Many thrifty people are searching for investment options for cash now that they’ve made the maximum allowed retirement-fund contributions. Financial experts have been saying it for years — “invest your money for retirement” — and a new survey shows that a growing number of people are listening. These people are now in the enviable position of having made the maximum allowable contributions to their retirement funds and not knowing what to do with their additional savings.

An example of good saving

Scott and Amber Rowson of Columbia, Missouri, have contributed the maximums allowed to their tax-deferred retirement accounts. They budgeted strictly enough to contribute the maximum from Scott’s state-job salary and Amber’s self-employment SEP IRA. Their two children’s 529 college education accounts are fully funded, too. Amber said, “Now that our children’s savings are taken care of and our retirement funds are maxed, we want to know where our money should go . . . over the years we’ve gotten good at squaring away a portion of our earnings and it seems illogical to just stop now.”

Ways to save after retirement accounts are funded

After retirement funds are maxed out, one option is to contribute directly to a Roth IRA. Of course the benefit is that withdrawals in retirement will be tax-free and it’s a great place to sock away more cash. There is a new change in the rules for a Roth IRA for 2010. This year everyone regardless of income can convert a traditional IRA to a Roth IRA. There is a cost, however, because taxpayers must pay ordinary income tax on the entire amount converted. Still, the strategy can pay off for taxpayers like the Rowsons. They can make the conversion and split the tax liability between 2011 and 2012.

Another option for savings

When it comes to managing cash now that retirement accounts are funded, people also can start investing in taxable accounts. Despite their taxable nature, there’s no penalty for making withdrawals from them. The benefit for the Rowsons is that Amber is self-employed and if her business suffers from market fluctuations, she can tap into any her savings whenever she needs to, without additional taxes or penalties.

Don’t forget about life insurance

Another option for the Rowsons, and anyone else wise and thrifty enough to max out their retirement contributions, is to look into alternative investments. The Rowsons’ retirement portfolios are packed with standard stock and bond options so any extra money can go into alternative savings like cash-value life insurance. This would provide another way to enjoy tax-deferred earnings as well as liquidity. Amber said, “I like this option because it gives me another safety net if my business slows down or if I decide that I want to do something different in a few years and get stuck in a learning curve.” For someone like Amber, who wants to move into real-estate investing, this could be the most viable option for the family’s future savings.

It’s an enviable thing to have maximized retirement savings

For anyone in the enviable position of having maximized retirement contributions, the question of what to do with cash now is an important one. Depending on the investor’s individual circumstances, some options may make more sense than others. Experts advise that the best thing for avid savers to do is simply to to continue saving, one or or another. There are always wise options when it comes to saving for the future.

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Many people fail to get life insurance when it is too late. Unfortunately, we are still in tough economic times; the last thing on an average American’s mind is a life insurance policy. You could walk to Starbucks on your lunch break for a cup of coffee and a drunk driver could blindside you and kill you instantly. You are dead and your family has to pay the tab. Your family has to pay your funeral costs and other expenses you might have just because you did not have any type of life insurance. Your loved ones are left with hefty bills instead of financial support; you were not serious about your life and you left them with nothing but your memory. What if you were perfectly healthy and you are in your retirement age; how long are you going to wait? The longer you wait to get life insurance, the higher the premiums are going to be.

What types of life insurance is available to you currently?

If your employer provides life insurance, you are already one step ahead of the pack. Your employer’s life insurance will be offered to you for an extremely generous subsidized rate. However, you should also consider getting private life insurance as a back-up plan. Peculiar circumstances may occur and you might not be an employee at your current employer anymore. You always have to have a safety net and plan events ahead of time. An important factor about life insurance rates is to keep yourself as healthy as humanly possible. Staying healthy will ensure that your rates are low and you can afford them. Many insurance companies will not insure you if you have poor health or pre-existing conditions, such as cancer, high blood pressure, and other life-threatening ailments. The healthier you are, the easier the life insurance process will be for you.

Should you pay your life insurance monthly or annually?

If you are capable of paying your life insurance policy annually, take that option if it is offered to you. If you are paying your rates annually, you could save as much as 20% on your premiums. You should also consider getting a higher life insurance policy that an insurance company offers; you will most likely get the lowest value offered to you. By paying a couple extra dollars, the lump sum in the event of your untimely demise will be thousands of dollars higher and your family will be financially set for many years to come.

It is time to shop around for life insurance quotes.

When you want a brand spanking new Toyota Camry and you want the best deal possible, what do you usually do? You compare prices with each dealership to secure the best deal that is available. The same logic can be used to search for life insurance quotes. You should research at least five life insurance companies and get quotes from each one and evaluate them thoroughly. Do not only research their annual or monthly prices, but find out the terms of the circumstances of when the insurance policy will be paid out and the amount of the lump sum that is awarded to your loved ones when you pass on. You can easily search for insurance quotes online and compare various life insurance providers and their policies. There are websites that provide each life insurance companies quotes on an entire page; this will be a life saver when you are ready to research for your life insurance policy.

Are you comfortable enough to talk to a life insurance agent?

Once you have gathered enough details about the life insurance policy that best suits your needs, you should contact an insurance agent. Contacting and speaking to an agent will help you with the life insurance policy process much faster, and if you have other inquiries, they will provide you with all the essential information that you need. Always put your family first; you should never settle for the second or third best life insurance policy. Choose the policy that is right for you and your family. You are the best and your family deserves the best.

Hope they took out the life insurance instead of the accidental death insurance. Talk about debt relief… (Photo: flickr.com)

Debt relief is something many consumers are longing for in this difficult economy. The recession has brought many people’s finances into turmoil and they are left trying to make ends meet every month. Market research shows that some commonly purchased items are necessities, but research is showing that other items aren’t. Here are some items consumers can reasonably cut out of their budgets to save money without jeopardizing their future.

Oil Changes

There is the old saying, “Change your car’s oil every 3,000 miles.” Although this is a commonly accepted theory, there is no substantial evidence to prove it to be true for every car. The owner’s manual of every vehicle will detail the exact time when to change oil. Manufacturers state that oil changes every 5,000 to 7,000 miles is totally acceptable. Decreasing the two extra oil changes yearly can save anywhere from $50 to $90.

Extended Warranties

Many dealers push customers to buy extended warranties for their vehicles. This is an expense that easily can be cut out of a budget because it normally isn’t worth the cost. Car buyers can add an extended warranty to their vehicle when the existing warranty is just about to expire, saving a lot of money. The other good tip is when a consumer reaches the end of the standard warranty, they will have a good idea of how the car runs or if there are any potential problems. They will be better suited to understand type of coverage they need for the extended warranty.

Accidental Death Insurance

Another expense that can easily be stripped from a budget is accidental death insurance. Statistically, only five percent of deaths are classified as “accidental” and actually receive a payout. Consumers would be wiser to invest in a life insurance policy because these pay out regardless of cause.

Brand Name Medications vs. Generic

Purchasing brand-name prescriptions rather than generic can also be used to save extra money for debt relief. In general there is no difference between the quality and effectiveness of the two, yet the generic drugs cost considerably less. Dr. Theoman, a physician in Montgomery, Alabama agreed: “I always tell my patients to substitute… there are rare cases where options aren’t available or suggested, but for 90 percent of medications I give out, they can save a lot of money with generics.”

Buying Premium Gasoline

If the owner’s manual doesn’t specifically instruct owners to use premium gas, then there is no need to pay extra. Save the extra cash and use regular unleaded. In the end, using a higher quality gas may even hurt a car’s performance, because it’s harder to ignite and the higher-octane can make a car’s performance less smooth. Save the extra money and use it for savings or bills.

Ways to Save

These are just a few ways for consumers to save their money. As analyst Gary Brentman of The Economist stated, “There are many misconceptions out there that have been passed down over the years. Because of the difficult economy, many of them are quickly being debunked.” Consumers need to be wise and do research on small ways to save. Just because the media advocates a product or service, that doesn’t mean it is truly beneficial. Saving a few dollars here and there can do wonders for consumer debt relief.

Bob thought he was doing a clever thing when he invested $50,000 in a viatical contract. He was told he would be making a humanitarian investment by purchasing the life insurance policy of a terminally ill person and that he could expect a large profit for himself.

Can you say scam?

But the insured person wasn’t really sick at all and Bob ended up paying the policy premiums to avoid losing his investment. Bob became a frequent flier at Payday Loans in order to meet the premium paydays.

What is a Viatical?

A viatical insurance settlement is an agreement in which a third party buys a life insurance policy from an insured person and thus becomes the legal beneficiary of the policy. The insured person receives an immediate cash payout and in most cases the buyer of the policy agrees to continue to pay the premium on the life insurance policy until the death of the insured.

How Viaticals Are Supposed to Work

When you buy a viatical, you purchase the life insurance policy of a terminally ill person at a discounted price from a viatical broker who takes a commission. The ill person gets a chunk of money to help pay expenses or take a cruise and the investor gets the full face value of the policy when the person dies. Brokers also sell a spin-off of viatical settlements, called life or senior settlements, in which the investor is offered the life insurance policy of an older, healthy person.

Helping others?

The investors are told they are helping older people stay financially secure in their golden years. The pitch is based on a high rate of return—often 20 to 40 percent—and a humanitarian opportunity to help a sick person, a combination appealing to older investors.

Watch out

Viaticals can end up costing investors a lot of money. It is known to be one of the top ten investment scams. Securities regulators are “concerned that the inherent risk of viatical investments – gambling on when someone will die – aren’t being adequately disclosed, and second, many investors have been outright defrauded by some viatical companies or their sales agents.”

Action taken

A Florida Grand Jury in 2000 found as much as 40-50% of the life insurance policies viaticated by viatical settlement providers may have been procured by fraud. The Securities and Exchange Commission has taken action against one company that allegedly defrauded 30,000 investors of $1 billion.

Here’s how the investor can lose money:

• With improved medical care, the ill or older person may live longer than expected. As the new owner of the policy, you have to pay the premiums to keep the policy in force. You tie up your money longer and your profit declines the longer the person lives.
• Sometimes the insured person is not ill at all, so the investor will need to make insurance payments, maybe for years, or the investment is lost.
• There may be some technical problem with the insurance policy or it may be fraudulent and the insurance company will later refuse to pay the settlement.
• The insurance company or viatical settlement company may go out of business along with your invested money.
• Some brokers have sold the same policy to multiple investors.
• The insured’s heirs may challenge changes made to the policy.

Protect Yourself

It is important to learn all you can about a viatical before you invest. Failure to research the investment could result in financial disaster.