Category

Planning

When One Spouse Retires First

By | Planning

It’s easy to think of retirement and dream of a relaxed stroll into the sunset with your significant other by your side. After all, many advertisements repeat this theme with salt-and-pepper-haired couples strolling hand in hand across a beachfront.

Yet, this is not always the case. Anymore, we often see couples retire at different times – perhaps one spouse actually enjoys going to work every day while the other can’t wait to retire. Different retirement times, however, can open financial and emotional rifts for couples. What if the retired spouse enjoys travel, or wants to spend long stretches with family? Did the couple consider the financial impact of one spouse retiring versus both spouses? What if the working spouse is resentful of the time or money the retired spouse spends on activities?1

At our firm, we help with issues related to couples’ financial preparedness for retirement. If you and your spouse are looking toward retirement–either at the same time or years apart – give us a call.

With the proper planning, the financial piece of retirement doesn’t have to play into your marital dynamic. Based on your circumstances, a wide variety of solutions can help provide one or more retirement income streams while allowing an investment portfolio the opportunity to grow—possibly even throughout retirement. Many of today’s retirees hope to benefit from ongoing growth opportunities to help offset the potential long-term impact of inflation, rising health care and long-term care costs, and increasing longevity.

Now, couples with a big age gap may need a totally different set of strategies from other couples. For instance, if you have a significantly younger spouse, it may be more appropriate to invest a higher percentage of an investment portfolio in stocks than it would be for couples closer in age.2

One way the IRS helps out couples with a large age gap is with an opportunity to reduce the size of required minimum distributions (RMDs) from tax-deferred retirement plans, which are generally required to start at age 70 ½. When the account owner is at least 10 years older than their spouse, and the spouse is the named beneficiary, the older spouse can use a different factor for their RMD calculation, which can result in a lower payout. The benefit to this rule is that it gives more of the older spouse’s funds the opportunity to keep growing while the younger spouse continues to work.3 This information is not intended to provide tax advice. Be sure to speak with a qualified professional about your unique situation.

Another retirement income option to consider for age-gap couples is a joint-and-survivor annuity. There are many different types of annuities to choose from, but joint-and-survivor actually refers to the type of distribution option that most annuities offer. If you purchase an annuity and choose this payout option, the annuity will continue to make payments to the surviving spouse, regardless of which spouse dies first.

A 50 percent option will continue to pay out half of the original amount to the survivor once the first annuitant dies, and a 100 percent option, while offering a lower original payout, guarantees the same amount for the life of both spouses.4 This can be a suitable component of a retirement income plan for couples with a significant age gap.

Whether you and your spouse are similar ages or decades apart, and whether you plan to retire on the same day or years apart, you should be planning for the financial – and emotional – components ahead. If you’re ready to plan, we can help.

 

Content prepared by Kara Stefan Communications.

 

1 Karen DeMasters. FA Magazine. May 12, 2017. “Who’s Retiring First?” https://www.fa-mag.com/news/couples-retirement-gap-32725.html?section=3. Accessed Sept. 11, 2017.

2 Kerri Anne Renzulli. Time. June 14, 2017. “Money, Marriage and a Big Age Gap: 6 Ways to Make Sure Your Retirement is Safe.” http://time.com/money/4810932/age-difference-relationship-couples-retirement-advice/. Accessed Sept. 11, 2017.

3 IRS. 2017. “IRA Required Minimum Distribution Worksheet.” https://www.irs.gov/pub/irs-tege/jlls_rmd_worksheet.pdf. Accessed Sept. 11, 2017.

4 Zacks. 2017. “How Does a Joint and Survivor Annuity Work?” http://finance.zacks.com/joint-survivor-annuity-work-2270.html. Accessed Sept. 11, 2017.

 

Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by company. Annuities are not a deposit of nor are they insured by any bank, the FDIC, NCUA, or by any federal government agency. Annuities are designed for retirement or other long-term needs. Guarantees and protections provided by insurance products including annuities are backed by the financial strength and claims-paying ability of the issuing insurer.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE09175112C

IRS News to Know

By | Planning

As we head into the final quarter of 2017, it’s a good idea to stay cognizant of any tax issues that may affect your finances come April 2018. Now is the time to review your investments and income distribution plans to help ensure you don’t trigger additional taxes or penalties later on.

We can help retirees create income distribution strategies that provide a reliable stream of income. As some income-generating strategies could increase your tax liability in a single year, we recommend clients also consult with an experienced tax professional to understand issues regarding their specific situation. We are happy to make a recommendation from our network of professional colleagues.

One common income distribution strategy is to transfer assets from an employer-sponsored 401(k) plan to a self-directed IRA. This move can give some individuals more investment choices. The IRS encourages eligible taxpayers to consider requesting a direct trustee-to-trustee transfer, rather than doing a rollover. However, if you do not conduct a direct trustee-to-trustee transfer, it’s important to understand the rules related to personally withdrawing money from one account and depositing it to another. The IRS allows a 60-day window to do this without penalty. If an individual misses that deadline, he may qualify for a waiver to extend the deposit window. The IRS will generally allow an extension for one or more of 11 circumstances, including the death of a family member or because the taxpayer becomes seriously ill. Furthermore, a taxpayer can use a new self-certification procedure to apply for the waiver of the 60-day period to avoid possible early distribution taxes.1

Speaking of IRAs, one income distribution strategy that early retirees may be able to take advantage of is IRS Rule 72(t). Normally, someone who retires before age 59 ½ would be subject to a 10 percent penalty on early withdrawals from a retirement plan. However, Rule 72(t) waives this penalty for individuals who make a series of “substantially equal periodic payments” for five years or until the retirement account owner reaches age 59 ½ – whichever is longer. The allowable amount is based on life expectancy and must be calculated using one of the IRS approved methods.2 Since every situation is different, individuals are encouraged to consult with a qualified tax professional before making any decisions.

A 2011 rule from the IRS relates to the “portability deadline.” This is the rule that allows a surviving spouse to absorb any unused portion of a deceased spouse’s estate tax exemption amount. The surviving spouse must file an estate tax return on behalf of the decedent in order to qualify for the portability rule, even if the estate is under the filing threshold and typically would not be required to file an estate tax return. A new IRS guideline grants a permanent automatic extension of the time to file an estate tax return just to claim portability, extending it from nine months to up to two years after the decedent’s death.3

Also, as a reminder, 2017 is the first tax year in which taxpayers age 65 and over are subject to the same 10 percent threshold of adjusted gross income (AGI) for deducting unreimbursed medical expenses as all other taxpayers (in previous years the threshold was 7.5 percent for those 65 and over). Eligible medical and dental expenses must be over 10 percent of the taxpayer’s 2017 AGI in order to claim the deduction.4

Content prepared by Kara Stefan Communications.

 

1 IRS. April 19, 2017. “2016 Tax Changes.” https://www.irs.gov/newsroom/2016-tax-changes. Accessed Aug. 14, 2017.

2 Investopedia. 2017. “Rule 72(t).” http://www.investopedia.com/terms/r/rule72t.asp. Accessed Aug. 18, 2017.

3 Michael Kitces. Nerd’s Eye View. June 28, 2017. “IRS Extends Portability Deadline (Retroactively) Under Rev. Proc. 2017-34.” https://www.kitces.com/blog/rev-proc-2017-34-automatic-extension-deadline-form-706-portability-dsue-amount/?utm_source=FeedburnerRSS&utm_medium=feed&utm_campaign=Feed%3A+KitcesNerdsEyeView+%28kitces.com+%7C+Nerd%27s+Eye+View%29. Accessed Aug. 18, 2017.

4 IRS. Dec. 15, 2016. “Questions and Answers: Changes to the Itemized Deduction for 2016 Medical Expenses.” https://www.irs.gov/individuals/questions-and-answers-changes-to-the-itemized-deduction-for-medical-expenses. Accessed Aug. 14, 2017.

 

The content provided in this blog is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice.

Investing involves risk, including the potential loss of principal.  Any references to reliable income generally refer to fixed insurance products, never securities or investment products.  Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE08175099C

Income Strategies for an 8,000-Day Retirement

By | Planning

By 2030, it’s estimated that 20 percent of the U.S. population will be over age 65.1 That means a fifth of all Americans will be on the fringe of retirement or already retired, a milestone that’s generally perceived to come late in life. But consider this, there are approximately 8,000 days in today’s average retirement. That’s approximately the same number of days from:2

  • Birth to college graduation
  • College graduation to mid-life crisis
  • Mid-life crisis to retirement

Eight thousand days translates to about 22 years. That may seem long for retirement, but it’s actually quite common these days: Retire at 65 and live to 87; retire at 70 and live to 92; retire at 80 and live to 102. More people are doing this all the time.3

If you are fortunate enough to enjoy 8,000 days of retirement, you’ll need plenty of retirement savings accumulated to make it last. For many people, that may not happen. Some young people don’t save enough because they struggle to make ends meet. People in their 40s might splurge on a sporty convertible or have unexpected expenses for a family member.

Sometimes the bulk of retirement saving gets crammed into those 8,000 days between mid-life and retirement. If this scenario sounds familiar, note that we have experience working with clients who are in similar situations. One of the keys is to use today’s retirement income strategies and financial vehicles to help maximize your assets for long-term financial confidence. We can use a variety of investment and insurance products to customize a financial strategy for your unique situation.

One possible strategy to help with the concern of outliving your retirement income may be to delay starting Social Security benefits.For example, an economist at Boston University demonstrated a scenario in which a 66-year-old retiree begins withdrawing income from his 401(k)/IRA account while delaying Social Security until age 70. His calculations show that this strategy would yield a higher income throughout retirement than if the retiree started pulling from all income sources at full retirement age.5

Also remember that the concept of 8,000 days is a middling number. Roughly, half of retirees will die before 8,000 days and half live longer. Annuities can be an option for people who want to help ensure a portion of their retirement income will be guaranteed. An annuity is an insurance contract that can provide long-term retirement income to help protect you against longevity risk, such as a retirement spanning two decades or more.

It’s important to understand there are several different types of annuities, and they don’t all work the same way. They may offer various features; such as payout options, death benefits and potential income for your spouse. Some can offer guaranteed income (a fixed annuity) while others offer an income stream that relies on the performance of the investments you choose (a variable annuity). There may be tradeoffs for these features, like additional fees or lower income payouts.6 A financial professional can help you understand which type of annuity suits your financial needs.

Content prepared by Kara Stefan Communications

1 Richard Eisenberg. Forbes. May 9, 2017. “Why Isn’t Business Preparing More for The Future of Aging?” https://www.forbes.com/sites/nextavenue/2017/05/09/why-isnt-business-preparing-more-for-the-future-of-aging/#108dfd522dec. Accessed July 31, 2017.
2 Ibid.
3 Ibid.
4 Mark Miller. The New York Times. Feb. 18, 2017. “How to Make Your Money Last as Long as
You Do.” https://www.nytimes.com/2017/02/18/your-money/retiring-longevity-planning-social-security.html. Accessed July 31, 2017.
5 Laurence Kotlikoff. Dallas News. May 5, 2017. “Which should you take first: Social Security or your 401(k)?” https://www.dallasnews.com/business/personal-finance/2017/05/05/take-first-social-security-401k. Accessed July 31, 2017.
6 CNN. 2017. “What is an annuity?” http://money.cnn.com/retirement/guide/annuities_basics.moneymag/index.htm. Accessed July 31, 2017.

The hypothetical example provided is for illustrative purposes only; it does not represent a real life scenario, and should not be construed as advice designed to meet the particular needs of an individual’s situation. We are able to provide you with information but not guidance or advice related to Social Security benefits. Our firm is not affiliated with the U.S. government or any governmental agency.

Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by company. Annuities are not a deposit of nor are they insured by any bank, the FDIC, NCUA, or by any federal government agency. Annuities are designed for retirement or other long-term needs.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE09175094C

Strategic vs. Tactical Asset Allocation

By | Planning

 In recent years, the markets, the economy and the global political scene have evolved considerably. We’ve witnessed both remarkable volatility and remarkable resilience in these areas. The reality is that less predictability in today’s economic landscape requires more vigilant risk diversification, coupled with the ability to adapt to a fast-changing environment.1

We work with our clients to set financial goals and make strategic and tactical recommendations to help them reach their individual financial objectives. Equally as important, we want to encourage clients to work with us to monitor their financial progress and let us know when their personal or financial situation changes. Investing mirrors life in many ways: You make plans, but they often get disrupted, waylaid or delayed. By closely monitoring your financial strategy, we can help you determine if and when it’s time to make changes.

To this end, it may be beneficial for you to understand the distinction between strategic asset allocation and tactical asset allocation. Strategic allocation establishes and maintains a deliberate mix of stocks, bonds and cash designed to help meet your long-term financial objectives.2

Tactical asset allocation, on the other hand, is more market focused. While an investor may set parameters for how much and how long he wants to invest in a certain asset class, he may want to then increase or decrease his allocations by 5 percent to 10 percent over a short time based on economic or market opportunities.3

It is important to be aware that tactical asset allocation strategies present higher risks but also the opportunity for higher returns. It’s a good idea to set percentage limits on asset allocations and time benchmarks for when you may want to exit certain positions.4 Tactical asset allocation is, in fact, a market timing strategy, but its risk lies more in asset categories rather than individual holdings, and a crucial key for this type of allocation is to actively manage that risk.5

To help diversify and manage risk, some financial advisors recommend exchange traded funds (ETFs). These are passively managed funds that can be bought and sold throughout the trading day. While ETFs are passively managed, they provide a means for an investor to tactically expand or shrink exposure to a specific asset class in her own actively managed portfolio. Proponents of ETFs favor them because of their low cost, tax efficiency and trading flexibility.6

 

 

 

Content prepared by Kara Stefan Communications.

 

1 Nasdaq. June 26, 2017. “Asset owners must be more innovative to fulfill investment missions.” http://www.nasdaq.com/press-release/asset-owners-must-be-more-innovative-to-fulfill-investment-missions-20170626-00612. Accessed July 8, 2017.

2 Chris Chen. Insight Financial Strategists. July 1, 2017. “Tactical asset allocation can enhance a long term strategy.” http://insightfinancialstrategists.com/asset-allocation/?utm_source=ReviveOldPost&utm_medium=social&utm_campaign=ReviveOldPost. Accessed July 8, 2017.

3 Ibid.

4 Ibid.

5 Girija Gadre, Arti Bhargava and Labdhi Mehta. The Economic Times. June 19, 2017. “5 smart things to know about tactical asset allocation.” http://economictimes.indiatimes.com/wealth/invest/5-smart-things-to-know-about-tactical-asset-allocation/articleshow/59189407.cms. Accessed July 8, 2017.

6 Robert Powell. MarketWatch. June 9, 2017. “Why financial advisers prefer ETFs over mutual funds.” http://www.marketwatch.com/story/why-financial-advisers-prefer-etfs-over-mutual-funds-2017-06-09. Accessed July 8, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE07175090C

 

3 Common Questions About Social Security

By | Planning

 

While Social Security shouldn’t be relied upon to be the sole source of income during retirement, it can play an important role in your overall financial strategy for retirement. But making sense of the basic ins and outs of Social Security can be overwhelming. Here are three questions people commonly ask as they approach retirement age:

When can I start taking benefits?

While full retirement age is 66 for people born between 1943 and 1954 and gradually increases to age 67 for those born in 1960 or later, you can start receiving Social Security benefits at age 62.1 Keep in mind, however, that there is a cost to early distribution; your benefits are reduced by about 0.5 percent for each month you receive benefits before full retirement age.2 For example, those born in 1955 with a full retirement age of 66 and two months who start taking benefits at age 62 will receive about 75 percent of the full benefit.3 

On the flip side, delaying benefits past full retirement age, up to age 70, increases your distribution amount. If the same individual in the previous example waits until age 68 to take benefits, his or her benefit will increase 8 percent each year after full retirement age. This increase continues until you reach age 70 or you start taking benefits, whichever comes first.4

What happens to my benefits when I die?

It depends. If you are married and your spouse is age 60 or older, he or she may be eligible to collect a survivor’s benefit. The benefit amount remains the same as the deceased’s amount, although that amount is reduced if benefits are started before the surviving spouse’s full retirement age.5 A spouse cannot collect both survivors benefits and retirement benefits based on their own work record. They will collect whichever benefit is higher.6

If you have a minor child or children, your surviving spouse (regardless of age) may also be eligible for a survivors benefit until the minor child turns age 16. If you have no surviving spouse or minor children, your benefit remains in the Social Security trust fund and is not paid out to any other named beneficiaries, unless they qualify under the Social Security survivors benefits eligibility rules.7

Can I work while receiving benefits?

Yes. However, if you haven’t reached full retirement age, your benefit amount will be reduced if your earnings exceed the limit. Starting with the month you’ve reached full retirement age, your benefits will not be reduced no matter how much you earn.8 The earnings limit and reduced amount vary according to your age. To find out how much your benefits might be reduced, use the Social Security earnings calculator at https://www.ssa.gov/OACT/COLA/RTeffect.html.9

Understanding Social Security can be challenging, but you don’t have to go it alone. Contact us today to learn more about how to incorporate your Social Security benefits into your complete financial strategy. We may be able to identify potential retirement income gaps and may introduce investment and insurance products as a potential solution.

 

 

 

Content prepared by Amy Ragland.

 

1 Social Security. January 2017. “Understanding the Benefits.” https://www.ssa.gov/pubs/EN-05-10024.pdf. Accessed June 20, 2017.

2 Ibid.

3 Social Security. “Retirement Planner: Benefits By Year of Birth.” https://www.ssa.gov/planners/retire/agereduction.html. Accessed June 20, 2017.

4 Social Security. “Retirement Planner: Delayed Retirement Credits.” https://www.ssa.gov/planners/retire/delayret.html. Accessed June 20, 2017.

5 Joseph L. Matthews. Caring.com. Dec. 24, 2016. “What happens to the rest of a person’s Social Security money after they die?” https://www.caring.com/questions/social-security-benefits-after-death. Accessed June 20, 2017.

6 Ibid.

7 Ibid.

8 Social Security. June 15, 2017. “What happens if I work and get Social Security retirement benefits?” https://faq.ssa.gov/link/portal/34011/34019/Article/3739/What-happens-if-I-work-and-get-Social-Security-retirement-benefits. Accessed June 20, 2017.

9 Social Security. “Retirement Earnings Test Calculator.” https://www.ssa.gov/OACT/COLA/RTeffect.html. Accessed June 20, 2017.

Financial professionals are able to provide you with information but not guidance or advice related to Social Security benefits. We are not affiliated with the U.S. government or any governmental agency.

 We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE06175080C

 

Savings and Investment Updates

By | Planning

 

The American College of Financial Services recently posted some surprising results from its Retirement Income Literacy Quiz. Nearly three-quarters of respondents ages 60 to 75 failed the test with a score of 60 percent or less.1

The quiz included topics such as which expenses are covered by Medicare and long-term care insurance and what age people should start drawing benefits from Social Security. If you’re not familiar with the answers to questions such as these, we invite you to schedule a consultation so we can help you delve into retirement planning. There are many factors to consider beyond where to invest and how much you’ve saved. Retirement is about preserving and distributing assets, as well as understanding the impact of longevity.

Let’s take a look at some other retirement-oriented questions that are important to answer. For example, do you know how long you have to work for your company before you can keep matched contributions to your 401(k) plan? Some companies that sponsor a 401(k) require employees to work around two to three years before employer-matching contributions are vested. If you leave the company before then, those matches won’t be added to your account balance — even if you maintain the plan with that employer after you go to work for another one.2

It’s worth noting that 401(k) and other employer-sponsored retirement plans may be considered for tax reform. Recent discussions have included eliminating the tax-deferred status of retirement plan contributions, which represent a four-year tab of $583.6 billion that Congress could spend elsewhere. The discussions are in the very early stages, but things can happen quickly in Washington these days, so it’s an issue worth watching.3

For those in the military, on Jan. 1, 2018, the military’s new Blended Retirement System goes into effect. Starting that day, all military personnel whose length of service spans one to 12 years will have one year to make an irrevocable choice between the old and new retirement plans. Service members who started before 2006 will automatically remain in the old plan, which offers a generous pension complete with inflation adjustments. However, anyone joining the military starting next year gets enrolled automatically in the new program, which combines reduced pension benefits with up to a 5 percent match of personal contributions to the government’s Thrift Savings Plan (TSP).4

If you haven’t saved enough money to retire yet, you may be thinking you’ll just keep working until you have enough. However, according to a recent survey of 1,002 retirees, 60 percent said the timing of their retirement was unexpected, citing reasons such as health issues, job loss or the need to care for a loved one.5 While working longer is a worthy goal, it’s good to develop a financial plan that helps provide for possible contingencies just in case you have to pivot to “Plan B.”

 

 

 

 

Content prepared by Kara Stefan Communications.

1 Walter Updegrave. Money. May 12, 2017. “Most Seniors Flunked a New Retirement Quiz. Could You Do Better?” http://time.com/money/4771461/retirement-quiz-pass-or-flunk/. Accessed May 12, 2017.

2 Emily Brandon. US News & World Report. May 8, 2017. “How Long Does It Take to Vest in a 401(k) Plan?” http://money.usnews.com/money/retirement/401ks/articles/2017-05-08/how-long-does-it-take-to-vest-in-a-401-k-plan. Accessed May 12, 2017.

3 Suzanne Woolley. Bloomberg. May 3, 2017. “What Is Washington Doing to My 401(k) Tax Break?” https://www.bloomberg.com/news/articles/2017-05-03/what-is-washington-doing-to-my-401-k-tax-break. Accessed May 12, 2017.

4 Dan Kadlec. Money. May 10, 2017. “What U.S. Military Need to Know About Their New Retirement Plan.” http://time.com/money/4767777/military-blended-retirement-system-tips-new-calculator/. Accessed May 12, 2017.

5 Charisse Jones. USA Today. June 2, 2015. “60% of Americans Have to Retire Sooner Than They’d Planned.” https://www.usatoday.com/story/money/2015/06/02/majority-of-americans-have-to-retire-sooner-than-theyd-planned/28371099/. Accessed June 2, 2017.

 

Our firm is not affiliated with the U.S. government or any governmental agency and does not provide federal benefits advice.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE06175072C

How Much Money Do You Need To Retire?

By | Planning

How much money do you need to retire? That’s about as personal a question as, “What do you look for in a spouse?” or “What is your dream job?” The answer is different for everyone.

So are questions about when you want to retire, how you want to retire (suddenly or gradually) and where you want to retire. There are vast combinations of these and many other variables that serve to make the style and level of retirement different for every individual — even within the same household.

Americans are retiring at a rate of 10,000 per day, which means a lot of people need retirement planning advice.1Financial services firms like ours develop relationships with neighbors and friends in our local community to offer personalized guidance and advice on financial matters. If you’re pondering how much money you may need to retire, please come and see us. Not only can we help you with that assessment, we create financial strategies through the use of insurance and investment products to help you work toward your retirement goals.

Fidelity recently conducted a survey that yielded wildly divergent responses in terms of how much money people think they need to retire. For example, 25 percent think they will need to have saved two to three times their annual salary during their last year of full-time work, while many financial advisors say it’s more like 10 years’ worth of salary saved. Overall, 74 percent of Americans underestimate how much they will need for a comfortable retirement.2

It’s important to keep in mind that issues may arise even if you’ve saved an appropriate amount for your household by the time you retire. Some circumstances — such as the unexpected death of one spouse before the other — could expose the need to replace a lost source of income. This is a possible circumstance where buying a life insurance policy, even long after your children have grown up and are on their own, may still be a part of your overall financial strategy, depending on your personal circumstances. At a minimum, one of the two Social Security benefits the couple was receiving will stop when one spouse dies. A life insurance payout can help augment any lost Social Security or pension benefits to help a surviving spouse maintain his or her current standard of living throughout retirement.3

While some retirement factors are personal, others may be cultural in nature. The most current available data shows that in the U.S., the average white family has more than $130,000 in retirement savings while the average African American household has only $19,000. Over time, disparities in income and personal wealth have an even more dramatic impact: By the time they enter their 60s, whites have accumulated 11 times more in savings than African Americans — on average at least $1 million more in wealth.4

Unequal pay and career opportunities also may impact a woman’s ability to save enough for retirement. To complicate matters further, women tend to live longer. A couple estimating how much they need to retire may make the assumption that they’ll need, for example, 25 years of retirement income. The husband might pass away after 15 years while the wife lives another 15 years on her own. However, their income plan may not reflect a loss of income sources once the husband dies nor increased expenses the surviving wife may incur in her later years of life.5

If you’re interested in estimating about how much money you may need to save each year, try out an online retirement calculator, like this one provided by the U.S. Financial Industry Regulatory Authority (FINRA).6 You also can contact us to schedule a more in-depth retirement analysis.

 

 

Content prepared by Kara Stefan Communications

1 Insured Retirement Institute. 2016. “Boomer Expectations for Retirement 2016.” https://www.myirionline.org/docs/default-source/research/boomer-expectations-for-retirement-2016.pdf. Accessed April 28, 2017.
2 Lee Barney. Plan Sponsor. March 6, 2017. “Most People Think They Will Need a Paltry Amount for Retirement.” http://www.plansponsor.com/Most-People-Think-They-Will-Need-a-Paltry-Amount-for-Retirement/?fullstory=true. Accessed April 28, 2017.
3 Jamie Hopkins. Forbes. April 27, 2017. “Why Life Insurance Is Essential for Retirement Planning.” https://www.forbes.com/sites/jamiehopkins/2017/04/27/why-life-insurance-is-essential-for-retirement-planning/#78b4ee9f31cd. Accessed April 28, 2017.
4 Rodney Brooks. Chicago Defender. April 28, 2017. “The African American Retirement Planning Gap.” https://chicagodefender.com/2017/04/28/the-retirement-crisis-facing-african-americans/. Accessed April 28, 2017.
5 LeAnn Bjerken. Spokane Journal of Business. April 27, 2017. “Women face unique challenges in retirement planning.” https://www.spokanejournal.com/local-news/women-face-unique-challenges-in-retirement-planning/. Accessed April 28, 2017.
6 FINRA. 2017. “Retirement Calculator.” http://apps.finra.org/calcs/1/retirement. Accessed April 28, 2017.

Life insurance policies are contracts between your client and an insurance company. Life insurance product guarantees rely on the financial strength and claims-paying ability of the issuing insurer.

Financial calculators are designed as informational tools to help you estimate answers to common financial questions. They are not intended to predict future returns or results, nor do they represent the performance of any specific investment or product.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE05175063C

The Power of Going Green

By | Planning

 Here’s a new twist to the renewable energy and save the planet story: The Kentucky Coal Mining Museum in Benham, Kentucky, has recently switched from coal to solar power to help save on operational costs.1

It just goes to show you that the power struggle over power may be better energized by not making it an “either/or” (traditional vs. renewable sources) conflict. Individuals might consider looking at their financial strategy in much the same way. For example, there are financial vehicles retirees traditionally use for income, such as government bonds, Treasury bills, CDs and money market accounts. But given the potential for higher inflation in the future and today’s longer lifespans, there is a greater call for incorporating growth opportunity in a retiree’s financial strategy.

This poses a challenging situation in that more growth potential generally involves more market risk. However, there are alternative options, such as insurance products, that can capture some of the gains of equity markets while protecting your principal from market losses, and we’d be happy to discuss them with you. Like the energy sources debate, a financial strategy may be best served by incorporating a combination of both traditional and alternative solutions.

While recent news for the coal-mining industry indicates a positive turn2, many experts believe that if the U.S. doesn’t continue to make substantial investments in renewable energy sources, we could fall behind in global competition.3 In fact, the global investment in renewable power in 2015 was more than twice that invested in new coal- and natural-gas-fired power generation. China alone represented 36 percent of that total investment.4

Speaking of global efforts, consider some of the ways other parts of the world are going green. For example, German households don’t just separate trash between garbage and recyclables; the average home has five different bins for dispersing paper, packaging, glass, compost and trash.5

And finally, studies in green trends have revealed positive effects on our health, particularly in the health of women. Research by Harvard Medical School found that women who lived among higher levels of green vegetation had lower rates of mortality. The study found that higher exposure to green landscapes was associated with lower levels of depression and increased levels of social engagement and physical activity.6

These factors may have a significant impact on longer lifespans. But it’s also interesting to note the vegetation correlation — plants have been found to remove pollutants, making them natural air filters.7 This may explain why women in the study who were continuously exposed to green environments were less likely to die of a respiratory disease.8 That’s one green benefit that can help you breathe easier.

 

 

 

Content prepared by Kara Stefan Communications.

1 Fox News. April 6, 2017. “Kentucky Coal Mining Museum Switches to Solar Power.” http://www.foxnews.com/us/2017/04/06/kentucky-coal-mining-museum-switches-to-solar-power.html. Accessed April 8, 2017.

2 John Kemp. Fortune. April 7, 2017. “Look for Coal and Mining Jobs to Come Back This Year” http://fortune.com/2017/04/07/coal-mining-jobs/. Accessed April 8, 2017.

3 Nick Stockton. Wired. March 16, 2017. “Clean Energy Could Spark a Trade War Between the US And China.” https://www.wired.com/2017/03/us-china-clean-energy/. Accessed April 8, 2017.

4 Jeff Nesbit. US News & World Report. March 15, 2017. “Clean Energy Is Seeing Monumental Job Growth.” https://www.usnews.com/news/at-the-edge/articles/2017-03-15/clean-energy-is-seeing-explosive-job-growth-dont-let-budget-kill-it. Accessed April 8, 2017.

5 Perfect Rubber Mulch. 2017. “Recycling Across the Globe.” https://static1.squarespace.com/static/5548ed90e4b0b0a763d0e704/t/58e69d90b8a79bf113147752/1491508625841/TheGlobe_by_GiuMagnani-2.jpg. Accessed April 8, 2017.

6 Elizabeth Pegg Frates, MD. Harvard Medical School. March 9, 2017. “Time Spent in ‘Green’ Places Linked With Longer Life in Women.” http://www.health.harvard.edu/blog/time-spent-green-places-linked-longer-life-women-2017030911152?utm_source=twitter&utm_medium=socialmedia&utm_campaign=030917&utm_content=blog. Accessed April 8, 2017.

7 Melanie Pinola. Life Hacker. May 20, 2015. “This Graphic Shows the Best Air-Cleaning Plants, According to NASA.” http://lifehacker.com/this-graphic-shows-the-best-air-cleaning-plants-accord-1705307836. Accessed April 13, 2017.

8 Elizabeth Pegg Frates, MD. Harvard Medical School. March 9, 2017. “Time Spent in ‘Green’ Places Linked With Longer Life in Women.” http://www.health.harvard.edu/blog/time-spent-green-places-linked-longer-life-women-2017030911152?utm_source=twitter&utm_medium=socialmedia&utm_campaign=030917&utm_content=blog. Accessed April 8, 2017.

 

 

Guarantees and protections provided by insurance products including annuities are backed by the financial strength and claims-paying ability of the issuing insurance carrier.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

AE04175044C

 

 

Best Laid Plans: What Can Derail Retirement?

By | Planning

From: AE Wealth Management

We often fall into a trap where we think we have all the bases covered. Take retirement planning, for example. You can plan for the lifestyle you want. You can plan for the income you need. You can even stash away extra funds for unexpected expenses retirees typically encounter. But can you truly plan for every variable?

There are many threats than can derail even the most solid retirement plan. Here are three of the most common:

1. Underestimating income needs

2. Withdrawing more money than you should

3. Overexposure to market risk

Should your retirement plan misfire on any of these fronts, you could outlive your savings.

Piecing together an accurate retirement plan is a little like putting together a puzzle without having the finished picture to refer to: You don’t know if you’ve got it right until you get to the end.

Too often, people don’t realize they missed a base until they’re rounding their way to home plate.

To Read More Click Here.