I’m Sorry About Your Loss—Now Here’s the Bill

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Funerals can be very expensive. The expense of a coffin, a plot, a headstone and the services can be very overwhelming for a family that was not financially planning for a death. When a loved one passes away the ceremonial process that our society participates in gives people a feeling of closure. 

Today, the average North American traditional funeral costs between $7,000 and $10,000.  This price range includes the services at the funeral home, burial in a cemetery, and the installation of a headstone.  While cremation is gaining in popularity, the traditional funeral is still the most popular manner for disposing of the deceased.

The honoring of the deceased has become part of our society and many families will go in debt to provide that. The funeral expenses are not the only unexpected costs that arise from a death. Many times there are taxes, probate costs or even the need for housekeepers and child care.

No one ever wants to lose a beloved friend or a family member. It is a very sad moment in time and is never easy to deal with. Some traditions hold on to the idea that the end of life is to be celebrated, not mourned. It is a romantic ideal that is much easier said than done.

On the other hand, when the most unfortunate event does occur, friends and family members find themselves discussing the life and memories of those they have lost. They do not focus on the fact that they are gone, but all of the happy memories that were created because of that person.

Average Funeral Costs: How the Funeral Industry Works

Most people planning a funeral use the services of a funeral home.  The funeral director is either the owner of a funeral home or, more commonly, an employee of a large corporate-owned chain of funeral homes.  In most cases the funeral director’s compensation is tied to the profits he generates for the funeral home or the sales commissions he earns by selling related goods and services.

While the funeral director will serve as the family’s main service provider when arranging a funeral service, other businesses are involved as well.  In addition to the funeral home, most families will need to use the services of a cemetery and a headstone dealer.  Often times, the funeral director will coordinate the purchase of goods and services between the family and the cemetery and headstone dealer.  While this is certainly convenient for the family, you need to remember that you are really buying things from three separate business entities: the funeral home, the cemetery, and the headstone dealer.

The funeral director’s main responsibility is generating profits for the funeral home.  Unfortunately, this often means the funeral director’s main objective is to increase the amount of money you spend at the funeral home, leaving cemetery and headstone costs as a separate expense for the family.  This is why the typical funeral service is publicized as costing $6,000 – because the family often pays about $6,000 to the funeral director.  However, the family still has to pay the cemetery for the purchase of a grave spot and the dealer for the price of a headstone.  It’s these additional goods and services that add another $2,000 to $4,000 to the price of a funeral.  Unfortunately, many families do not find this out until after they have signed a contract for the funeral services with the funeral director.

So perhaps there is something to the idea of celebrating the life as opposed to mourning the death. This practice can be difficult when there are mounting expenses involved. That is why many individuals choose to carry funeral trust insurance to ensure that their loved ones will have less to concern themselves with when they pass.

The last thing people want to think about when a loved one passes is money. Sure, there are those greedy, heartless family members that can think of nothing more than how much inheritance they will receive, but they are rare. For most people, they want to keep all of their attention and focus on remembering their loved one.

They prefer to remind themselves of all the cherished memories they were fortunate enough to have with the dear departed. They remember all of the good times and the bad. Everyone involved shares stories of how that loved one touched their lives and how great of an affect their presence had on them. It is a very sad time, but also one for remembrance and reflection.

Most people do not sit around thinking about what will happen when they die. It is a subject that is sort of taboo. However, it is one that every person should consider from time to time. As difficult as it is to imagine there is much more to it than people would like to think.

When a person contemplates death, they may only ponder what happens when they die. Where do they go and what will happen to them. Whether they know it or not, these questions ignore the tremendous affect death has on everyone they love. Not only does it carry a heavy emotional toll on family and friends, but a large financial burden as well. Holding onto a quality funeral insurance plan can help at least alleviate the financial difficulties associated.

When a loved one passes, the last thing you want to worry about is how to pay for the after death expenses. It is an important aspect to consider when thinking about your own life. How will your passing affect those you love financially? As mentioned earlier, it is not an easy subject to ponder, but it is one that can help dampen the impact of your death on your family.

Purchasing a casket, arranging a burial plot, and planning a ceremony tend to be extremely costly, especially if the family is not prepared. All together, it can cost upwards of about fifteen thousand dollars. However, if one plans ahead for their own passing with funeral insurance, they can ease that financial burden placed on the family. This way, all of the final expenses are covered in advance.

The death of a loved one is never a pleasant experience. Family and friends gather to remember the one they lost and reflect on how many lives were touched throughout their lifetime. Planning ahead with funeral insurance affords the family the chance to mourn and remember your life instead of worrying about how to cover the cost of your passing.

I’m Sorry About Your Loss—Now Here’s the Bill
Buying a package funeral deal seems to be the easiest option for grief-stricken family members—and that’s the way it’s intended. Instead of scaling down to the necessities, many people buy an all-inclusive “traditional” funeral—an embalming, an ornate casket, open casket wake, fancy flowers, ceremony, procession, and graveside service.

Anyone who has experienced paying for an unexpected funeral can appreciate the cost of this service. Knowing what to expect in terms of cost can aid in your pre-planning. Here are the facts:

The average cost of a funeral is $6,000, but many traditional funerals can cost more than $10,000. Many people feel there is a connection between how much is spent and how much you loved your family member or friend, but that should not be the case. Letting your family members know your wishes ahead of time will help them realize they do not have to spend money to show their love.

Here’s a breakdown of what you might expect to pay:

Transportation

• Hearse – $135–$250
• Limousine – $125–$250

Facilities and Services

Cremation

• Funeral Home – $1,500-$3,500
• Crematory – about $700, including container

Visitation

• On-site – $100–$520
• Off-site – $275–$550

Funeral

• On-site – $100–$850
• Off-site – $200–$660
• Graveside Ceremonies – $50–$415

Memorial Service*

• On-site – $100–$670
• Off-site – $100–$520
• Removal of Remains – $125–$300

Merchandise

Casket / Cremation Urn

• Less Expensive Casket – $90–$860
• More Expensive Casket – $2,995–$65,000
• Less Expensive Cremation Urn – $25–$235
• More Expensive Cremation Urn – $335–$3,650

Burial container

• Vault – $375–$525
• Liner – $285–$525

Professional and Administrative Services

• Embalming – $100–$525

Caterer

• Opening and Closing the Grave – $350-$1,500

Other

• Headstones or grave markers – $500 to several thousand
• Grave Plot – $350-$3,000
• Death certificates – cost depends on state
• Obituary – cost depends on newspaper and length

To read more click here:  http://annuitynews.net/2009/11/16/pre-need-funeral-trust

Annuity Distribution Of Assets is an Art

Many financial advisors recommend that 20% of an individuals investment should be in bonds, yet bonds in this market is risky to say the least.  It is my belief that annuities would be a better choice for that investment. 

With Americans generally living longer, longevity risk — the chance that you’ll outlast your portfolio’s ability to support you — is rampant, with good reason: U.S. Census statistics indicate that the average 65-year-old man can look forward to nearly two more decades of life, with women likely to live even longer. All this points to the importance of investments that can withstand the long test of time.

Annuities are designed to protect against the risk that retirees outlive their savings, a danger made clear by market losses suffered by older Americans over the last year. For example, the average 401(k) fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages.

The distribution of assets is an art.  For most of us, the immediate goal is to save enough for retirement so we can have a comfortable lifestyle and not have to eat dog food. But once you’ve achieved that goal, the next task is to ensure that you don’t withdraw so much from your retirement nest egg that you end up outliving your money.

An annuity is a type of “insurance” against outliving our assets. Annuities are a widespread retirement product that guarantees a steady stream of income for a lifetime.

When it comes to retirement planning, there are three main risks to a sustainable income. Investment risk, Longevity risk, and Inflation risk.

• Stocks or mutual funds can lose money. Of course, we all understand this from watching recent financial news.
• Certificates of Deposit and savings accounts are also safe, but they have low interest rates.
• Equity Indexed Annuity -Equity indexed annuities are relatively new products to the market and offer the best of all world’s to the investor. These retirement annuities increase in value when the market rises but they don’t lose money if the market drops. Instead, they receive a fixed interest rate promised in the contract. While not all equity indexed annuities are ties to the same type of index, many use the S&P 500 as their benchmark.  The return rate will be somewhat less than the actual market return in years when the index goes up. When the market goes down though, there is a guaranteed return rate so the account does not lose money. A common guaranteed return would be 2% – 3%.

An Equity Indexed Annuity is the one tool that can accomplish three things.

Investment risk: All investors have experienced the ups and downs of market cycles, but these fluctuations can be particularly problematic in the years just before and just after retirement. The ability to generate a lifetime income from retirement can depend greatly on when you start to take income and, specifically, on the sequence of your returns. Negative returns early in retirement have more impact, and when returns eventually turn positive, it takes longer to make up the losses caused by the initial declines.

Equity Indexed Annuities, Provide investment risk protection by helping to assure a predicable level of income, regardless of market conditions.

Longevity risk: The risk of outliving your retirement savings. Thanks to advances in science and medicine, life expectancies – and the length of the average retirement – have increased by 20 years. And if both you and your spouse reach age 65, there is 52 percent chance that one of you will live to be 90. (Source: Society of Actuaries, 2006.)

As a result, without careful planning, the risk increases significantly that you may outlive your retirement savings. Income must be able to sustain lifestyle needs for much longer, while also covering health care, housing and other costs for an extended period of time.  Length of retirement… life expectancy- It’s extremely important to make sure your assets last a lifetime and if at all possible increase to provide for adjustments to the cost of living.

Equity Indexed Annuities, Eliminate longevity risk by generating a guaranteed flow of retirement income that cannot be outlived.

Inflation risk What would appear to be a statistical marvel is a financial irony, for inflation can devastate lives as readily as healthy lifestyle choices and modern medicine can sustain them. Inflation erodes the purchasing power of your income and wealth. And it doesn’t stop just because you have retired.

Of particular concern in any retirement income plan is the cost of health care, which is rising far more rapidly than the cost of living. During the past eight years, while inflation was pushing prices up by about 20 percent, the cost of health care more than doubled. 

Equity Indexed Annuities, Combat inflation by allowing you to access the upside of the equity market and lock in gains to increase potential retirement income.

In the past, it was possible to address these risks individually by combining multiple types of investment products, but it was almost impossible to effectively reduce all risks with a single investment vehicle. Today, however, new annuity designs integrate a range of features and benefits that make it possible to deal with all three risks.

To recap, An annuity is a contract between you and an insurance company, In exchange for your premium payment, the insurance company guarantees you income, starting immediately or at some time in the future.” This potential income can be a supplement to Social Security.

Withdrawing retirement funds

Annuities, Pensions And 401(k)s in Retirement

Pre-retirement planning is particularly important now as millions of Baby Boomers in America are beginning the transition from work into retirement. Living in retirement comfortably demands planning in advance to meet financial requirements. Income to consider during this period includes Social Security, 401ks and pensions that may have been acquired during working years.

It’s possible you might be working for a company that still offers a traditional defined pension benefit plan in addition to a 401(k) plan.  Most of the errors in planning for retirement are those of neglect, omission or panic. Failing to evaluate an employer’s retirement options can be costly as benefits can be worth as much as a nice paycheck.

A pension which is structured as a defined benefit plan provides a predictable, secure amount of money to you for the rest of your life, beginning at a specified age. 

Retirement benefits for Defined Benefit plans are calculated by a formula.  These types of plans are very popular for workers because of the lifetime guarantee and because benefits can be calculated before retirement, but are becoming increasingly less popular with companies.  There has been a significant drop in the number of defined plans, from 95,000 plans in 1980 to around 40,000 today. 

The employer is responsible for making the required contributions to the plan so that it’s funded sufficiently to make the appropriate benefits available when required. As such, the employer decides where the funds will be invested. With a defined benefit pension, the longer you remain with the company, the larger your pension will be.

With the current climate surrounding the state of corporate pension plans, it behooves you to understand exactly how your pension is calculated to ensure that you’ll receive all of the benefits due you.

Many people are not aware of just how their pensions are calculated. With most pensions, the benefit depends upon such factors as the employee’s earnings, length of employment, the age when he or she begins collecting benefits, and the formula which the plan utilizes. For instance, the formula might use an average of your pay in the final three- to five years of employment.

If your only company retirement plan is a pension, the likelihood is that you cannot make the decision to take a lump sum or monthly income because that has already been made for you.  That’s because most pensions pay benefits only in the form of a monthly annuity; in other words, you’ll get equal monthly payments for the rest of your life.  Very few remaining pensions allow employees to take a lump sum.

A 401(k) retirement savings plan is structured as a defined contribution plan. The plan defines the amount of money that you can put into it and how much your employer will match, if any.

Future retiree’s income is a concern because most employees simply aren’t saving enough. The average amount of money in a 401(k) is $29,000 while the median level is only about $10,000. That’s not likely to help much if it’s the only money you’ve saved for retirement and don’t have a pension.

In a Defined Contribution plan, retirement benefits are not known, unlike a Defined Benefit plan.  There is “no formula” to determine what the retirement benefits will be.  Rather, the amount that a retiree can expect is very dependent on how much money has been invested and the performance of the investments.  In this case, the investment choices figure prominently in the type of retirement the retiree can look forward to.  In this type of plan, there is generally no lifetime guarantee.

A 401k is a retirement savings instrument that enables contributors to place money aside without facing tax liabilities. This vehicle is typically offered through employers and might include matching funds paid on an employee’s behalf by the employer.

Contributions to a 401k are tax deferred. This means that income taxes will not be charged on money placed in these accounts until they are withdrawn.

You can usually choose relatively safe, fixed-rate investments for your funds, or you can opt for somewhat riskier alternatives. This savings vehicle can gain earnings in addition to contributions if it is attached to such things as annuities, mutual funds, stocks, bonds or money market accounts.

You’re most likely to face the choice of taking a lump sum or a lifetime income if your retirement package includes a profit sharing savings plan or 401(k).  Though such plans usually pay benefits as lump sums, your company may allow you to convert your account balance into an annuity. 

The annuity option is to take the market value of the investments in their account, the value may be in the hundreds of thousands, and purchase an annuity.  Annuities are insurance products that provide a guarantee of income for a certain period of time or for your life if that income option is selected and are available from major insurance companies.

Pension payments stop at your life’s end (or the life of your surviving spouse), not at the end of the actuarial life expectancy that’s assigned to you at retirement.  If you or your spouse’s heritage contains quite a bit of longevity, you could possibly lean toward the annuity. Thus, an annuity could be a bargain if, of course, you manage to live longer than average. 

The most common types of annuities are life income, which pays you a certain monthly amount until your death; life income joint and survivor, which assures that if you die first your spouse will continue to receive a certain amount until he or she dies; and life income and period certain, which pays benefits for your lifetime or for a specified period, whichever is longer. 

Life-only annuities pay the largest pension amounts but are cut off at your death.  But be careful if you decide to use this option; it must be done correctly.  Under federal law, a married person is prohibited from choosing the life-only option without the written consent of his or her spouse.  So, you’ll need your wife or husband’s approval in order to implement this financial approach.  In doing so, it’s wise to obtain a notarized waiver of the joint-and-survivor option from your spouse.

The other options continue to pay your beneficiaries at the cost of reducing your income by 10- to 15% during your lifetime. But pension payments stop at your life’s end (or the life of your surviving spouse)  so when retirement’s finally here, and now you have a gut-wrenching decision to make: how to take the money. 

Since most choices open to you are irrevocable, if you choose incorrectly you’re stuck with the consequences for the rest of your life. Make sure that you understand the pros and cons of each of the retirement options listed above.  Only then can you choose the option that is right for you.

For those reasons, you’ll probably want to have an experienced financial planner or accountant help you run the pertinent numbers to determine what’s best for you, as well as keep you from being tripped up by the tax laws.