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September 2013 - Austria reflections and Social Security


“I guess I’m just ‘living in the moment’,” I thought to myself as I sat on the bench outside the 18th century Franzenburg Castle in Laxenburg, Austria.  I have heard other people say that, advise that, and allude to practicing it.  If this was what I was doing, it was a somewhat new experience.  I was feeling content as I rested and waited for the museum part of the tour to open.  It was a warm day and we had just walked a couple miles through the beautiful but vast estates of former Austrian royalty to reach this castle.  As I was sitting in the shade cooling down, it occurred to me that I was content.  I was content in such a manner that was unusual for me.  Normally I have several activities, projects, or proposals in various stages of tweaking that I am constantly returning to in my idle moments.   At this particular time, I was caught up with all of those activities, we had  travelled thousands of miles and were reunited with our goddaughter Yanna, and I felt like I hadn’t a care in the world.  It was an interesting time!  I think it was probably therapeutic.

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As we rushed to catch bus #830 from the documentation center I was relieved as well as tired from the physical exercise.  We had just spent several hours traveling, climbing, and viewing while visiting a site I have desired to see for about 35 years.  As we rode back to Salzburg, I reflected on the day’s events.

During our visit in Austria, we have seen many sights from Vienna to Salzburg but had maintained a hope we could visit the Kihlsteinhaus (Eagle’s Nest), the place that was Hitler’s retreat in the Bavarian Alps.  It has been on my radar ever since I read the classic book by William Shirer called “The Rise and Fall of the Third Reich.”  This eyewitness testimony with eyewitness interviews forever educated me on the character of the Nazis from their beginning to end.  In all my years of study, I have not read any history that would contradict what I learned in that book or his other book on the same topic.

As a result of years of study, I knew the history behind the making of this retreat.  There are two main parts to the complex.  One is the actual retreat building where Hitler and others entertained dignitaries.  This situated on top of a mountain at the end of a 6k private road.  The other is the document center at the base of the mountain where all the support personnel were stationed.  This was to be Hitler’s command post in case of a losing situation.

It is beautiful to behold and makes one marvel at the ingenuity and engineering genius that built the retreat on top of a mountain and the labyrinth of support tunnels (like an underground city) inside the mountain.  Going up to the retreat center, we had to climb the last mile because the elevator was out of order that day.  That made us appreciate it even more.  :-)

As beautiful as it was on the top, I knew we would need to view the document center at the bottom.  I knew it would be a drastic change of emotions and indeed the change of scenery couldn’t have been more contrasting.  We went from a sunny clear beautiful day on top of an Alpine mountain to the sobering dark dreary tunnels built by slave labor!  This was the Third Reich.

I won’t belabor the point but if you do not understand the significance of the contrast I just described, please read a few short books on WWII.  Watching the last two episodes of the “Band of Brothers” mini series might be helpful also.  (Be careful as it is very   violent and realistic.)  As you are researching, try to understand the way the Nazis and their sympathizers justified their actions.  You might discover something about human behavior.

Since this is my newsletter, I will make some obvious analogies.   Be careful what you give your allegiance to since what appears on the surface is not always what is underneath.  Likewise be careful in loving the beautiful and glamorous in any culture as underneath it may actually be ugly and false.

With all of our supposed wealth, glamour, and beauty here in America (that’s what most people in other countries think anyway!), we still voluntarily murder millions or unborn children every year.  How can we justify it?  A screening of the typical average American investment portfolio shows significant VOLUNTARY monetary support for the abortion industry with no exception for those who are people of faith!   Usually the motivation is money.  How can we justify it?  

Anything you decide to invest your time and energy into bears close scrutiny.   How about a free moral screening report on your average American investment portfolio? 



Guaranteed investment income

To provide some amount of certainty to your income strategy, consider putting a portion of your money into  investments guaranteed by the US government such as US Treasury securities or by insurance companies such as annuities.  Typically investments that are guaranteed, result in lower returns compared to other investment options. While they may make a suitable foundation for a retirement income strategy, they should be balanced with higher return/higher risk options for more income flexibility and to fight the effects of inflation.


Predictable investment income

A common form of predictable investment income is interest payments from bonds. You can buy bonds directly or invest in bond mutual funds.  Bond interest is quite predictable. Bond interest payments would stop only if the bond issuer became a bad credit risk and defaulted on its promise to pay. A strategy called bond laddering, in which bonds of different maturities are combined in a portfolio, can help manage inflation risk and help to     ensure a steadier income stream.


Variable investment income

Variable income can be created from a broadly diversified portfolio that includes a combination of investment types. This strategy will spread out your investment risk by investing in everything from relatively safe, low-risk investments (cash) to higher-risk, growth-oriented investments (stocks).


From your diversified portfolio, you can initiate withdrawals anytime after age 59½ as needed. Or, you can elect to establish a systematic withdrawal plan that liquidates a certain percentage of your portfolio on a regular basis. It's important to keep in mind the resulting income from the systematic withdrawal may vary based on the underlying value of your investments.


Diversify to customize your approach

Work with your financial professional to combine all of these approaches into an income strategy that will meet your needs and last your lifetime. Together, you can monitor your strategy and make adjustments to manage risk as you head into retirement.

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There is much to be said about Social Security.   For most Americans, it doesn’t feel so ‘secure’ anymore.    A well-balanced retirement plan includes Social Security, pensions, investments, strategic employment (before and possibly after retirement), and other means.  

The best retirement planning happens 10-15 years before retirement.  We advise sitting down with a trusted financial adviser and assessing your assets, your debt, your insurance coverage, your investment strategy, and your basic overall financial position.   It is much easier to make course corrections in 10 years than in   1-2 years.  

We encourage you to take action this month.      Plan to attend the Social Security seminar.   Call our office to schedule a free, no-obligation appointment to analyze your position.  Knowledge is power!

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Social security was created in 1935 during the Great Depression as part of President Franklin D.           Roosevelt’s New Deal plan. Today it is one of the largest government programs in America. Its focus is to help protect retired and disabled workers from falling into poverty. The program was never intended to provide retirees with 100 percent of their retirement income. Rather, it was designed to supplement other sources of retirement income, such as pensions and personal savings.


The entire program is funded by a payroll tax on current workers’ wages. You’ll recognize this as the FICA (Federal Insurance Contributions Act) deduction on your paycheck. You pay a portion of the tax and your       employer pays the other portion.


Who qualifies and how much do you get?

Social Security provides monthly income that's adjusted each year for inflation. To qualify for the retirement benefit, you must:

· Accumulate enough Social Security credits, generally by working for at least 10 years with substantial     earnings subject to Social Security tax

· Be age 62 or older

· Apply for the benefits (Social Security benefits are not automatic—you can apply online).


You can choose to start receiving reduced benefits before your full retirement age (this age varies depending on your date of birth). Waiting until after your full retirement age will increase the monthly benefit. Since benefits are taxed as income, you may want to talk with your tax professional before deciding when to start taking      benefits.


The benefits formula has changed over the years, but generally the lower your average salary, the higher the percentage of your preretirement    income that Social Security will replace. Some  retirees may be surprised to discover that Social Security replaces less than a third of their preretirement income.

Take control of your retirement income

In 2011, nearly 55 million Americans received $727 billion in Social Security benefits. Retired workers received an average monthly benefit of $1,181, which represented about 41 percent of their income. Clearly, you can’t rely on Social Security as your only income source in retirement. This is why it’s so important to save your own money. You may need a lot more than Social Security can provide to live the retirement lifestyle you want.

An effective retirement income strategy combines multiple types of income.