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Estate Planning

Summer Memories, Lasting Legacies

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These long summer days have me thinking back on the summers of my youth, and all the ways life was simpler. The world was a different place back then! 

When I was a kid, we used to ride our bikes for miles and miles. If we were running late, we couldn’t just text our moms that we were on our way. We had to find a pay phone and sometimes even ask a stranger for some spare change to make a call home.

Whenever I got my allowance, the first place I rode off to was the 7-11 for a Slurpee. Perfect on a summer day!

Come dusk, we ran around the neighborhood with flashlights, scrambling through yards with the kids from our block as we played “Ghosts in the Graveyard”. We spent the entire day outside with our friends until that very last sliver of sunlight disappeared.

My fondest summer memories are of fishing with my grandfather. Those hours spent on the water, telling stories as we waited for the fish to bite, are a cherished part of his legacy for me. 

Time together in the outdoors is something I’ve tried to continue with my son and my dad, his grandfather. A few years back, we took a trip to Canada together. I was so happy when my son, Gavin – 13 at the time – commented how much he enjoyed the trip and how he would always remember it.

He’s 16 now, and we often revisit stories from that trip.

Legacies aren’t just about the money we leave behind. They’re about the values, lessons, and memories we pass along to our loved ones.

At Secured Retirement, we understand that retirement planning is a part of a deeply personal process. When we plan for retirement, we’re securing a future to continue creating special memories and preserving our values.

I hope that my son tells his own kids of the summers we spent on the water. That he shares with them the importance of time together and conveys a love of the great outdoors. 

What are you hoping to leave with those you love? Build a legacy that lives through the generations to come with Secured Retirement.

Cup of Joe

CUP OF JOE

From Joe Lucey, Founder of Secured Retirement

There’s something about sitting down with a steaming cup of coffee that always kicks my day into high gear. And it’s not just because of the caffeine it sends coursing through my veins.

Throughout my career, some of my biggest revelations have come to me in conversation with my mentor over a cup of joe. Good conversation and personal connection can pick you up in a special way. It’s that feeling that I’m hoping to bring to you with my series, your Cup of Joe.

3 Key Differences Between Life Insurance and Roth IRAs

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Life insurance and Roth IRAs are both effective tools for wealth transfer, allowing you to efficiently transfer of assets from one generation to the next tax-free. However, their similarities largely end there.  Despite their general resemblance, the rules that apply to life insurance don’t always apply to Roth IRAs. In fact, this is the case more often than not. Below, we outline three main differences in their structure that make these two retirement planning vehicles so different.

1. Estate Inclusion

Roth IRAs Are Always Included in Your Estate:

Due to the current $13.61 million federal exemption amount, which allows a substantial amount to pass estate tax-free to beneficiaries, the majority of Americans won’t owe federal estate tax upon death. However, a small segment of the population still faces estate tax concerns, especially in states like Minnesota with lower state estate tax exemptions ($3 million). In such cases, life insurance can offer a distinct advantage over Roth IRAs.

The “I” in IRA stands for “individual”. This means it’s always yours, and the value of your Roth IRA is always included in your estate. If your estate exceeds the federal or applicable state estate tax exemption amount, your beneficiaries could owe estate tax on what were thought to be “tax-free” Roth IRA assets.

Life Insurance Can Be Excluded from Your Estate:

Life insurance can be structured to remain outside your estate, providing a tax-free benefit to your heirs that is not subject to estate tax. This can be achieved through various methods, such as having an irrevocable trust purchase the life insurance policy. Consulting with your insurance advisor, Secured Retirement tax professional, estate planning attorney, or all three can help determine the best approach for your situation.

2. Contribution Limits

Roth IRAs Have Contribution Limits:

When contributing to a Roth IRA, you face strict limitations. For 2024, contributions are capped at $7,000 ($8,000 if you are 50 or older by year-end). However, you can convert existing IRA or eligible retirement plan funds to a Roth IRA. Additionally, Roth IRA contributions are subject to income restrictions. Roth IRA contributions can only be made with income that qualifies as “compensation,” which is typically earned income. So, if you have too much income from any one source, you can be prohibited from making Roth IRA contributions.

Life Insurance Has No Contribution Limits:

Life insurance is not bound by the same restrictions, but insurance carriers may limit the amount you can purchase based on factors like health, annual income, and net worth. As far as Uncle Sam is concerned, you can have as much insurance as you want, or perhaps, as much as you can get. You can purchase as much life insurance as you are eligible for, providing greater flexibility compared to Roth IRAs. Life insurance premiums can be paid with any type of income, including interest, dividends, and Social Security, none of which are not considered compensation.

3. Required Minimum Distributions (RMDs)

Roth IRAs Have RMDs for Non-Spouse Beneficiaries:

Non-spouse beneficiaries of a Roth IRA, such as children, must generally withdraw the entire account by December 31 of the tenth year after inheritance. While these distributions are usually tax-free, they are mandatory.

Life Insurance Has No RMDs:

Beneficiaries of life insurance do not face required minimum distributions. They receive the proceeds tax-free, but any subsequent investments of those proceeds may generate taxable income unless invested in non-taxable assets like municipal bonds.

Example:

Someone inheriting a Roth IRA at age 50 can leave it to grow for 10 years, with tax-free growth and tax-free distributions thereafter. In contrast, a $500,000 life insurance policy provides only the initial proceeds tax-free. A $500,000 Roth IRA, if left to grow, may double in value, providing tax-free distributions potentially worth more than the life insurance payout.

A Final Thought

When planning to leave a legacy, there are many tools to consider, including life insurance and Roth IRAs. At Secured Retirement, we know that each situation is unique, and there is no one-size-fits-all solution. Consulting with our professionals can help tailor a plan to your specific needs and goals so that you can pay taxes consciously, spend confidently, and ultimately, retire comfortably. To discuss your life insurance vs Roth IRA strategy, give us a call: 952-460-3290.

5 Considerations To Help You Land the Right Financial Advisor

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With more and more financial products hitting the market and a growing number of so-called gurus shilling financial advice from every nook and cranny of the internet, it’s more important than ever to have a trusted financial advisor in your corner. But with so many opinions floating around, how can you determine who to actually trust? Navigating through the maze of investment options, retirement plans, and financial strategies demands tried-and-true expertise and insight. We’ve put together a list of five things to consider as you sift through the noise and find a professional who’s worthy of your trust.

  1. Communication Style: Clear and effective communication is crucial to the advisor-client relationship. In this industry, things can get complex and confusing quickly. You want an advisor who can spell it all out for you in a way you understand. Beyond that, you’ll want to work with someone who responds promptly and is willing to provide you with regular updates. Transparent and open communication fosters trust and ensures that you remain in the know and empowered throughout your financial journey.
  2. Credentials and Beyond: Formal credentials can be a valuable indicator of expertise, but they don’t provide a complete picture of competency. In the world of financial consulting and retirement planning, there is a whole spectrum of designations ranging from rigorous to just plain formalities. Take into account a prospective financial advisor’s track record, integrity, and compatibility with your financial goals, rather than simply relying on the acronyms trailing their name.
  3. Specialization: Just like you’d consult a cardiologist for heart-related concerns rather than your family doctor, you should seek out a financial advisor whose expertise aligns with your specific financial needs. At Secured Retirement, our specialization revolves around income and tax planning for retirement. Having a specialty indicates the presence of proven strategies. Whether you’re interested in retirement planning, estate management, or investment strategies, and depending on where you are in your financial journey, working with a specialist ensures guidance and comprehensive insights tailored to your goals.
  4. Life-Long Learning: Even the most decorated financial professionals should seek out ongoing education and training. This is a field that is constantly changing. You want to work with advisors who keep up with this change. What’s more, you want to know that the training they’re doing isn’t on sales techniques, but in areas of financial substance. Ensure your financial partner values honing their knowledge and skills in their area of expertise so that they consistently stay on top of their game.
  5. A Range of Approaches: Every family’s financial situation has its strengths and weaknesses. Within their specialty, your financial advisor should be able to tailor their approach to your unique situation in order to achieve your personal financial goals. You need a partner who takes the time to listen to your vision and can craft a strategy around it. There is no one-size-fits-all approach in this industry, and if anyone claims there is. . . Beware!

In the complex world of financial planning, working with competent financial professionals you can trust makes all the difference. At Secured Retirement, we’ve built our business with these very considerations in mind. We’re a partner you can rely on and thrive with. 

Connect with us today: 952-460-3290

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Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!