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 Dear
Brother Knight:
Are
you, like many Americans, “asset-rich and cash poor”?
Answer that question honestly, and you’ve taken the first step toward
achieving your dreams of a comfortable retirement.
People
who are asset-rich may have many of the good things life has to offer: a big
house, new cars, vacation property, boats, etc. This isn’t a problem if you
have the income to afford these assets and still prepare for the future.
If,
instead, you’re stretching your budget to just to make the monthly payments on
big-ticket items, you are cash-poor. And you’re not alone, as you’ll read in
the article “Living Large, Saving Little,” inside this issue.
Tax
season is a good time to ask yourself if you’re asset-rich and cash-poor—and
if you are, to do something about it.
Also
inside is a brief look at how Father McGivney bucked the long-held tradition of
many of his parishioners to establish the Order that, today, we still uphold and
cherish. If your family should ever need to rely on the benefits of a Knights of
Columbus life insurance policy, they’ll understand what drove Father McGivney
to do what he did.
At
this time of year, I can provide you with a complimentary financial check-up and
tell you more about planning for a comfortable retirement. We can also discuss
how to protect your savings from an unexpected loss of income.
If
you are currently cash-poor, now’s the time to make the switch to
opportunity-rich, for the long haul.
Fraternally
yours,
Your
Omaha Archdiocese Knights of Columbus Agents
Father McGivney forged new tradition with life insurance
Father Michael J. McGivney was a mere 29 years old when he founded
the Knights of Columbus. That he was able at such an early age to establish the
Order that, today—125 years later—we still cherish and uphold, can only be
attributed to divine inspiration.
But wait, the story gets better. In 1882, the year the Order was
established, the culture in which Father McGivney and his working-class
parishioners lived was not a stable one. Perilous jobs, poverty, and illness
were the norm. And while the Irish immigrants who lived in New Haven,
Connecticut may have been living in a new country, many were steeped in
old-world traditions.
For example, tradition held that one was not to tamper with one’s
fate. “Traditional Irish folk wisdom viewed any attempt at advance preparation
as a fool’s ploy to outwit ‘Mr. Death,’” wrote Christopher J. Kaufmann
in his book Faith and
Fraternalism—the History of the Knights of Columbus 1882 - 1892. “Such folly would only provoke from Death
an early invitation.”
In other words, to prepare in any way for death was to invoke it. Father
McGivney didn’t believe that. Instead, one of his fervent goals was to provide
financial protection for people whose lives had been touched by tragedy. Having
left his seminary studies at one point to help his widowed mother raise a large
family, he was intimately familiar with that situation. The priest’s work with
those in his parish left destitute by a breadwinner’s premature death
“touched him deeply,” notes Dominican Father Gabriel B. O’Donnell,
postulator for Father McGivney’s cause for sainthood. Fortunately, the efforts
of Father McGivney and the Knights of Columbus prevailed.
For struggling Irish immigrants, the realization that insurance was a
financial necessity began to outweigh the beliefs of previous generations.
According to John Gilmary Shea, a Catholic historian in the late 19th Century,
the ceremonies of the Order enjoyed great popularity, “but a still more
powerful attraction was the establishment of …cooperative life insurance.”
Life insurance attracted many new Knights to the Order, and it has helped make
life better for countless Catholic families. In essence, because he had a vision
of something better, Father McGivney bucked long-held beliefs, and succeeded. It
is fitting that the result of his efforts contributed to life insurance becoming
part of our own culture. ✦
Living large, saving little
There’s good news and bad news when it comes to Americans and
their retirement savings.
The good news is that our savings rate (current income minus spending) is
up from an abysmal low of -0.5 in 2006.
The bad news is that it’s still abysmally low.
The personal savings rate for Americans in the third quarter of 2007 was
under 1%, a number that doesn’t bode well for anyone envisioning a cozy
retirement. “The mentality of ‘live for today’ sounds very exciting now,
but it won’t help people with their retirement,” says Knights of Columbus
Agent Doug Kelly of Omaha, Nebraska.
The impulse to spend, spend, spend rather than save has made many
Americans “asset-rich and cash-poor.” Instead of building retirement nest
eggs, people spend too much of their money accumulating assets like; houses,
cars, and big-screen TVs.
This behavior not only jeopardizes retirement funding, it can quickly put
people in a tough spot if interest rates rise. A spike in variable rates on
credit cards or home loans can make payments unaffordable. To see the
consequences of this, look no further than the wave of home foreclosures over
the last year, as low introductory rates on adjustable-rate mortgages ended.
To save effectively for retirement, you have to put your money in a place
where you can’t readily access it, such as in tax-deferred retirement plans.
This is especially important for empty nesters. “We see people overspending
the last 10 to 15 years of employment,” Kelly notes. “Instead of saving all
this new discretionary income, they spend it.”
Tax season is the perfect time to analyze your long-term financial
situation. Seeing the annual amount of money you spend on taxes can be a real
eye-opener, Kelly points out, and you should take that opportunity to discuss
the range of options for easing your tax burden and protecting your income.
Beyond employer-sponsored 401(k) programs or individual IRAs, Kelly
suggests discussing annuities and whole life insurance with your K of C agent.
“We’re in a position to help our clients diversify,” he says. “The nice
thing about our products is that they’re guaranteed—the risk is low, the
return is good.” He also recommends that you consider long-term care
insurance, which can protect your nest egg in the event of a nursing home stay.
A disciplined, sustained approach to savings is really the only way to
reverse the asset-rich, cash-poor scenario. The reverse scenario, by the way,
doesn’t mean you have to be “asset-poor.” In fact, you’d be surprised
how learning to save for retirement can teach you how to save for so many of the
good things in life. ✦
On guard: protecting your ID is
critical
Identity theft has established itself as the signature crime of the
digital world. Victims can lose fortunes and spend months, even years, trying to
repair their credit. And the nasty part is, it’s a relatively easy crime to
commit.
Some thieves still use low-tech “Dumpster diving” to get personal
information, while others create elaborate online schemes. Thieves can use a
small amount of your personal information to unlock more data—some Web sites
will even provide your Social Security number for a fee. Even some
publicly-posted government documents display enough personal information for
thieves to do their work.
Follow a few simple tactics to protect your identity:
✔ Guard your Social Security
number. Don’t carry your card with you.
✔ Shred sensitive documents.
✔ Remove mail from your
mailbox soon after it’s received, and don’t leave outgoing mail in your
personal mailbox.
✔ Contact one of the credit
bureaus to establish a monitoring system for your credit report. Check your
report at least once a year. Be sure to also carefully review your credit card
bills. The three main credit bureaus are: Equifax (www.equifax.com);
TransUnion (www.transunion.com); and
Experian (www.experian.com).
✔ Make sure your online
passwords include a mix of numbers, letters, and symbols. Don’t use your birth
date or
Social Security number!
✔ Never give out personal
information over the phone, through the mail, or over the Internet.
The Federal Trade Commission estimates that as many as nine million
Americans have their identity stolen every year. If you’re one of those who
don’t make it easy, you’re far more likely to be overlooked by thieves. ✦
This
publication is written to provide accurate and authoritative information with
respect to the subjects covered. However, the information contained
in
this publication is not intended as a substitute for direct financial
and legal advice. For such assistance, please contact a qualified
professional.
Reproduction
of any part without written permission is strictly prohibited. Published
in conjunction with the Knights of Columbus by Planet Newsletter,
LLC;
distributed in the United States and Canada.
Copyright
© 2008 Planet Newsletter, LLC, 1 N. Pinckney Street, Madison, Wisconsin
53703, 1(800) 419-5203
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