Term vs. permanent insurance: Which is right for you?

Scott-Johnson---HeadWhat’s your most valuable asset? While you are still working, this asset may actually be your future income — so you need to protect it. And you can do so by maintaining adequate life insurance, which can help provide your family with the financial resources necessary to meet critical expenses — such as mortgage payments, college tuition, and so on — should you pass away prematurely. But what type of insurance should you purchase? There’s no one “right” answer for everyone, but by knowing some of the basics of different polices and how they relate to your specific needs, you can make an informed decision.
As its name suggests, term insurance is designed to last for a specific time period, such as five, 10 or 20 years. You pay the premiums and you get a death benefit — that is, the beneficiaries of your policy will collect the money when you pass away. In general, term insurance may be appropriate for you if you only need coverage to protect a goal with an “end date,” such as paying off your mortgage or seeing your children through college. Term insurance may also be a reasonable choice if you need a lot of coverage but can’t afford permanent insurance.
Why is permanent insurance more costly than term? Because, with permanent insurance, your premiums don’t just get you a death benefit — they also provide you with the potential opportunity to build cash value. Some types of permanent insurance may pay you a fixed rate of return, while other policies offer you the chance to put money into accounts similar to investments available through the financial markets. These variable accounts will fluctuate in value more than a fixed-rate policy, so you will need to take your risk tolerance into account when choosing among the available permanent insurance choices.
Permanent insurance may be suitable if you want to ensure a guaranteed death benefit for life, rather than just for a certain time period. Permanent insurance may also be the right choice if you have a high net worth and are seeking tax-advantaged ways of transferring wealth.
Still, you may have heard that you might be better off by “buying term and investing the difference” — that is, pay the less costly premiums for term insurance and use the savings to invest in the financial markets. However, this strategy assumes you will invest the savings rather than spend them, and it also assumes you will receive an investment return greater than the growth potential you receive from permanent insurance. Both assumptions are just that: assumptions, not guarantees. If you are considering the “buy term and invest the difference” route, you will need both a consistent investment discipline and a willingness to take a greater risk with your money, in hopes of higher returns.
In any case, your financial professional can review your situation with you and help you determine whether term or permanent insurance is best suited for your needs. But don’t delay. If you have even one other person depending on your income to maintain his or her lifestyle, you need to be covered — and once you are, you’ll consider those premium dollars to be well spent.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

From K to R in Homer Glen

BOB BONG columnWatseka-based Big R Stores opened its first Chicago-area store last week at 15830 S. Bell Road in Homer Glen in the former Kmart store.
Big R stores cater to owners of small farms, which are still plentiful in the Homer Glen area. The stores carry a wide range of merchandise from clothing and footwear to sporting goods to farm supplies. Most stores also feature rental centers. The Homer Glen store features popular brands, such as Carhartt and Under Armour apparel, Cub Cadet and Stihl power equipment.
It’s the 17th store for the chain; 10 in Illinois and seven in Indiana.
The store created 45 new jobs.
The village approved a sales tax sharing agreement with the retailer for the next 10 years as an inducement. Officials estimate that the new Big R Store will generate more than $100,000 in sales tax revenue for the community each year.
Hours are 8 a.m. to 9 p.m. Monday through Saturday from 9 a.m. to 7 p.m. on Sunday.
“The new Big R store will help the village to capture important retail sales currently spent in other Will County communities,” Mayor George Yukich said in a release. “Big R breathes new life into the former Kmart property, at one of our busiest intersections, and will draw new retail customers to Homer Glen from up to 30 miles away.”
“The Morris store is doing really well, and we saw an opportunity to continue investing in the Chicago community,” said Big R CEO Jerry Gibbs. “It’s a great feeling to bring our family-run stores to the south suburbs while creating new jobs. We want to make sure that we always take care of our customers. We want to make sure each customer’s dollar is well spent and that they leave Big R happy and satisfied.”

Tropical Sno now open in Willow Springs
Tropical Sno shaved ice at 8695 S. Archer Road in Willow Springs reopened last week for its seasonal run until around Labor Day.
The popular summer spot is open from 11 a.m. to 10:30 p.m. Monday through Saturday and from noon to 10 p.m. on Sunday.

Chenchos adds third location
Chenchos Burritos, a Mexican restaurant with locations at 5240 W. 159th St. in Oak Forest and 14207 Bell Road in Homer Glen will open its third location last week at 16731 Oak Park Ave. in the former La Fajita Grill that closed last year in the Ace Hardware plaza.
Hours are expected to be from 10 a.m. to 10 p.m. Monday to Thursday, from 10 a.m. to midnight on Friday and Saturday and from 10 a.m. to 11 p.m. on Sunday.

Dollar Busters closes
Dollar Busters, a dollar store that opened about a year ago at 17133 S. Harlem Ave. in Tinley Park in the Jewel-Osco plaza has left the building. The signage is still up but the store has been cleared out.

Office Depot closes in Cal City
The Office Depot store at 1370 Torrence Ave. in Calumet City closed for good at the end of business last week.

The Music Shop moves into new digs
The Music Shop, which opened in Tinley Park in 1973 and offers music instruction, instruments and service, recently moved from its longtime home at 16705 S. Oak Park Ave. into new digs at 16752 S. Oak Park Ave. Hours and services remain the same. For information, visit the website at

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Garfield Pharmacy aims to maintain neighborhood tradition

Jawad Hamdan, who opened the Garfield Pharmacy last month in Chicago’s Garfield Ridge community, is proud to be continuing a neighborhood tradition.
“I wanted to maintain an independent pharmacy in the area,” said Hamdan.
Garfield Pharmacy, 6456 W. Archer Ave., is now the fifth pharmacy that Hamdan has opened. He has other locations in Chicago’s Little Village, Pilsen and Gage Park neighborhoods, and in Chicago Ridge.
What appealed to Hamdan was that the Garfield Ridge location has a history of being an independent pharmacy. The site was most recently Archer Pharmacy and that location has been an independent pharmacy in the community for nearly 40 years.
“It’s an area that got my attention,” said Hamdan. “It was already set up to be a pharmacy. I like the area. It is very quiet and multicultural. We have a lot of people coming in who are Polish and Mexican. It is very steady.”
Hamdan said the people he has met are hard-working and loyal. They like the idea of an independent pharmacy where they feel comfortable and get to know the pharmacists and other employees. Hamdan said it is a connection to the neighborhood.
He said attentive service is provided with low prices. Free medication delivery is provided. Garfield Pharmacy accepts Medicare and Medicaid customers.
Hamdan has four employees at Garfield Pharmacy. He is looking for someone who can speak Polish. Hamdan’s goal is to eventually have 10 employees, which is about the number he has at each of his other locations.
Plans for a grand opening will take place when the weather improves, Hamdan said. He has tentative plans for music and will give out free gift bags.
Garfield Pharmacy is open from 9 a.m. to 7 p.m. Monday through Fridays, and 10 a.m. to 6 p.m. Saturdays.
For more information, call 773-424-7772.
Tropical Sno to open for summer in Bridgeview
Sno - Daze Tropical Sno will be opened for the season Friday, May 1, at 7777 S. Harlem Ave. in Bridgeview.
Normal business hours of 2-10 p.m. started on Saturday, May 2.

Pandora to open at Chicago Ridge Mall
Pandora will open its third south suburban jewelry store on April 29, at Chicago Ridge Mall. The retailer also has stores at Orland Square Mall in Orland Park and one that opened in December at Louis Joliet Mall in Joliet.

Tinley Kmart adopts K-fresh format
Kmart is reconfiguring its Tinley Park store at 16300 S. Harlem Ave. from a Super Kmart into a new format the chain calls K-fresh.
The Hoffman Estates-based retailer is changing most of its remaining Super Kmarts into the new format, which includes the removal of its butcher, bakery and deli food service departments.
The new format also includes less sales floor space, reduced operating hours fewer staff.
The company said in a release at least five of its remaining 11 Super Kmart stores would be converted. The Tinley store was the only one in Illinois.
K-fresh stores have replaced the service departments with prepackaged items, and offer reduced brand variety and pack sizes.
Store hours have been cut from 24 hours to 8 a.m. to 10 p.m.

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Help mom with her retirement income strategy

Scott-Johnson---HeadMother’s Day is almost here. This occasion may have special significance for you if you’ve been fortunate enough to have your mother around for your adult life. So naturally, you’ll want to bring Mom some flowers or another gift. But if she’s planning to retire soon, you may want to think about a longer-term way to improve her life — namely, by initiating a conversation about her retirement income strategy.
Of course, she may already have matters well in hand. But a great many people on the verge of retirement have not planned for those years, so you may be able to provide some valuable suggestions. Here are a few ideas:
• Boost contributions to retirement plans. If Mom is still working, urge her to contribute as much as she can afford to her IRA and her employer-sponsored retirement plan, such as a 401(k). The chances are pretty good that she will be spending many years in retirement — in fact, the average life expectancy for a 65-year-old woman is 20.5 more years, according to the Centers for Disease Control and Prevention. So she’ll want to accumulate as much as possible before she bids “adieu” to the working world.
• Discuss appropriate withdrawal rates. Encourage your mother to meet with a financial professional to determine an appropriate rate of withdrawal from her investments. To help ensure that she doesn’t outlive her resources, she needs to avoid taking out too much during her early years of retirement.
• Take care of legal arrangements. If you haven’t already done so, ask your mother if she has drawn up the important legal documents related to her estate plans. Does she have a will? Has she created a durable power of attorney, which allows her to name someone to make financial and health care decisions on her behalf if she becomes incapacitated? As you know, this is a sensitive topic, so you’ll want to approach it with care.
• Evaluate Social Security options. Your mother is probably well aware that she can start taking Social Security as early as age 62, but will get much bigger monthly payments if she waits until her full retirement age, which will likely be 66 or 67. But she may not know that she might be able to benefit from a Social Security “spousal strategy” that could result in her receiving more income than she could get by just taking her own benefits.
For example, if her spouse is the higher wage earner and can afford to delay taking benefits, your mother could eventually receive higher survivor benefits. Or, your mother and her spouse could employ a “file and suspend” strategy. Under this strategy, her spouse, upon reaching full retirement age, files for retirement benefits and then immediately requests to have those benefits suspended. As a result, your mother can file for spousal benefits, which would be larger than what she would receive at her full retirement age. To make sure they are making any Social Security-related moves correctly, though, your mother and her spouse will want to consult with a tax advisor who is thoroughly familiar with Social Security rules.
You want your mother to enjoy a long, happy and active retirement. So, talk to her about the moves she can make to help turn that aspiration into reality.

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.

Can you free yourself from some investment taxes?

Scott-Johnson---HeadApril 24 has been designated Tax Freedom Day for 2015. Tax Freedom Day, calculated by the Tax Foundation, is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year. So it may be a good time to review your own situation to determine if you can “free” yourself from some investment-related taxes in the future.
Of course, Tax Freedom Day is something of a fiction, in practical terms, because most people pay their taxes throughout the year via payroll deductions. Also, you may not mind paying your share of taxes because your tax dollars are used in a variety of ways — such as law enforcement, food safety, road maintenance, public education and so on — that, taken together, have a big impact on the quality of life in this country. Nonetheless, you may well want to look for ways to reduce those taxes associated with your investments, leaving you more money available to meet your important goals, such as a comfortable retirement.
Fortunately, it isn’t really that difficult to be a tax-conscious investor, as some of the best retirement-savings vehicles have built-in tax advantages. For starters, depending on your income level, your contributions to a traditional IRA may be tax-deductible, so the more you put in (up to the maximum of $5,500, or $6,500 if you’re 50 or older), the lower your annual taxable income. Plus, your earnings grow on a tax-deferred basis.
If you meet certain income guidelines, you may be eligible to contribute to a Roth IRA. The contribution limits for a Roth IRA are the same as those for a traditional IRA, but the tax treatment of your earnings is different. In fact, your Roth IRA earnings can grow tax free, provided you don’t take withdrawals before 59½ and you’ve had your account at least five years. (Roth IRA contributions are not tax-deductible, however.)
Even if you have an IRA, you can probably also participate in your employer-sponsored retirement plan, such as a 401(k), a 403(b) or a 457(b). You typically contribute “pretax” dollars to these types of retirement plans, so your contributions will lower your annual taxable income. Plus, you’ll benefit from tax-deferred earnings. And employer-sponsored plans have much higher contribution limits than an IRA; in 2015, you can put in up to $18,000 to a 401(k) or similar plan, or $24,000 if you are 50 or older.
Beyond contributing as much as you can afford to tax-advantaged retirement plans, how else can you take greater control of your investment-related taxes? One move is to avoid frequent buying and selling of investments held outside your IRA and 401(k). If you sell investments that you’ve held for less than one year, your profit will be taxed as ordinary income, with a rate as high as 39.6%. But if you hold investments at least one year before selling them, you’ll just pay the long-term capital gains rate, which is 15% for most taxpayers (20% for high earners). So, from a tax standpoint, it pays to be a “buy-and-hold” investor.
Taking full advantage of your IRA and 401(k) and holding your investments for the long term aren’t the only tax-smart moves you can make — but they can give you a good start on making investing less of a “taxing” experience.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation

Scott Johnson, CFP, is a financial advisor with Edward Jones, 8146 W. 111th St., Palos Hills, 974-1965. Edward Jones does not provide legal advice. This article was written by Edward Jones for use by your local Edward Jones financial advisor.