The Sooner the Better
By Amir Zaman, WEA Insurance
employee benefits specialist
March 1997
Best time to start TSA: Now
You hear warnings on the news. You see dire articles in the newspaper.
Your colleagues worry and talk about it. Nearly everyone is saying how
difficult it will be for most people to enjoy their “golden years”
in comfort and have financial security. You can’t help but take notice.
You have every intention of establishing a retirement plan . . . but when
and where to start?
One step you should consider is to open a tax-sheltered annuity (TSA)
account. Here’s why:
- With a TSA, the IRS helps you secure your retirement. How? When you
contribute to a TSA, the amount that would have been withheld for state
and federal taxes goes into your account, too. And, the interest and
earnings that your TSA accumulates are tax-deferred. You pay no taxes
until you withdraw the money at retirement. TSAs are one of the best
tax-advantaged retirement options available today.
- With a TSA, you establish a good savings habit. Financial planners
recommend that you pay yourself first. You can do that with a TSA by
having contributions deducted automatically from your paycheck. You
won’t miss the money, and you’ll be pleasantly surprised at
how quickly your account grows.
- The sooner you start a TSA the better. Does it make sense to start
a TSA if you’re starting out in your profession and don’t
have a lot to save? Absolutely! Consider an example. Say Joe and Jill
start TSAs. Each decides to contribute $2,000 a year, but Jill starts
at age 28 and stops contributing after seven years. Joe starts at age
35 and contributes until age 65. By the time they are 65 (assume they
earn 10% APR), Joe has $421,778 in his account while Jill has $445,445.
What’s remarkable is that Jill only contributed $14,000 to her
TSA whereas Joe put $62,000 in his. [10% is for illustration purposes
only; no guarantees are expressed or implied. Results will vary depending
upon the actual rate used in the calculation.]
So you can see that nothing beats starting early. You can start with
as little as $20 a month or contribute up to $9,500 a year depending on
your circumstances. To find out more, give us a call at 1-800-279-4030.
Driver's education: It pays to understand your automobile policy
When you buy an auto policy, just what are you getting and what do you
need? Here are brief descriptions of common coverages you can buy along
with the protection they offer you.
- Bodily Injury Liability: Provides coverage if you cause an
accident that results in injury or death to others, including passengers
in your car. It covers such expenses as medical costs and lost wages
for those injured in an accident. If you are sued, the legal costs of
defending yourself are also covered.
- Property Damage Liability: This coverage pays for damages you
cause to the property of others in an auto accident, including damages
to vehicles or property such as fences, mailboxes, buildings.
- Uninsured Motorist: Provides coverage for injuries to you and
the passengers in your car caused by a motorist who has no insurance
and is considered at fault in the accident.
- Underinsured Motorist: Provides coverage for you and your passengers
if injured by a motorist who is at fault in the accident and has inadequate
liability limits.
- Medical Payments: Pays for physician and hospital bills not
covered by other health insurance regardless of who is at fault in the
accident.
- Collision: Covers damages to your vehicle caused by colliding
with another vehicle or fixed object.
- Comprehensive: Covers damages to your vehicle caused by something
other than collision; for example, damages due to fire, theft, vandalism,
etc.
The coverages described above protect you from financial loss up to the
policy limits that you select. For more information on these coverages
or to have your current policy reviewed, please call us at 1-800-279-4010.
Group policy makes long-term care affordable
Most of us haven’t given long-term care much attention. Many of
us don’t know what it is, or we think it’s just for older folks.
Yet, according to one survey, 40% of those currently receiving long-term
care are between 18 and 64. And, the cost of long-term care isn’t
cheap — one year in a nursing home can cost $40,000, little if any
of which is covered by health insurance. That’s because the cost
goes toward paying for such assistance as helping a patient get dressed,
eat, go to the bathroom, etc.
One reason the cost of long-term care has emerged as an economic hazard
is that we no longer have as many traditional caregivers. Families normally
provided such care, but these days children usually live farther away
from their parents, and both sons and daughters have full-time jobs.
One way to pay for the cost of long-term care is through insurance. Insurance
provides independence. It gives you the ability to have more say in where
you receive custodial care (whether at your own home or in a nursing home),
and it also means you don’t have to deplete your pension or retirement
funds to pay for this care. While individual long-term care insurance
policies have been available for years, not everyone can afford their
premiums. That’s one reason why WEA Insurance created a group long-term
care insurance policy. If it is negotiated as part of a group plan, you
can protect your finances and get coverage against the high cost of long-term
care at a relatively low and affordable premium.
Posted March 5, 1997