Likewise, while some recognize the need for retirement planning, they often mistakenly exclude annuities as a viable option simply because of limited exposure to the various annuity options and features. This article will educate you on how annuities work and where they can assist you in fulfilling your retirement planning objectives.

What is an Annuity?
Annuities are insurance products allowing individuals, or annuitants, to contribute premiums guaranteeing income payments over a specified period of time. There is a saying that “you can’t outlive an annuity” which holds true as annuity income payments are typically guaranteed for the rest of the annuitant’s life.

Annuities can be either qualified or non-qualified. Qualified annuities are typically used for tax-deferred retirement savings vehicles such as IRAs, 403bs, etc. Non-qualified annuities are funded with after-tax funds and in most cases income payments can be considered tax-free income.

Annuities can also be categorized as immediate or deferred according to when annuitization, or annuity income payout, occurs. Immediate annuities are designed for individuals who begin annuity income payments immediately (or shortly after) opening the policy. These annuities are also known as Single Premium Immediate Annuities or SPIAs. Deferred annuities in contrast, allow individuals to contribute premiums over an extended period of time and elect to withdraw income from the annuity at a later date.

Why Should You Consider Annuities?
• Lifetime income
• Protection against outliving your assets
• Qualified annuities can grow tax-deferred
• Ideal for individuals seeking a specified income amount during retirement years
• Can be distribution method for individuals receiving unexpected lump-sum income (e.g., inheritance, lottery earnings, personal injury settlements, etc.)

What Annuity Categories are Available?
Annuities can have several variations but they are typically categorized by product type, namely fixed, equity indexed and variable annuities.

Annuity Category Description
Fixed Annuity Insurance companies guarantee to credit annuity policy with a fixed interest rate (usually calculated annually). Fixed annuities are generally considered the most conservative annuity type.
Equity Indexed Annuity Equity-indexed annuities credit interest based on the movement of an equity index like the S&P 500, for example. EIAs differ from variable annuities (described below) in that they are not directly invested in the stock market. EIAs may also have an interest rate cap.
Variable Annuity Annuity funds are invested directly in the stock market, usually via mutual funds according to the annuitant’s risk tolerance. The annuity account value can fluctuate up and down based on how the market performs. Typically variable annuities have higher returns than other annuity types, but also carry the increased risk for potentially negative returns.

Are you confident that upon retirement you will have enough income to not only cover basic living expenses, but also for the pleasures of life? If not, call one of our qualified Optimum representatives at 718-623-3433 to evaluate if annuities should be a part of your retirement planning. II Corinthians 9:6 says “Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously.” Let Optimum assist you in sowing financial seeds today for a bountiful harvest during your retirement years.

NOTE: Neither Optimum Capital Management nor its Financial Advisors provide individual tax preparation or legal advice. Clients should review any planned financial transactions that may have tax implications with their own tax and legal advisors in addition to the consulting provided by Optimum of such matters.

*Roper ASW, 2003 and AARP Study, 2003

Once again it’s that time of the year when hopeless romantics everywhere look forward to candlelit dinners, flowers delivered to the office or even a much anticipated marriage proposal. Aside from Christmas it probably is the most wonderful time of the year, but before we let Cupid create our ideal vision of love, we must first ask each other the following questions about the role money plays in maintaining healthy relationships beyond Valentine’s Day.

1. What is your current financial picture and what are your financial goals?
Far too often couples find it easier to discuss how many children they will have, which house to buy and where they will spend retirement without even talking about how they plan to meet those goals financially. College funding, home ownership and retirement are three of the biggest financial decisions any couple will make, but somehow we fail to determine how we will make it happen. Further we choose to hide from our partners outstanding credit card debt, low FICO scores and excessive spending habits instead of having honest conversations with our significant others. Perhaps you want to be “copreneurs” (couples who own businesses together), but like everything else it requires careful planning and consideration.

2. Do you put the pursuit of money above everything else?
I Timothy 6:10 is says: “For the love of money is the root of all evil; which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” Some have misinterpreted this passage to read Sthat money is evil and that the accumulation of it should be avoided at all costs. But read the scripture carefully – it says the love of money is the root of all evil, not money by itself. In other words, we err in the sight of God when we place money as the most important thing in our live and we love money more than we love God. As a couple you need evaluate that you are not putting material things (which often leads to unnecessary debt) above building your relationship together according to God’s purpose.

3. Are you disciplined enough to maintain a family budget?
My pastor recently called for a six (6) month fast on excessive spending except for absolute necessities. As hard as this will be, the purpose for me is to enforce a sense of discipline and more importantly to recognize God as the true provider of my daily bread. Part of that discipline comes from understanding the difference between need vs. want and sticking to a budget. I am always amazed with reality shows like Bridezillas where brides obsess with spending at least $100,000 on a wedding and aren’t the least bit concerned if the wedding goes over budget. Unfortunately many of these brides and grooms will carry that same mentality into their marriage and their finances and ultimately relationship will suffer as a result.

Now, I’m sure this wasn’t Valentine Day message you were expecting, but sometimes we need to look at more than just being in love, sometimes you need a reality check. Don’t get me wrong I believe in the power of love and desire romance just as much as the next person, but I’ve learned that they key to the success for any relationship is not just about finding chemistry or common interests. It’s also about making responsible decisions as partners, including those related to finances. So, enjoy the chocolates, cozy dinners and tender kisses this Valentine’s Day, but be sure you also make time to have serious conversations about your finances…it just might save you from Heartbreak Hotel.

Given today’s economic challenges, this is not the time to start panicking. Instead we must carefully plan our next financial steps to ride out this storm intact. The steps outlined below are tangible solutions to guide you and your loved ones in making sound financial decisions during this uncertain time. Let one of Optimum’s qualified advisors work with you to start your tomorrow today!

At one time or another we’ve all heard the ominous, monotone and quite frankly annoying tone that typically interrupts our favorite television or radio program to let us know these famous words—”This is a coordinated monthly test of the Emergency Alert System (EAS). If this had been an actual emergency, official messages would have followed the alert tone. This concludes this test of the Emergency Alert System.” We are then returned to our regularly scheduled program already in progress. Like EAS, today’s economic crisis may initially frustrate and confuse us, but we should not panic thinking the world is on the verge of total collapse. Therefore we must heed sound instruction and most importantly use this as a signal to adequately prepare and protect our financial futures.

Rising foreclosures, decreasing values of retirement plans, tight credit lending, plummeting stock markets and bank recovery plans have experts saying we are experiencing our biggest financial emergency test since the Great Depression. But the good news is that all is not lost and we WILL recover if we are patient and diligent enough to ride out the ups and downs of this economic storm.

So How Do I Prepare?

We’ve all heard the advice, “Save for a rainy day” but lately today’s economy makes me wonder if we should be saving for a monsoon! With that being said, preparation is the key to riding out any storm, including economic storms. Most Floridians put together hurricane kits ready at a moment notice with basic survival items just as Californians will have a similar earthquake kit and New Yorkers may have one for adverse winter weather. As a person who rode out several hurricanes and tornadoes, I can attest that being prepared helps calm some of the fear and anxiety that often comes with uncertainty. It gives a sense of peace that at the very least, I know my basic needs will be provided. The same is true for our finances. We can be calm about our financial situation during times like these when we’ve taken the time to plan. Our Economic Survival Kits should include the following:

• Develop a written budget that is enforced and realistic, avoiding large purchases unless absolutely necessary and affordable within the budget.
• Ensure everyone is held accountable for following the household plan.
• Contribute to an Emergency Savings account to cover at least 3-6 months (or more depending on your occupation) of your living expenses in a high-yield savings account.
• Create diversified investment portfolios (i.e. retirement acct) with the proper asset allocation according to your individual risk tolerance and market conditions.
• Consider alternative methods for earning extra income to further increase your savings potential (e.g. selling unwanted items on eBay, consignment stores, yard sales, seasonal employment, etc.).
• Consider barter agreements with neighbors, family and friends for babysitting and other services.
• Maintain adequate life, health, disability and property insurance – now is not the time to drop coverage in order to minimize your expenses.
• Prioritize debt repayment with the goal of being completely debt free.
• Establish estate planning documents such as wills, trusts, living wills, durable power of attorney, etc.
• Don’t forget to continue in your efforts of responsibly “giving” to others who are in need, as we remember the proverb, “Give and it shall be given unto you”.

If you’ve already put together your Economic Survival Kit, Congratulations! You’re well on your way to minimizing your economic collateral damage and today’s economy will test your preparation efforts to sustain your family during financial downturns. But I suspect that most of you are reading this thinking, “I don’t have any of these items prepared for my economic future and I’m doomed for failure.” Not so, as there is still time to start putting these things in place. Even if you are only able to place one item in your Economic Survival Kit, it will go a long way in creating stability during these times. The most critical thing to start doing today is changing your bad financial habits (i.e. using credit card for consumption purposes, not saving) and replacing them with sound financial disciplines that will render the greatest results.
One of Optimum’s qualified representatives will gladly assist you with any questions you may have about how the economy directly affects you. Remember, we are in this economic test together so don’t stress knowing that at some point we will return to regular programming.

According to a recent study by LIMRA International, 44% (48 million) of all U.S. households either don’t own life insurance or believe they need more (LIMRA, September 2006). Bottom line, each day without adequate life insurance coverage almost one half of the U.S. population is taking the risk that their family’s assets and lifestyle will be protected in the event of an untimely death. Will your loved ones have to sell treasured assets (e.g. houses, cars, possessions, etc.) you worked hard to accumulate during your lifetime just to cover basic household expenses? Will your children’s college education still be funded if you are no longer there to provide income? Unless you have enough liquid assets to cover these needs, these are important questions you must ask yourself now before your family is faced with the harsh reality of poor life insurance planning. For most people the best solution to this dilemma is by obtaining enough life insurance that covers your expenses and protects your assets from liquidation. Call us today at Optimum Capital to discuss appropriate life insurance solutions to help protect your family’s future!

On April 30, 2007 I lost my most valuable asset here on this earth – no, I didn’t lose it in the declining stock market nor did I lose it in some elaborate investment scam. You see on that day my father, Rev. James A. Hodges, passed away after a courageous and faithful battle with cancer. It’s amazing how as a financial advisor who is immersed with stocks, bonds and investment opportunities on a daily basis, my greatest asset was something that money can’t buy. While my father was not a financial advisor by profession, he instilled in me solid financial principles that ensured economic stability for my family and others. In this article I will share his “Fab Four Financial Principles” so that Optimum’s readers may also benefit from his legacy of teaching and empowerment.

1. Pay God First, Then Yourself
Nothing feels better than giving back to God what is rightfully His in the first place. He has called us to be good stewards over all things so we should make a habit of faithfully paying our tithes and offering first before heading out on our next shopping spree. Malachi 3:8 states “Will a man rob God? Yet you rob me. But you ask, ‘How do we rob you? In tithes and offerings.” My question to you is “Are you robbing God?”

Some may ask “What about my bills and other expenses, there just isn’t anything left?” The key word in this question is “left” because it implies that you’re putting other things ahead of God. Trust me, when you put God first He will provide the increase to take of the bills and other expenses (see Malachi 3:9).

2. Learn to Save for A Rainy Day
After you’ve honored God with your tithes and offerings, learn to protect your family’s financial future by saving regularly. We at Optimum teach that you should have at least 3-6 months of expenses in a high-yield savings account to cover unexpected expenses due to job loss or disability. The only way your emergency fund will grow is if you have the discipline to diligently contribute to the account. Sorry, there is no magic wand that will instantly fund this for you, therefore you must be responsible enough to do this on your own.

3. Live Within Your Means
I can’t even lie, I’m feeling the new Lexus LS 460L that parallel parks itself, especially since I can’t parallel park to save my life! But at $71k+, that doesn’t mean that I will rush out to the nearest Lexus dealership and buy one, as I’m perfectly content with a car that fits my budget more appropriately.

We as a people need to learn that although we see famous celebrities and athletes with fancy cars, big houses and fine jewelry, we have to keep it in perspective that they are just material things that will eventually fade away or at the very least go out of style. Most importantly, if you couldn’t afford it in the first place, you’ve now incurred a load of debt that you’ll still be paying off even after that Lexus is towed off to the junkyard.

4. Pay Off Your Bills and Credit Card Balances
My father was quite proud of the fact that he always paid his bills on-time and refused to carry a credit card balance.

First, he established a house checking account strictly for household expenses and ensured that his paycheck went directly to this account first. Second, he put his bills in a central location and clearly marked on the outside of the envelope when the bill was due. It should also be noted that he always knew the average due date and amount for each bill so if he missed a statement or if the amount due seemed incorrect he knew how to respond accordingly. Lastly, after each payday he reviewed his bills and paid and mailed each bill at least 8-10 days before the due date (I’ve personally modified this step by utilizing online banking services). Following these principles I can assure you that you will never pay a late fee or have service discontinued because of a misplaced bill or because you spent the rent money at Macy’s. The same is true for credit cards by making sure you pay off the balance each month to avoid high interest payments.

Don’t let my father’s advice be in vain – take charge of your financial future today! By applying these principles you too, like my father, can hear Jesus say “Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things…” (Matthew 25:21). Thank you, Daddy!

Ok, pop quiz. Have you ever made one or more the following statements in your lifetime?

1. “I promise to start my exercise plan tomorrow, seriously.”
2. “If I just lose 5 pounds, I won’t have to pray before trying to squeeze into those new jeans.”
3. “I really need to stop smoking.”
4. “Who cares if that Whopper with Cheese has 770 calories and The Cheesecake Factory’s Chocolate Oreo Mudslide cheesecake has 1,050 calories in just one slice…I’m worth it! Besides I’ll just work it off on the exercise plan I’m starting tomorrow.”

Sounds familiar, right? But did you know that each of these statements directly affects your ability to obtain adequate and affordable health and life insurance?

When applying for individual health and life insurance, underwriters evaluate your health based on several factors to ensure they are not taking any unusually high risks by insuring you. In other words, insurance companies want to reduce the probability of having to pay out a claim so if there are any health conditions that may increase those chances, they are more likely to decline coverage or charge higher premiums to cover the increased risk. Some of the health conditions affecting your insurance coverage include:
• Medical conditions such as High Blood Pressure, High Cholesterol, Diabetes
• Smoking
• Poor Diet/Lack of Exercise/Overweight
• Stress
• Family History of Chronic Illnesses

Don’t worry if you have one or more of these conditions – you still may be able to obtain coverage. The key is to show the insurance company you are taking tangible steps, with your physician’s assistance, to manage your condition properly. For example, with diabetes, insurance companies want to see that with diet, exercise and medication your blood sugar levels are within normal ranges. This demonstrates you are genuinely taking an interest in maintaining a healthy lifestyle and also that will not likely lead to more serious problems or death. Your commitment to change can be the deciding factor in not only whether you obtain coverage at all, but also your monthly premiums.

Likewise, by following basic physical fitness rules you can also significantly reduce your insurance premiums through preferred rates only offered to healthy individuals. Not only do you enjoy the health benefits of looking and feeling good, you save money. For example, a male nonsmoker may pay $88 in monthly premium, whereas a male smoker at the same age could pay at least $216 for the same face amount – that’s almost 40% paid more in premiums just because of smoking. Factors that lower premium rates include:
• Routine exercise and well balanced diet plans
• Getting enough sleep and effectively managing stress
• Stop smoking and limiting excessive alcohol use
• Routine annual physical exams
• Meeting target weight and body mass requirements for your height

We can’t ignore the foundational importance of health and life insurance to cover unexpected expenses due to illness or death. Let’s take the steps now to start our financial future today and as an added benefit we help our pocketbooks as well! Contact your Optimum representative today at 718-623-3423 if you have any questions about insurance products and how to increase your insurability.

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1 CalorieKing for Food Awareness. 24 March 2009. http://www.calorieking.com/foods.
2 First MetLife Investors Insurance Company. $500,000 10 year term. Male, Age 45. Standard Non-Smoker and Standard Smoker. State: NY