Four Setbacks You Could Face! Why Do We Save So Little?

bump in the road
What’s good for the economy isn’t necessarily good for our future. Will I outlive my money?  If not what can I do to avoid this situation?

Provided by Mark S. Gardner

Our parents & grandparents saved much more than we do. Most people who have read up on the economy for any length.

of time have heard of the personal saving rate (PSAVERT), which the Commerce Department calculates as the ratio of personal saving to disposable personal income. The January personal spending report released by the Commerce Department in early March showed the PSAVERT at 4.3%.1

As recently as January 2013, households were saving just 2.3% of their disposable incomes – so this can be labeled a short-term improvement. It still pales in comparison to the way Americans used to save.2

The “greatest generation” had a culture of saving. Its thrift was reinforced further by hard times and a call for personal sacrifices as the economy endured the Great Depression and stateside rationing during WWII. The Commerce Department began measuring household saving in 1959, and as unbelievable as it may seem today, households saved 10% or more of their disposable incomes through nearly all of the Sixties. In May 1975, the personal savings rate reached a historic peak of 14.60%.1,2

From 1959 to the present, the PSAVERT average has been 6.84 percent – but the 21st century shows evidence of a significant decline. The savings rate fell into the 1-3% range, dropping to a record low of 0.8% in April 2005.2

To some analysts, a declining personal savings rate signals a stronger economy. It implies more spending, and consumer spending has the biggest impact on GDP. You can’t have it all, however; more spending means less saving, and Americans are plagued by insufficient retirement reserves.

Are credit cards the problem? We borrow greatly, but there are other factors in play. You may have heard about America’s “shrinking middle class.” That is no exaggeration.


The most recent Census Bureau data shows the median U.S. household income for 2012 at $51,017. By comparison, median U.S. household income in 1989 – when adjusted for inflation – would work out to $51,681 today. From 1989-2012, annualized consumer inflation was mostly in the 2-4% range. All this illustrates a slow but notable erosion of purchasing power.3,4


During the same time frame, the cost of college went up dramatically, health care costs increased, and real estate values fluctuated. People saved less and borrowed more, and not simply on impulse; they wound up borrowing more to maintain a middle-class standard of living.


Real incomes aside, we are often lured into unnecessary spending. Advertising can convince us that we have unmet needs and desires, and that we must respond to them by buying goods and services. Urges, emotions, ennui, living without a budget – these can all lead us to spend more than we really should, especially given how much money we will need to adequately retire.


Our parents and grandparents really knew how to pay themselves first – and while economic pressures make it harder for many of us to do so today, that doesn’t make it any less of a priority.  


It might be useful to think about future money when you think about making a discretionary purchase. Are those dollars you are spending at a mall or restaurant today better off saved or invested for tomorrow?


Think about your big dreams and goals, the ones you have looked forward to realizing for years. How many dollars are you putting toward them? Is your spending aligned with them, or in conflict with them? Could you spend less here and there and devote more money to those priorities?


Sometimes we have to borrow and spend more than we would like, but often we have a choice – and the choice we make may affect our ability to retire sooner or later.     


In a 2013 survey of people aged 50 to 70 with $100,000 or more in financial instruments, 90% reported that they had experienced at least one setback in saving for retirement.

In fact, the average respondent had experienced four setbacks with an average loss or missed opportunity of $117,000.1

The future is always uncertain, and as the saying goes, “Life happens.” It would be wise to prepare for the unexpected and react logically rather than emotionally when faced with retirement challenges. Here are some obstacles you might need to overcome.

Surviving market downturns. More than half of those surveyed said their nest egg had been reduced by index losses during the Great Recession.2 Yet another survey suggested that about 50% of workers who were 32 to 51 when the recession started actually showed gains in their retirement dollars during the 2007 to 2009 period.3 This group may have had lower balances when the recession began, and it’s likely that they continued saving throughout the downturn.

Saving too little or too late. To accumulate sufficient retirement dollars to retire at age 65, one rule of thumb suggests stashing away 15% of income starting at age 25. Someone starting at age 35 might need to put away about 30% each year, and the percentage would increase to about 64% annually for someone starting to save at age 45!4 To maximizing your retirement nest egg, you may also need to adjust your lifestyle and control your spending. Once you reach age 50, you are eligible to make additional “catch-up” contributions.

Experiencing a traumatic event. A job loss, unexpected medical expense, death of a loved one, or divorce might make it difficult to save for retirement. Having three to six months of living expenses in “emergency dollars” would prevent you from tapping into your retirement nest egg, especially tax-deferred IRAs and 401(k)s. This is because withdrawals are taxed as ordinary income and may be subject to a 10% federal income tax penalty if taken prior to age 59½.

Balancing college and retirement. When these two priorities compete, many people stop putting aside money for retirement to pay for their children’s educational costs.1 The key is to balance your children’s needs with your own retirement goals and find an appropriate strategy.

The road to retirement is long, winding, and seldom smooth. But with patience and a steady commitment, you could reach your destination regardless of how many obstacles you encounter along the way.

Let me help you get started with a sound retirement strategy today. Just Ask Mark S. Gardner 214-762-2327

1–2), May 14, 2013
3) The Pew Charitable Trusts, 2013
4), September 24, 2012
5), March 4, 2013


Mark S. Gardner may be reached at 214-722-7555 Office or 214-762-2327 Cell.


1 – [3/3/14]

2 – [3/6/14]

3 – [9/20/13]

4 – [3/7/14]


Ten Things To Help Make Your Money Work Harder for Retirement



Little Things You Could Do That Could Help You Leave Work a Little Sooner.

Provided by Mark S. Gardner

Little things matter. When planning for retirement, people naturally think about the big things – arranging sufficient income, amassing enough savings, investing so that you don’t outlive your money, managing forms of risk. All of this is essential. Still, there are also little financial adjustments you can make at mid-life that may pay off significantly for you down the road.

Drop some recurring expenses & do something else with the money. How much do you spend for cable or satellite TV? Could you drop that expense or find a cheaper provider? How about the money you spend each month on a storage unit? A service contract? A subscription to this or that? Two or three such monthly expenses might be setting you back $100, $200 or more. What if you used that money to pay yourself? What if you saved it? What if you invested it and let it compound?

Assign your investments to appropriate accounts. This could be a route toward tax savings. When you retire, you will probably want to structure your retirement withdrawals so that money comes out of your taxable accounts first, then tax-deferred accounts, and then tax-free accounts. This gives assets in tax-deferred and tax-free accounts a little more time to grow.

Before that time arrives, you will likely find it ideal for your taxable accounts to hold investments taxed at lower rates, and your tax-advantaged accounts to hold investments taxed at higher rates. Various investment classes (stocks, commodities, bonds and so forth) are taxed differently, and some investors ignore that reality.

How much of a difference could such placement make? Here’s a long-range hypothetical example. Imagine putting $4,000 each year in a mutual fund returning 8% annually, with 3% of that 8% coming from income. If that fund is held in a tax-deferred account under those circumstances for 40 years, it grows to $1,036,226, and $880,792 when adjusted for taxes. Put that fund in a taxable account (annual contributions adjusted to $2,880, the return taxed annually at 15%) and you wind up with $841,913, actually $771,789 adjusting for taxes.1

Investigate fees. High fund and account fees can eat into your retirement savings effort, and most people never check on them. If your 401(k) plan charges 0.4% in annual fees and you contribute $10,000 or more to it annually over the decades, those tiny fees could shave tens of thousands of dollars off the account balance by your retirement date. Investment fees of 0.5% for index funds and 1% for actively managed funds are probably enough to make you think twice about putting up with anything greater.2

Ditch a zero-interest savings account for a better one. Interest rates are rising, but they are still far from historical norms. If you have money in a savings account that is yielding 0.15%, then search online for one that might yield 1.5% or 2% or more.

Strategize with your credit cards. If you always pay the full balance off each month, look for a card with rewards points – you could use them instead of cash someday. If you can’t pay off monthly balances fully, your strategy is simple – you want a credit card with the lowest interest rate you can find.

See what you’re spending. Few pre-retirees do this, and that’s because when they think “track monthly expenses,” they think of pen and paper and a couple of dull hours poring over receipts and bills. Good news: software exists to do some of the work for you, software that can keep you apprised of household budgetary limits, trends and progress. Some of the budgeting software out there now can help you retain more money to save for the future.

Spend less on food & clothes. Online discounts (and coupons) abound, and it is astonishing how many people don’t take advantage of them. Your smartphone and your PC aren’t the only sources; the Sunday paper can pay for itself this way. In the rear-view mirror, many food and clothes purchases are less than necessary, sometimes frivolous.

Reduce your debt. Some of the above moves may help you do just that. According to the most recent study from credit card comparison website CardHub, American households averaged $6,690 in credit card debt in the third quarter of 2013. Whether you owe more or less than that, such debt is certainly worth whittling down.3

Annual Portfolio Review. As one ages you should reduce your exposure and risk. Historically when interest rates increase the stock market retreats. Common sense says our government is printing money for going into further and further deficits. So ask yourself where do you see interest rates go? If you feel are going up and especially if you have a portion of your assets and fixed income bond portfolios or if you are concerned that we are closer to a top than a bottom in the stock market what can I do with my money or a portion of it. One of the answers is Fixed Income Annuities.

 As this quarter is coming to an end let’s sit down and review where you are today and where you want to be tomorrow.

Mark S. Gardner may be reached at 214-762-2327 or Web Site


1 – [1/2/14]

2 – [1/19/11]

3 – [10/23/13]


The Fed Finally Tapers Seven Things to Know and One Alternative Investment Solution

The FOMC authorizes a minor reduction in bond buying starting in 2014.December 18 turned out to be T-Day: the day on which the Federal Reserve finally tapered QE3. In making the move, the Fed acknowledged an improving economy; Wall Street quickly and enthusiastically applauded its decision.

The Fed will reduce its monthly asset purchases by $10 billion.

QE3 will continue, but the central bank will buy only $75 billion of bonds per month starting in January. The $10 billion cut comes evenly across Treasuries and mortgage-backed securities; next month, the central bank will purchase $40 billion of the former and $35 billion of the latter.1,2

Fed officials voted 9-1 in favor of a taper.

Boston Fed President Eric Rosengren was the lone dissenter on the Federal Open Market Committee, terming the action “premature” as the jobless rate had not yet descended to the Fed’s target of 6.5%.1,3

Market reaction: thumbs up.

The 2:00pm EST announcement gave stocks a real boost; the Dow rose 292.71 for the day to 16,167.97, the NASDAQ gained 46.38 to 4,070.06 and the S&P 500 ascended 29.65 to 1,810.65. Judging by the rally, Wall Street seemed to agree that it was time for action.4

“I think logically, this is what they had to do,” JPMorgan Funds managing director David Kelly told CNBC, reflecting a broad opinion. “If you look at what’s happened this year, the unemployment rate has come down to 7 percent. We’ve got housing starts over a million units. We got the S&P 500 up 25 percent. In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it’s overdue. I’m glad to see it.”3

Additional gradual reductions in QE3 may follow.

At Wednesday’s press conference, Fed chairman Ben Bernanke noted that the central bank’s quantitative easing effort may be reduced in “further measured steps” determined in upcoming FOMC meetings.5

Could an interest rate decision be coming?

The FOMC addressed that topic in its policy statement. It noted its intention to keep the federal funds rate at current levels “well past the time” unemployment reaches its target of 6.5%.5

What does this mean on Main Street?

As the noted economist Peter Morici told MarketWatch: “The stimulus program was supposed to boost spending going in, so it’s going to reduce spending going out.”6

It may become slightly tougher to finance big-ticket purchases in 2014, especially if the Fed keeps reducing the scale of its monthly asset purchases as the year unfolds. National Association of Realtors chief economist Lawrence Yun commented to Market Watch that homeowners who want to move (or move up) “need to realize that it could be more challenging a year from now.” Yun thinks the average interest rate on a 30-year home loan could hit 5% or even 5.5% sometime in 2014. Home improvement projects, student loans and auto loans may all grow costlier.6

Retirees, on the other hand, may see some financial positives if the Fed opts to tinker with interest rates next year. “Interest rates close to zero punish savers and retired folks,” University of Michigan-Flint finance professor Mark Perry reminded Market Watch. “Right now, consumers are getting almost zero interest on their checking or savings account.” Perry estimates that under present conditions, American savers could realize $76 billion in additional interest income for every 1% that the Fed raises the key interest rate. Retirees and pre-retirees who dream of traveling more might also benefit in the near term – the dollar strengthened versus a basket of currencies prior to the central bank’s announcement, and an appreciating dollar certainly buys more overseas.6

One may consider investing in a Fixed Annuity.

An Annuity is a financial product that allows a contract holder to accumulate money on a tax-deferred basis and receive a series of payments at regular intervals. People purchase annuities to obtain an income or to supplement retirement income they will receive from Social Security, pension benefits, investments and other sources.

Annuities can help eliminate one of your fundamental concerns: Outliving your savings. They can offer you guaranteed lifetime income payments, which may give you:

  • Freedom to fulfill your retirement dreams
  • Financial peace of mind
  • Flexibility to use your cash however you choose
Unique among insurance products, annuities can offer you:
  • Guaranteed lifetime income payments that you can’t outlive
  • Tax-deferred growth which may minimize the taxes you have to pay when you start receiving payments
  • Flexible payout options that can help meet your financial needs.

There are many factors to consider when determining the best retirement strategy for you and your family. If you are interested in safety and guarantees without giving up great earning potential then an annuity may be right for you.

And due to market fluctuation an investor never has to work about losing a penny of ones principal and can be guaranteed a guaranteed return on your investment. Call me if you wish to learn more how you can get a positive return on your money whether the Stock market is up or down.


  • 1. [12/18/13]
  • 2. [12/18/13]
  • 3. [12/18/13]
  • 4. [12/18/13
  • 5. [12/18/13]
  • 6. [12/18/13]

Mark S. Gardner may be reached at 214-722-7555 office or 214-762-2327 cell or



Seven Things You Should Know About Your Financial Co-Pilot

If anything happens to you, does your family have someone to consult?

If you weren’t around, what would happen to your investments?

In most families, one person handles investment decisions, and spouses or children have little comprehension of what happens each week, month or year with a portfolio.

In an emergency, this lack of knowledge can become financially paralyzing. Just as small business owners risk problems by “keeping it all in their heads,” families risk problems when only one person has an understanding of investments.

This is why a trusted relationship with a financial advisor can be so vital.

If the primary individual handling investment and portfolio management responsibilities in a family passes away, the family has a professional to consult – not a stranger they have to explain their priorities to at length, but someone who has built a bond with mom or dad and perhaps their adult children.

You want an advisor who can play a fiduciary role.

Look for a financial advisor who upholds a fiduciary standard. Advisors who build their businesses on a fiduciary standard tend to work on a fee basis, or entirely for fees. Other financial services industry professionals earn much of their compensation from commissions linked to trades or product sales.Look for a financial advisor who upholds a fiduciary standard. Advisors who build their businesses on a fiduciary standard tend to work on a fee basis, or entirely for fees. Other financial services industry professionals earn much of their compensation from commissions linked to trades or product sales.

Commission-based financial professionals don’t necessarily have to abide by a fiduciary standard. Sometimes, only a suitability standard must be met. The difference may seem minor, but it really isn’t. The suitability standard, which hails back to the days of cold-calling stock brokers, dictates that you should recommend investments that are “suitable” to a client. Think about the leeway that can potentially provide to a commission-based advisor. In contrast, a financial advisor working by a fiduciary standard has an ethical requirement to act in a client’s best interest at all times, and to recommend investments or products that clearly correspond to that best interest. The client comes first.

You want an advisor who looks out for you.

The best financial advisors earn trust through their character, ability and candor. In handling portfolios for myriad clients, they have learned top professionals earn much of their compensation from commissions linked to trades or product sales.

Commission-based financial professionals don’t necessarily have to abide by a fiduciary standard. Sometimes, only a suitability standard must be met. The difference may seem minor, but it really isn’t. The suitability standard, which hails back to the days of cold-calling stock brokers, dictates that you should recommend investments that are “suitable” to a client. Think about the leeway that can potentially provide to a commission-based advisor. In contrast, a could alert you to egregious fees and work with you to find alternatives.1,2

Many investors have built impressive and varied portfolios but lack long-term wealth management strategies. Money has been made, but little attention has been given to tax efficiency or risk exposure.

As you near retirement age, playing defense becomes more and more important. A trusted financial advisor could help you determine a risk and tax management approach with the potential to preserve your portfolio assets and your estate.

Financial advisor working by a fiduciary standard has an ethical requirement to act in a client’s best interest at all times, and to recommend investments or products that clearly correspond to that best interest. The client comes first.

The best financial advisors earn trust through their character, ability and candor.

The best financial advisors earn trust through their character, ability and candor. In handling portfolios for myriad clients, they have learned to watch for certain concerns, and to be aware of certain issues that may get in the way of wealth building or wealth retention.

Take account and fund fees, for example. These can subtly eat into retirement savings. According to Investment Company Institute research, annual expense ratios of stock funds averaged 0.77% in 2012. So why do many investors endure annual fund fees well above 1%? (The typical equity mutual fund charges an investor 1.3-1.5% a year.) An advisor acting in your best interest

Your family will want nothing less.

With a skilled financial advisor around to act as a “Co-Pilot” for your portfolio, your loved ones have someone to contact should the unexpected happen. When you have an advisor who can step up and play a fiduciary role for you today and tomorrow, you have a professional whose service and guidance can potentially add value to your financial life.

If you’re the family member in charge of investments and crucial financial matters, don’t let that knowledge disappear at your passing. A will or a trust can transfer assets, but not the acumen by which they have been accumulated. A relationship with a trusted financial advisor may help to convey it to others.

Having spent over 4 decades on Wall Street I have several clients who I work for as a Trustee.

Concerns to address—Do you have a Will, Directive to a Physician and Power of Attorney? If so is it current? Do you have a list of all your Holdings, Bank Accounts, Credit Cards, Banker, CPA and other Valued Advisors—Name, Numbers and Contact Information? Tell me are your Executors holding copies of these papers?

Mark S. Gardner may be reached at 214-722-7555 office or 214-762-2327 cell or



Six Things You Need To Know About FIXED INDEXED ANNUITIES

Fixed Indexed Annuities can be very useful investments.

As the name implies, FIAs are fixed annuities linked to the performance of a stock market index (often the S&P 500). Because of this stock market exposure, they can sometimes bring conservative investors very nice returns – often, considerably better returns than CDs, bonds, or money market accounts. They really aren’t designed to outperform the stock markets; they are designed to outperform the fixed markets. Note Our US Government is continuing to print money. Ask yourself ultimately what is going to happen to us? Inflation ring a bell! What is going to happen to Fixed Income Investments that one owns? If yields turn around and go back up the value of your Fixed Income Investment goes down.

Why not look at an Investment that gives you Principal protection and a chance to benefit from market gains.

During the accumulation phase of an FIA, you have the opportunity to benefit from stock market gains while your principal is protected against stock market losses. The annuity contract usually guarantees you a minimum rate of interest on your purchase payments while the annuity is growing; the insurance company involved will credit you with either the minimum return stated in the contract or a return based on the performance of the linked index.

If you are skittish about stock market investment, you can potentially realize the benefits of stock market participation through this comparatively low-risk investment.

Participation rates to note.

Each FIA has a particular participation rate. The participation rate signifies the percentage of the invested assets within the annuity keyed to the linked index.

Let’s say you have an FIA linked to the S&P 500 and the participation rate is 60%. That means 60% of your invested assets are exposed to the index. If the S&P 500 gains 10% across a year, this means your annuity gives you a 6% return for the year (before any fees and administrative charges). Compare that 6% potential return to so many CDs and money market accounts which generate a pittance of interest.

Some FIAs measure an index’s gain on an annual basis, others over the entire term of the annuity. Sometimes there are “ceilings” on just how high a return you can realize. From time to time, participation rates may be reset by the insurance company. Occasionally, a margin or “spread” determines the index-linked interest rate instead of a participation rate. In this case, if your annuity gains 10% and the spread is 2.5%, your credited gain is 7.5%.

What if I told you can get Tax-deferred growth, an income stream, and often a death benefit. Would that perk your interest?

Most FIAs give you all the features of a fixed annuity: your earnings are not taxed, and when the distribution phase of your annuity starts, you can receive periodic (usually monthly) income payments. (Sometimes you can take the entire value of your annuity as a lump sum at the end of the contract term. It is your withdrawals that are taxed.) There is often a guaranteed minimum death benefit payable to your beneficiary when you pass away.

No annual contribution limit.

If you need to put away more retirement savings NOW, the contribution limits on IRAs and 401(k)s can be frustrating. Would you rather have a retirement account you can only put $5,000 or $6,000 in annually, or an account to which you can contribute as much as you want? FIAs (and other types of annuities) have no contribution ceiling, and there are no IRS-imposed income limits above which you cannot contribute.

Make no mistake, these are long-term investments.

Many of these annuity contracts are 6-7 years or longer. If you need to withdraw your money from the annuity in the accumulation phase, there is usually a considerable penalty. Fixed indexed annuities do require a long-term outlook and a long-term commitment.

Would you like to learn more?

If you are planning to maintain or improve your quality of life in retirement or know someone who this may apply to, maybe you would like to see how fixed indexed annuities can potentially help you. If that’s the case then pick up the phone and let’s talk about these hybrid annuities today.

Mark S. Gardner may be reached at 214-762-2327



The Only Thing in Life That Stays Constant is Change! Let’s see what is in Store for Us with Our Retirement Plans for the Coming Years.



America is facing monumental record debt numbers. Our government continues to borrow and print money like there is no tomorrow. Are you alarmed by this? I am.

We are not resolving the debt crisis as the House and Senate are just letting our government borrow us into more and more debt. We have the Obama Care staring us in our eyes and soon we will likely to take up the following proposals, all of which would have lasting effects on how anyone will be saving for retirement.

1. Automatic Enrollment in IRAs

The president’s 2014 budget would require employers in business for at least two years that have more than 10 employees to offer an automatic IRA option to employees.

How this will work will be contributions would be made to an IRA on a payroll-deduction basis. If an employer already offers a plan, it wouldn’t have to comply with this regulation, but if its current plan excludes certain segments of its employees from participating in the plan, the employer would have to begin to offer the automatic IRA to those excluded employees..

Do you remember when Exxon showed us the commercial with a Tiger and people would get a discount if they poured their own gas into their cars. Well the Oil Companies set us up for later putting our own gas into our tanks. They set us up to pour our own gasoline without a discount. Now do you think the government is setting us up too? Obama included this provision in the 2014 budget because he wanted to turn the tide on a rising retirement crisis in the United States. According to a Treasury report, the number of U.S. workers participating in an employer-sponsored retirement plan has remained stagnant for decades at no more than about half the total workforce. Will Social Security be around for us….for the next generation?

The administration has seen that automatic enrollment efforts can be very effective in raising the number of people participating in workplace retirement plans and believes that by forcing small companies to offer automatic enrollment in an IRA, the number of people saving for retirement will rise. But I say so will the cost to the employer. Question folks—If the employer can be held at fault if two workers earning the same amount but one invests in bonds and the other in a balanced portfolio and one out performs by a wide margin. Is the employer being set up for a law suit?

Under the proposal, employers could help their workers save without having to make contributions to the plan or having to comply with the Employee Retirement Income Security Act. All they would have to do is make their payroll systems available to transmit employee contributions to an employee’s IRA.

Employers with fewer than 100 employees that offer an automatic IRA could claim a temporary credit for expenses associated with the arrangement of up to $500 for the first year and $250 for the second year. They also could be entitled to an additional credit of $25 per enrolled employee, up to a maximum of $250 for six years.

If employers adopted a new qualified retirement, SEP or SIMPLE plan, they would receive a tax credit for their startup costs that would be doubled from the current maximum of $500 per year for three years to a maximum of $1,000 per year for three years.

2. Elimination of Stretch IRA

The Obama budget would eliminate the stretch IRA that allows beneficiaries to stretch the proceeds from an inherited retirement account over their lifetime. This means a non-spouse beneficiaries of retirement plans and IRAs would have to take full distribution of their inheritance within five years of the account holder’s death. Why is this important to know…you the tax payer cannot hold onto the inherited funds till you are 59 ½ or latest 70 years old to begin distributions. The government will get their tax share faster. Now thank our government for 2008 and beyond bailouts. Funny thing no one asked me if I needed to be bailed out or if I approved of them bailing out Merrill Lynch or General Motors.

The only exceptions would be disabled or chronically ill individuals, someone who is not more than 10 years younger than the participant, or an IRA owner or a child who has not reached the age of majority. Those individuals would be allowed to take distributions from the deceased person’s retirement plans over the life or life expectancy of the beneficiary beginning in the year following the death of the participant.

If the beneficiary was a child at the time of the participant’s death, they would have to take a full distribution within five years of coming of age.

If beneficiaries are forced to take distribution of large sums of money early, they will be taxed at a higher rate than they would be if they could leave the funds in the participant’s account and take money out gradually.

3. A $3.4 Million Cap

The president’s proposed cap on retirement savings has garnered the most attention this year. The cap would raise about $9 billion for the federal government over the next 10 years by prohibiting taxpayers from taking advantage of the pre-tax deferral in their 401(k) or defined contribution pension plans after they cross a $3.4 million threshold. According to the Employee Benefit Research Institute, only a small percentage of IRA and 401(k) investors would be affected by the cap. In 2011, only 0.06 percent of total IRA account holders had $3 million or more in their accounts, and only 0.0041 percent of 401(k) accounts had that much money in them at the end of 2012.

The $3.4 million cap would allow an account holder to generate an annuity of $205,000 a year.

Small-business owners would be the biggest losers in this proposal, according to Judy Miller, director of retirement policy at the American Society of Pension Professionals & Actuaries.

Why you ask? That’s because company-sponsored retirement plans are the only way small-business owners can generate tax-deferred savings.

Workers might be hurt, too, even those with nowhere near $3.4 million in their accounts.

Brian Graff, executive director and CEO of ASPPA, said he is concerned that “without any incentive to keep the plan, many small-business owners will now either shut down the plan or reduce contributions for workers. This means that small-business employees will now lose out not only on the opportunity to save at work but also on contributions the owner would have made on the employee’s behalf to pass nondiscrimination rules.”

4. Social Security COLA

The president also proposed changing the way inflation is measured to shrink cost-of-living adjustments for retirees receiving Social Security benefits. The use of a chained consumer price index for Social Security and other programs, like Supplemental Security Income and veterans pensions, would reduce government deficits by $230 billion over 10 years. A chained CPI is a lower measure of inflation, which would reduce Social Security and other benefits by $130 billion. AARP asserts that these cuts would have a catastrophic impact on older Americans who are the least able to absorb cuts to their benefits because they rely on Social Security for their income and have higher out-of-pocket medical expenses. They also have a higher poverty rate than younger Americans

Let me leave you with this thought…for some of you the pain of high inflation in the 1980’s was devastating. We are facing what I believe is an inflationary cycle. We are printing money and nothing to back it up. How long can we keep interest rates down? How long can China buy our Treasuries? What will the stock market do when inflation rears up its ugly head? Do you know what happens when we have high interest rates and how it effects the stock market?

I have answers to all these questions. If you are concerned about the future and what to do. Let’s talk.

Mark S. Gardner may be reached at 214-762-2327


How & When to Sign Up for Medicare



Medicare enrollment is automatic for some of us

If you are age 65 and eligible to receive Social Security benefits (or married to someone eligible to receive them), then you are also automatically eligible for Medicare Part A (free hospital insurance) and Medicare Part B (medical insurance for which you pay premiums), a.k.a. “original Medicare”.

If this is the case, then you’ll get a red-white-and-blue Medicare card in the mail 3 months before your 65th birthday.

Others may need to sign up

You can apply to receive Medicare benefits even if you haven’t retired. If you’re coming up on 65 and you don’t yet receive Social Security benefits, SSDI or benefits from the Railroad Retirement Board, visit your local Social Security Administration office or dial (800) 772-1213 or go to to determine your eligibility.

If you are eligible, you have the choice of accepting or rejecting Part B coverage. If you want Medicare Part A and Medicare Part B, then you should sign your Medicare card and keep it in your wallet. If you don’t want Part B, you put an “X” in the refusal box on the back of the Medicare card form, and send the form to the address shown right below where your signature goes. About four weeks later, you will get a new Medicare card indicating that you only have Part A coverage.

When you are enrolled in Medicare Part A & Part B (sometimes called “original Medicare”), you can join a Medicare Advantage plan (Part C). Anyone enrolled in Part A, B or C becomes eligible for prescription drug coverage (Part D).

If you are 65 or older and aren’t eligible for Medicare Part A, you can still sign up for Part B as long as you are a U.S. citizen or a legal resident of this country for five years or longer.

If you choose not to enroll in Part B during your initial enrollment period, you have another annual chance to sign up for it during a “general enrollment period” from January 1 through March 31, with Part B coverage commencing July 1.

If you already have medical insurance through a group health plan at your workplace or your spouse’s workplace, you can either enroll in Part B while you are still covered by that plan or enroll in Part B within eight months of leaving your job or losing your health coverage, whichever happens first.

When can you add or drop forms of Medicare coverage?

Medicare has enrollment periods that allow you to do this.

  • The initial enrollment period is seven months long. It starts three months before the month in which you turn 65 and ends three months after that month. You can enroll in any type of Medicare coverage within this seven-month window – Part A, Part B, Part C (Medicare Advantage Plan), and Part D (prescription drug coverage). If you don’t sign up for Part D coverage during the initial enrollment period, you may have to pay a penalty to add it later.
  • Once enrolled in Medicare, you can only make changes in coverage during certain periods of time. For example, the annual enrollment period for Part D is October 15-December 7, with Part D coverage starting January 1. (You can also drop Part D coverage, leave one Part C plan for another, or switch from a Part C plan to original Medicare or vice versa in this period.)
  • There is also an annual open enrollment period from January 1-February 14. During this one, you can switch out of a Part C plan and go back to original Medicare with Part A & B coverage starting on the first day of the month following that switch. If you do this, you have until February 14 to also join a Part D plan if you want to add drug coverage to complement Parts A and B. Part D coverage kicks in at the start of the month after the Part D plan receives your enrollment form.
Special situations

Individuals with end-stage kidney failure who need dialysis or a transplant may qualify for Medicare regardless of age. Upon diagnosis, they can contact the SSA. Medicare coverage usually takes effect three months after a patient begins dialysis. People with Lou Gehrig’s Disease (ALS) are automatically enrolled in Medicare as soon as they begin receiving SSDI payments. Americans who are under 65 and disabled also qualify for Medicare.

Do you have questions about your eligibility, or that of your parents?

Your first stop should be the Social Security Administration – (800) 772-1213 or You can also visit and

Mark S. Gardner may be reached at 214-762-2327


Medicare Open Enrollment for 2014



Medicare Open Enrollment has arrived.

The open enrollment period for 2014 runs from October 15-December 7, 2013. This is not only a period where you may enroll for the program, but also switch providers for your comprehensive health and drug coverage.

Some key dates to remember

This fall and winter, there are three periods in which Medicare beneficiaries can either enroll or disenroll in forms of coverage:

Now through December 7: Open enrollment period

This is when you can elect to leave Original Medicare (Parts A and B) for a Medicare Advantage Plan (Part C) and change your prescription drug coverage (Part D). You can also elect to get out of a Part C plan and go back to Parts A and B during this period.

December 8: Annual enrollment period begins for 5-star plans

As you probably know, Part C and Part D plans are assigned ratings. Beginning December 8, 2013 and ending November 30, 2014, a window opens for you to enroll in a 5-star Part C or Part D plan. You can do this once per 365 days. How do you find the 5-star plans? Visit

January 1-February 14: Disenrollment period

If you join a Part C plan in late 2013 and want to reverse that decision, you can disenroll from that Medicare Advantage plan in this window of time and go back to Original Medicare with a stand-alone Prescription Drug Plan (Part D).

Some key dates to remember

No. Medicare isn’t part of that. If you have Medicare, you are already insured in the eyes of the federal government. You don’t have to make any changes to your Medicare coverage because of the implementation of the exchanges, and your Medicare benefits won’t change as a result of them, whether you have Original Medicare or a Medicare Advantage plan through an HMO or PPO.

In case you are wondering, you can’t buy Part D prescription drug coverage or Medigap insurance through the new online health insurance exchanges.

What should you look for in a Part C or Part D plan?

Be sure to take a look at a few key factors.

  • While premiums matter, overall plan expenses ultimately matter most; scrutinize the copays, the co-insurance and the yearly deductibles as well. Attractively low premiums might not tell you the whole story about the value of a Medicare Advantage plan.
  • How inclusive is the plan network? Assuming the plan has one, does it include the hospitals you would choose and the physicians that now treat you?
  • Regarding Part D, how wide-ranging is the prescription drug coverage? Look at the list of approved drugs (the formulary). If the drugs you want or need aren’t listed, you are probably going to have to open your wallet to pay for them. The frustrating thing about formularies is how they change; drugs on this year’s list may not always be on next year’s list.
  • Every fall, Medicare plans mail out Annual Notice of Change (ANOC) letters to their plan members. Use this notice to determine if your current plan is still right for you and your medical care needs. If you didn’t receive such a letter in September, contact your plan.

How expensive will Part D coverage be next year?

According to CBS MoneyWatch, monthly premiums for a stand-alone Medicare Prescription Drug Plan (PDP) under Medicare Part D are projected at $31 for 2014.

The initial deductible for standard Part D prescription drug coverage will be $310 next year. After your total prescription drug costs surpass $310, you’ll pay 25% of your total drug costs between $310-2,970. You’ll find yourself in the “doughnut hole” between $2,970-4,550 (wherein you pay 100% of any drug costs under the standard plan). Should your total prescription drug costs exceed $4,550 in 2014, you’ll be eligible for catastrophic coverage, leaving you on the hook for just 5% of drug costs above that level.

Mark S. Gardner may be reached at 214-762-2327


Six Things Woman Need to Know About Legacy Planning for Women



Women often become guardians of family wealth.

Many women outlive their spouses, and have the opportunity to have the “final say” (from an estate planning standpoint) about the wealth they have built or inherited. Legacy planning is essential for single women and couples, too, as one or two successful careers may leave a woman or a couple with a significant estate.

So how do you take steps to convey the bulk of your wealth to the next generation, or to your favorite causes or charities after you are gone? It all starts with a conversation today – a conversation with a legacy planning professional.

Analyze the risks to your net worth & strategize to alleviate them.

You have years to go, perhaps many years, before you pass away. In those years or decades, you must manage portfolio risk, taxation, medical or long term care costs, and perhaps “predators and creditors” as well. What tax and risk management strategies can be put into place with an eye toward enhancing your net worth? Can you reduce the size of your taxable estate along the way?

How might trusts come into play?

If you want to shrink your taxable estate, a well-crafted trust may provide a way to do it. There are many, many different kinds of trusts. A basic revocable living trust helps a family avoid probate, but it doesn’t do anything to reduce estate taxes. Other trusts do offer grantors and beneficiaries opportunities for substantial estate and/or income tax savings.

For example, you can bequeath an amount of money up to the limit of the current estate tax exemption to a bypass trust; at your death, the remainder of your estate can therefore transfer to your spouse tax-free, or optionally your spouse can enjoy income from the trust while living with your heirs receiving the remaining principal tax-free at his or her death. Blended families sometimes choose to use a qualified terminable interest property trust (QTIP) plus a bypass trust to direct income derived from assets within an estate to a surviving spouse and then the bulk of the estate to their children and stepchildren. Grandparents sometimes use generation-skipping trusts (GSTs) to forward big chunks of money tax-free to grandchildren.

Women business owners have employed irrevocable life insurance trusts (ILITs) to shrewdly remove their life insurance from their taxable estates. In an ILIT, the trust becomes the owner of the life insurance policy. When the business owner passes away, the beneficiaries receive tax-free policy proceeds, which can be used to sustain the family business and pay estate costs.
A qualified personal residence trust (QPRT) will permit you to gift your primary residence or vacation home to your children while you retain control of it for the term of the trust (typically 10 years). If your home seems poised to rise in value, the QPRT may lead to major estate and gift tax savings – it helps you transfer the home out of your taxable estate, thereby reducing its size. The hitch is that to validate the QPRT, you have to outlive the term of trust. Assuming you do, you can either a) move out of your house at that point or b) keep living in it while paying your heirs fair market rent as a tenant.

How well can your legacy plan sustain your values?

Can you design it to teach your adult children and grandchildren lessons in character, responsibility, ethics and social service? Philanthropically, what do you want to accomplish? If you want to direct wealth to charities or other non-profits, you will need to pick one or more vehicles with the help of a legacy planner – options may include a family foundation, a charitable remainder trust (CRT), a tax-deductible charitable gift of appreciated securities with a resulting income stream, or donor-advised funds. A conversation with a tax professional can inform you of the kinds of assets you do and don’t want to gift from a taxation perspective.

As you craft your legacy plan, can you do it at reasonable cost?

There is truth in the old maxim “you get what you pay for”, but at the same time, you want to work with a legacy planner whose fees aren’t exorbitant. Even the fees for creating a simple living trust can vary widely. You definitely want the help of experienced professionals here; given that each legacy plan is on some level an agreement with the federal tax code, legacy planning is not a do-it-yourself project.

Your legacy plan can represent your final, thoughtful gift to your loved ones.

When you think of it that way, it becomes easier to conceive and implement with the input of your spouse, your children and your grandchildren. Along the way, valuable money lessons can be taught and responsibilities shouldered.

Mark S. Gardner may be reached at 214-762-2327



The Government Shutdown

As you have no doubt heard, the United States government shut down at midnight (Eastern) October 1, 2013. There are many questions and concerns about this situation, but here are some basics.

What happened?

In short, Congress did not pass any of their appropriations bills. These bills provide money to various to federal agencies. Federal law requires agencies without these funding laws in place to close.

<h2class=”sub_heading”>How long will this last?As with other shutdowns, this is largely up to the two major parties and their abilities to reach whatever deal is necessary to get the bills passed. If we look to history, the two most recent government shutdowns happened in the Clinton administration. One only lasted five days. The other lasted three weeks.

What’s closed, what’s opened?

Not every public service is shut down entirely, as not every agency requires appropriations to function. Social Security and Medicare are not affected, active duty military continue to function, as does the Department of Defense, as do intelligence, law enforcement, and our embassies overseas. Some are only partially closed; U.S. Courts will be open for 10 days, for instance.

CNN has a frequently updated list of shutdowns at:

How is this different from the debt crisis?

They are different situations, but one can affect the other. The debt crisis relates to the separate matter of establishing how much money the U.S. Government can borrow in order to fund its various agencies and programs. However, Treasury Secretary Jack Lew says that the crunch is coming soon – no later than October 17.

With the shutdown a fluid situation, it’s difficult to say when this will be resolved. Whether you are a government employee or an ordinary citizen, it’s only natural to be concerned. It may be a good time to contact a financial professional and inquire if and how the shutdown may affect you.

Mark S. Gardner may be reached at 214-762-2327