P L A N N I N G G U I D E S A T U R D A Y, J A N U A R Y 1 9 , 2 0 1 328

For many of us, our goals in life remain constant: nancial independence and providing for family. Striking a balance between saving for goals, such as education and retirement, and allocation money for daily expenses can be challenging. But you can do it.

Learn how you can rede ne your savings approach toward education and retirement. Call or visit today.

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