The Big Picture
 Pension Planning

Most of our clients have a pension plan, yet few truly understand the options and limitations of their plan. A pension is essentially an annuity that can provide a stream of income for someone's lifetime. With an annuity, you are betting that you will live a long life, and the company is betting that you will not. For this reason, they are willing to pay you income for life. The calculation that they use to determine how much to pay you is based on, among other factors, your life expectancy. If you live to receive one check beyond your life expectancy, you win.

The primary option for those with pension plans comes in the form of a lifetime stream of income. With this option, someone who is married can select a full benefit or a partial benefit with spousal survivorship income (some plans now provide for a non spousal beneficiary). The full benefit typically provides the largest stream of income, but does not provide a survivorship benefit. If, for example, you passed away one year into receiving benefits, the rest of your lifetime income would be surrendered back to your employer's pension plan. If, however, you opted to provide survivorship income, you would receive a reduced income for life and your beneficiary could receive a modest income for the rest of his/her life.

Another option provided by some companies is a lump sum benefit. With a lump sum benefit, the company determines your pension income and then calculates your distribution. This one-time pay out is typically the current value of all of your future income. When you receive this benefit, you can typically transfer the money to an Individual Retirement Account (IRA)

Having the money in an IRA provides you with increased flexibility over the annuity benefit. First, you can take as much money as you need from an IRA. If you have an emergency or want to take a vacation, you can dip into your IRA for those excess funds. With the annuity payment, you are set on a fixed income. Second, if you pass away, you can name your spouse/partner, family, friends, a trust, and/or a charity as your beneficiary. Third, the assets in the IRA belong to you not the company. If your company were to go bankrupt, you could see a reduction in your pension income. If the money is in your IRA, they cannot reclaim those funds. These benefits provide you with greater control over the money that you earned during your years of service with your employer.

For those who must take an annuitized income stream, you may want to consider purchasing life insurance. Many of our clients use this strategy because it allows them to protect their spouse/partner at a smaller cost than reducing the retiree's full pension income. Using this option, you can evaluate the survivor's need, calculate the current value of that need, and purchase life insurance on the retiree for that amount.

If you have a pension plan, make sure you know all of your options before selecting your distribution option. Please contact our office before making a selection so that we can help you review all of your options.

Research Publications 

 The Office
 

Our office will be closed on September 3rd for Labor Day.

On September 28th and 29th, Woody will attend the bi- annual Pride Planners conference in Washington, DC. This conference provides information and instruction on areas of financial concern for domestic partners as well as how recent events factor into our clients' greater financial picture.

Mark your calendars!!! On September 27th, we will host our 2nd Annual Paws for a Cause charity night. This year we have partnered with our local Coldwell Banker office to make the event what is certain to be a huge success.

Our goals for the 2007 Paws for a Cause are to raise $10,000 for the Humane Society of Baltimore and $3,000 for the Canton Dog Park. The proceeds will go to build a real-life room for the Humane Society. The real-life room is used to create a comfortable environment for both pets and prospective parents to make their introductions. The Canton Dog park is in need of new landscaping to make the park a cleaner, safer environment for the dogs.

Paws for a Cause will be held from 6-9PM on September 27th at the Waterfront Hotel in Fells Point. If you would like more information or if you would like to attend, please call Brenna at 410-732-2633. We look forward to seeing you there!

 

 The Family
 

My baseball team did very well in our season-end tournament. We won our first two games in decisive fashion and advanced to the championship game. The championship game, however, was rescheduled at the last minute, so I was unable to attend. Unfortunately, we fell to the top seeded team.

I had a great time on my new team this year and I'm eagerly awaiting next season. I'm sure my teammates would say the same. Of course, I will make sure to point out my value to the team as the only game we lost during the tournament was the one I couldn't attend!

Fenway wraps up his latest round of obedience classes next week. While Fenway has always listened well, we felt that he could use some fine tuning before he starts agility competitions. He begins agility classes in two weeks and will likely begin competing before the end of the year.

 

 Other Resources
 Estate Planning for your Pet

Estate planning for pets has been increasing in popularity over the past few years. Many of us have a dog, cat, or other pet that we consider part of our family, but we don't always make arrangements for them should they out live us.

The Estate Planning for Pets Foundation in Phoenix (yes there is a foundation for this), has information on their site about advances in local estate laws. They also provide other resources you can consider when drafting your estate plans.

Of course estate planning for pets isn't going to be for everyone. You should ask yourself if something happened to you, who would take care of your pet. If you have someone in mind, have you discussed it with them? Many people who sit for and love your pet may not want the daily commitment- especially if your pet has a disability or other health issue.

Please consult the link for more information on estate planning for your pet.

Estate Planning for Pets