Financial security
A disciplined plan that protects against risk and builds assets over time is crucial to achieving financial security in retirement and beyond.
Are you saving regularly and following a monthly budget? Have you calculated how much you will need to reach your near-term and long-term goals, and are you setting aside funds each month to achieve them?
Your financial representative can help you explore your hopes and dreams and create the right plan to make them a reality.

Family
Think through scenarios and take necessary action so family members’ income is protected if disability or death strikes.
Ask yourself, is there sufficient disability income (DI) insurance to pay for basic expenses? Do you have enough life insurance in place to cover survivors’ living expenses as well as their important life goals, such as higher education? Are wills and powers of attorney current?
With these essentials you can feel confident the family will endure financially even in the worst-case scenario.

Health
Though they are critical to well being and a long life, actions to foster good health can fall by the wayside in the face of other daily demands. Done consistently, even small things — like taking a brisk walk or recording your steps on a pedometer — can make a big difference. Visit www.healthfinder.gov for interactive tools, advice and health-related resources for all ages.

Education
Learning is a lifelong process that helps you stay current, employable and stimulated as you age.
Though your financial security plan may include college education for your children, remember to consider funding adult education as well.
In addition to traditional and more expensive options, many webinars and training tools may be viewed online at little or no cost. Search industry association websites for available training or find free videos from university sources on the Internet.

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Make an outright bequest
One of the easiest ways to make a planned gift is through an outright bequest in your will or trust. By leaving money to charity when you die, the funds go directly to the charity with no strings attached. What’s more, the full amount of your contribution is deducted from your estate.

Use your IRA for good
If you have an Individual Retirement Account, you can name a charity as a beneficiary. This allows you to continue to take withdrawals from your account during your life and then leave the remaining value to charity. The full value of your gift will be deductible from your estate upon your death.
Congress recently changed the rules for charitable gifts to include gifts made directly from IRAs. According to the new rule, if you are over 701/2, you can give up to $100,000 each year from your IRA directly to charity without claiming an increased income or paying additional tax. However, you are not permitted to take a charitable income tax deduction for the gift.

Giving through life insurance
Life insurance can be an easy and flexible way to make a significant gift to a favorite charity, and at the same time it offers practical advantages, including possible tax deductions.
Perhaps you have a policy you no longer need. You can give that policy to your favorite charity now and receive an income tax deduction for the fair market value of the policy or its basis, whichever is lower, and for any future premiums you continue to give to the charity. Alternatively, you could name a favorite charity as the beneficiary of all or part of your policy. This strategy allows you to access the cash value of your policy and retain control of the policy during your lifetime. In exchange, your estate will receive an estate tax charitable deduction for the benefit paid to the charity upon your death.
Another option is to give the cash dividends from your insurance policy to charity. This enables you to benefit a favorite cause while receiving an income tax deduction. (With life insurance policies that are not modified endowment contracts, you can receive dividends in cash up to the basis income tax-free.)
And finally, you can purchase a life insurance policy to fund a pledge or future donation to charity. Instead of making a large contribution now, this enables you to make smaller monthly premium payments over time. These premiums will result in a much larger financial gift when the policy matures and, in many cases, those premiums will be tax deductible.

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Recognize opportunities to educate
• When watching TV with younger children, play devil’s advocate to the ads that bombard them — help them be more discriminating of what they see.
• When traveling in the car, use the time to comment on the commercial messages from billboards and stores.

Use shopping trips to teach financial lessons
• Talk about why you chose one product over another – describe details about value, quality, ingredients, etc.
• Explain the steps you take to economize, trade-off and make choices.

Make bill-paying a learning experience
• Link utility bills to actions — like running water, lights, TVs and computers.
• Demonstrate the impact and effect of large, unexpected expenses on the overall household budget.

Talk about the cost of living
• Payday is a good day to show kids the effect of deductions — for taxes, insurance, retirement, etc. — and that no one gets to bring home all the money they make.
• Talk about the role of taxes in supporting the community — its schools, roads and services.

Each stage in your child’s life presents challenges and opportunities for helping them learn to make good financial decisions. Like measuring growth in inches, start setting goals for your child and track their financial progress.
For example, the preschool years are a good time to introduce the piggy bank and simple money concepts. Ages 7 to 13 might be a good time to introduce an allowance and the principles of earning and saving. High school is when to increase financial responsibilities, explain protection against risk and talk about safe debt levels. As they go off to college, it’s important to address the advantages and disadvantages of credit cards, explain good and bad debt and encourage the idea of “pay yourself first.”
For more information on how to talk to kids about money, visit Themint.org.

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“The market is moving, I should change my plan”
If you listen to the daily news, it can be tempting to respond emotionally to the changing stock market. In fact, doing so is one of the costly mistakes people make with their assets. While no investment strategy can guarantee a profit or protect against a loss, the investors who typically achieve the greatest benefit are those who take a long-term view of investing, with asset allocation that positions them for consistent performance through market ups and downs. The only time you should change your long-term approach is if your situation or risk tolerance have changed.

“I’ll have enough money to retire”
Realistically, you may need to save more for retirement than you realize if you consider your health and health-care needs, possible longevity, financial habits, income streams and retirement goals. The best approach is to examine all your potential needs and compare them to your anticipated assets to be sure you know exactly where you stand. Your financial representative can help you create a plan, consider different scenarios and decide steps to achieve it.

“I have a financial security plan, so now I’m done”
It’s good to go through the planning process, determine a direction and move toward it. But with the many stages in life, and changes that happen in families, careers and finances, you need to review your plan on a regular basis to be sure it accurately reflects your situation. Think of this as a continual process to help ensure a financially secure future.

“I can take care of my financial security — I don’t need help”
Even the most financially savvy individuals can benefit from outside perspectives and support to create the right plan and identify the financial security vehicles that best suit their needs. A Northwestern Mutual financial representative is a resource who can help you answer the key questions to help achieve financial security.

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Identify Your Retirement Needs
Take time to figure out how much money you’ll need in retirement, based on your circumstances and lifestyle. Experts estimate that retirees generally need at least 70 to 80 percent of their pre-retirement income.
One option is to use Northwestern Mutual’s Lifespan Calculator to estimate how many years you may need retirement income.

Know Your Social Security Benefits
Social Security may still be a strong retirement tool for you. To find out what your Social Security benefits will be, visit www.ssa.gov.

Learn About Your Employer’s Pension
Pension laws are complicated. Learn the facts about your company’s pension plan to make sure you obtain the benefits to which you are entitled.
You’ll want to find out what your eligibility requirements are, when your benefits become vested, how your pension benefit amount is calculated, how much money you can expect to receive, if your benefits will increase once they begin, when you can elect to retire under the plan and the types of income plans that are available.

Use Tax-Deferred Savings Plans
How you save can be as important as how much you save. Contribute as much as you can to a savings plan, such as a 401k. Since you will invest with pretax money, you can also lower your current tax liability. You might also consider using other financial tools to supplement your retirement income, such as IRAs, annuities, mutual funds and/or life insurance.

Don’t Touch Your Retirement Savings
Resist the urge to fund life’s many expenses with your retirement savings.
You’ll not only find your retirement will be underfunded, but IRS early withdrawal penalties also may apply to money taken out from tax-sheltered investments before you turn 59 ½.

Consider Basic Investment Principles
Many people know how much money they have, but they may not know what they can expect in the future. Understanding investment principles can help you select investments to match your risk tolerance, time horizon and goals, as well as manage the impact of inflation.
As a general rule, your money should be allocated among different types of investments and appropriate to your risk tolerance, time frame and investment objectives. This will change over time and will need to be rebalanced periodically. For example, the closer you are to needing the cash, the fewer fluctuations you will probably want in the value of your portfolio.
The key to living the retirement lifestyle you dream of is making the right decisions today.

* Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2010 Retirement Confidence Survey. No investment strategy can guarantee a profit or protect against a loss in a declining market.

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1. Create a financial security plan.
Make sure your plan protects against risks to your income and assets — and accumulates funds. It typically includes a combination of disability insurance and life insurance for risk protection as well as investment products for wealth accumulation. Your financial representative can help you develop the right plan for you.

2. Formulate an estate plan.
A good estate plan fully protects your family by providing for loved ones and anticipating unexpected events. It considers tax implications and your specific needs while minimizing expenses and ensuring assets are distributed efficiently. Some elements of an estate plan, such as life insurance and investments, may be prepared with help from your financial representative. Others may involve an estate-planning attorney and include the following:
• Create a will. This legal document defines who will receive your money, property and family heirlooms. It specifies charitable contributions, names an executor and designates a guardian for your children. If you die without a will, these matters will be decided by state law and a court, often adding expense and slowing down asset distribution.
• Designate and update beneficiaries. Certain financial vehicles in your name are automatically disbursed to the beneficiaries you designate upon your death. Be sure to update these documents periodically.
• Establish a durable power of attorney. This designates a person to act on your behalf, in the event of incompetence, to handle personal financial affairs.
• Establish durable power of attorney for health care. This allows a specified person to act on your behalf regarding health-care decisions when you are unable to do so. Be sure to discuss your health-related issues and wishes and confirm the person will carry them out.
• Set up a living will. This document is a direction to your physicians with your wishes regarding life-sustaining treatment.

3. Consider a trust.
This legal mechanism allows you to put conditions on how and when your assets will be distributed upon your death, such as if heirs are too young or unable to manage assets themselves. Some trusts also allow you to reduce estate and gift taxes, and certain trusts distribute assets to heirs without the expense and time involved with probate court, which administers wills.

4. Plan your legacy.
In addition to providing for heirs, careful estate planning can help you leave a legacy through a charitable bequest. Your financial representative can help you identify options that could be incorporated into your plan.
What better resolution for the New Year than getting your financial house in order? Regardless of family situation or assets, having a plan to deal with the unexpected allows you to protect your family and ensure they have what they need if something should happen to you. Your financial representative can help you move forward on these important areas or introduce you to a specialist or attorney who can.

DISCLOSURE: Article prepared by Northwestern Mutual with the cooperation of Mike MacFarlane and the Edgewood Group. The Edgewood Group is an office of Northwestern Mutual. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and its subsidiaries. Mike MacFarlane, District Agent and Rob Dowdle, Ryan Ericksen, Kurt Peterson, Jake Rust, David Carruth, Greg Merrill, Tim Hodnett, Tyler Vongsawad, Will Beck and Jeff Barrett, Insurance Agent(s) of NM (life and disability insurance, annuities) and Registered Representatives of Northwestern Mutual Investment Services, LLC (NMIS) (securities), subsidiary of NM, registered investment adviser, broker-dealer, member FINRA and SIPC. Mike Macfarlane, Ryan Ericksen, Kurt Peterson, Scott Phillips and Tyler Vongsawad, Investment Adviser Representative(s) of NMIS. The products and services referenced are offered and sold only by appropriately appointed and licensed entities and network representatives. Network representatives might not represent all entities shown or provide all the services discussed. To contact Mike MacFarlane, please call (801) 225-8000 or e-mail mike.macfarlane@nmfn.com.

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America’s unsung heroes
According to the most recent U.S. Department of Commerce and Bureau of Census data, small businesses employ just over half of all private sector employees; they pay 44 percent of total U.S. private payroll; they’ve generated 64 percent of net new jobs over the past 15 years; and they produce 13 times more patents per employee than larger firms.
But as small business owners breathe new life into our economy, a number of issues keep them up at night — namely, how to keep their operations secure and growing even in the face of the ever-changing pressures. Among their concerns are finding the best ways to:
1. Attract and retain top-quality talent
2. Mitigate and manage risk
3. Create a solid succession strategy
4. Meet business obligations without sacrificing personal financial security

Finding and keeping employees
The success of a business’s development depends on the experience, knowledge and skill of human capital.
Offering a benefits packaged tailored to the business can attract and retain key people.
Most employees request group health insurance — which is also one of the most costly plans to the employer. However, it’s possible to customize a plan to fit both the needs of your employees as well as your company’s budget.
Life, disability and long-term care insurance programs are becoming more prevalent among small businesses. They can be provided by the employer or offered via payroll deduction, which enables employers to build goodwill among employees without incurring the cost of an expensive benefit program.
One of the other most requested benefits is an employer-sponsored retirement plan — and it’s also one of the most beneficial in terms of employee retention. By providing a way for employees to save for their own future, a qualified retirement plan may also increase the chances they will make a long-term commitment to the business.

Protecting what you’ve built
For most business owners, the business itself is often their greatest asset. If something happened to the owner or key employees, how would the business continue to operate? Without proper planning and protection, the disability or death of an owner or key employee could cripple the business built by years of hard work.
Key person insurance can help companies weather the disability or death of a key employee. It can provide the funds needed to pay debts and to provide working capital while a suitable replacement is recruited and trained. In many cases, key person insurance may be required as collateral for a business loan.
Finally, property and casualty insurance can pay benefits to repair or replace buildings, equipment and data damaged or destroyed in a natural disaster; while liability insurance can provide resources to satisfy personal injury or property claims.

The value of a trusted professional
It can be difficult to know if you’ve done enough to ensure a secure financial future. The expression “it’s lonely at the top” is often very true for small business owners. A trusted financial representative can help.

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Getting on track for saving
Even though more women than ever are working and building financial independence, many still depend on their husband’s income and investment expertise for their financial well-being. However, divorce or death can quickly change that situation, which is a discouraging thought since it’s widely known that about half of all U.S. marriages end in divorce.
The average woman can expect to live to age 80.2, which is 6.8 years longer than a man. Add to that the fact that in our society today, experts say for the first time more women are living without a husband than with one.

Smart choices for the future
No matter your age, here are five basic steps for building a financial strategy that will move you closer to self-reliance.
• Establish solid goals. Be it a dream home on a lake or a comfortable condo in the city, concrete objectives give you something tangible to strive for and make it easier to assign a price tag to goals. Establish your goals, set a time frame, list the steps you need to get there, and implement your plan. Start now.
• Assess your financial position. Take a critical look at finances, especially with regard to life goals. Consider asking an objective outside financial professional for help in calculating where you stand. Know what investments you have and how much they are worth. Estimate how much you will have saved by retirement and how long that will last based on your lifestyle.
• Seek out good financial guidance. Look for information and never hesitate to ask questions.
• Create a solid portfolio. Young investors should start as soon as possible to research financial information and start saving. Even seemingly small amounts now can help build future stability and eventual wealth.
• Team up with a financial planner you can trust. Women who are unfamiliar with the financial products available should team up with a financial professional they can trust.

For both women and men, it pays to create a clear vision of one’s financial future; both in terms of a better-focused, less stressful today and a comfortable, more prosperous tomorrow.

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  Few would dispute the value of a college education. Still, the price of a degree could jolt almost anyone’s budget. During the five-year period ending in 2007, the nation’s average public and private college costs rose by 31 percent and 41 percent, respectively.

  When on-campus housing, books, supplies, transportation and other personal costs are factored in, the average cost to attend a public four-year university or college for one year is $17,336, and $35,374 at a private institution.

  Consider this: students are taking an average of more than six years in public four-year colleges and more than five years in private four-year colleges to earn a bachelor’s degree.

Reducing sticker shock
  To help you determine how much money you will need to pay for an education once your child reaches college age, there are a number of online calendars such as those at www.finaid.org, www.collegeboard.com and www.nmfn.com. Involve your child in the process to determine if your child:
• plans to attend a private or public college or university, community college or technical institute.
• wants to live at home or on campus while attending school.
• may take more than four years to finish school.
  It is never too early to begin saving for college. A great place to start includes any of the most popular plans used today such as Section 529 plans, Coverdell Education Savings Accounts (ESA), Custodial Accounts and life insurance. In addition to the possible benefits of compounding, these plans may also provide some great tax advantages.

Better late than never
  No matter how late in the education savings game you get started — and if after factoring in the amount you’ve already saved you still fall short — various options may be available including the following:

• Grants and scholarships: Your child need not be a budding Einstein in order to qualify for some of the existing scholarships. Grants based on such factors as your income, place of employment, or even a relative’s military service, are available to qualifying individuals.

• Student loans: The Federal Student Aid Information Center provides a variety of free publications that are available by calling 1-800-4-FED-AID (1-800-433-3243). Their Web site www.federalstudentaid.ed.gov allows you to complete the Free Application for Federal Student Aid (FAFSA) online. It also provides tips on reducing college costs, finding non-federal scholarships and other helpful topics.

• Home equity loans: In some instances, the best option to help pay for college education can be leveraging the equity in your home. Banks offer a variety of programs, from flat loans at a fixed interest rate to lines of credit that can be accessed on an “as needed” basis.

• Life insurance: The cash value of a life insurance policy is one of the few assets not considered in determining eligibility for financial aid. If you have a permanent life insurance, you may have an additional source of cash. Your insurance representative can help you determine how much cash is available in policies you own as well as any potential implications that may arise.

  Above all, don’t be afraid to ask for advice when planning for your child’s education regardless of how late you might be starting this process. Financially, emotionally and psychologically, it is probably one of the biggest investments you will ever make. And, the impact on your child’s future will last a lifetime.

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Teach good habits
  The options for summer fun and spending make it a natural time to help children understand how to manage money and operate within limits. Rather than serving as a “bank” dispersing funds for every whim, consider paying a weekly allowance to cover discretionary spending. Agree to divide each allowance into portions labeled “save,” “spend,” “give” and “invest,” and explain parameters.
  Having a systematic “payday” at the same time every week will encourage discipline in managing money.

Plan and follow a budget
  Planning a party or a home improvement project? Involve children. They can see how you decide your plan, estimate costs, comparison shop and track your budget.
  Once they understand numbers, small children can participate. Ask them to decide whether the price of an item is more or less than a budget number, use the calculator to add up items as you shop, or handle their own small project. While gardening, for example, give your child a small budget to choose and buy flowers to plant in a designated area while you complete the rest of your project.

Run a business
  From lemonade stands to lawn mowing, summer is filled with business opportunities. Financial management is essential, so be sure that children account for expenses as well as income and understand there are costs to any endeavor. Reinforce that any profits should be allocated to “save,” “spend,” “give” and “invest.”

Keep a job
  A first summer job is a chance to offer guidance on what employers expect. Punctuality, proper attire, listening skills and good communication are important for all employees. Summer work also may involve collaborating with people of various ages, so pointers about teamwork can be helpful. Don’t overlook the chance to explain financial documents and processes, such as the information on their paycheck stub, payroll and government withholding, and options for direct deposit into their bank account.

Learn from role models
  Make the most of visits with grandparents, family and friends by asking them about the financial strategies that worked best for them. Their memorable stories will be recalled for years to come as they reinforce the importance of financial responsibility and commitment. Remember that parents are a child’s first role models.

Set and save for goals
  Explain your goals to your children and encourage them to set some of their own. Saving for a special event or end-of-summer reward will give them first-hand experience in delaying gratification with a goal in mind.

Understand banking & personal finance
  From using a savings account to balancing a checking account, using credit and paying bills, everyone needs a fundamental knowledge of personal finance. Take advantage of the various resources available and introduce them to your children, as appropriate, from an early age. Information is available at www.themint.org.

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