Assessing Risk in Retirement Income

By | Investments

When it comes to investing, there’s no such thing as a “safe bet.” Every type of financial vehicle has some level of risk, even checking and savings accounts. Back in the 1920s, people believed that the safest place to keep their money was a bank, and they were right. But as they witnessed during the Great Depression, even those assets were not 100 percent safe. Bank runs caused banks to deplete their cash holdings, and they had to call in loans and liquidate assets to try to keep up with withdrawal demands, which subsequently led to bank failures.1 In response, the government created the Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $250,000 per depositor, per FDIC-insured bank, per ownership category.2

Throughout history, bank deposit accounts have generally been considered the safest place to keep assets. However, today’s longer lifespans illustrate that risk takes many forms, including the potential risk of outliving your money if you don’t save enough, have a well-diversified financial portfolio to help outpace inflation and seek out multiple sources for reliable income streams. We can recommend a variety of strategies to help retirees pursue each of these goals, based on individual circumstances. Give us a call, and let’s discuss your options.

Consider even Social Security. The agency projects that by 2034, its Trust Fund will be reduced to the point where it can pay out only 74 percent of promised benefits to retirees. While it’s unlikely this safety net will collapse, Congress will need to take steps to keep the fund fully solvent.3

However, individuals who invest in 401(k)s should be aware that even if their company closes or goes bankrupt, vested 401(k) assets belong to the account owner; the employer or the employer’s creditors can’t touch them.4

Another factor that can potentially affect your retirement assets is the impact long-term inflation can have on cost of living expenses for people who spend 20 to 30 years or more in retirement. Inflation has remained low for many years, and some market experts believe that, as a result, many investors are not well-prepared for a resurgence of inflation.5

With the knowledge that investing offers the possibility of growth but also the risk of loss, it’s a good idea to consider working with a financial advisor to help tailor a financial portfolio to your specific goals, timeline and tolerance for different types of risk. Your financial advisor may also suggest annuities, and although they are not investments, some annuity contracts credit interest earnings that are linked to the performance of an external market index. These types of annuities, often referred to as fixed index annuities, offer a combination of higher interest growth potential and guaranteed income. The guarantees are backed by the insurance company so it’s important to check out the credit rating and financial strength and experience of the issuing insurer.

 

Content prepared by Kara Stefan Communications.

1 History.com. “Bank Run.” http://www.history.com/topics/bank-run. Accessed Aug. 6, 2017.

2 Federal Deposit Insurance Corporation. June 3, 2014. “Deposit Insurance FAQs.” https://www.fdic.gov/deposit/deposits/faq.html. Accessed August 15, 2017.

3 Chris Farrell. Forbes/Next Avenue. June 24, 2016. “The Truth About Social Security’s Solvency And You.” https://www.forbes.com/sites/nextavenue/2016/06/24/the-truth-about-social-securitys-solvency-and-you/#2590b10b2199. Accessed Aug. 14, 2017.

4 Dana Anspach. The Balance. Nov. 22, 2016. “If My Company Closes, What Happens to My 401k?” https://www.thebalance.com/if-my-company-closes-what-happens-to-my-401k-2388225. Accessed Aug. 14, 2017.

5 Rebecca Ungarino. CNBC. Aug. 5, 2017. “Inflation isn’t stirring, but still the biggest risk to investors even as it’s ‘least apparent’: Brown Brothers.” https://www.cnbc.com/2017/08/05/with-inflation-dormant-investors-downplay-risks-to-the-economy.html. Accessed Aug. 6, 2017.

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. 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.

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.

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.

AE08175096C

 

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

Create Your Own Portfolio Benchmark

By | US News

An Excerpt from the Article:

Much of the heavy lifting of investing centers on choosing the right assets for your portfolio. How those investments perform can influence your short-term decision-making and long-term outcomes.

Choosing a benchmark to measure your portfolio’s performance against is standard practice for many investors. For example, the Standard and Poor’s 500 index is a commonly used benchmark. Some investors may measure their portfolios against a specific asset class or sector. Others may use a target-date fund based on their retirement age as a performance guideline.

A written plan keeps you grounded. Discipline and commitment are critical to investing. An investment policy statement (IPS) can lay the groundwork for developing a personal benchmark. This written plan for managing your portfolio is something every investor needs because it puts you and your financial advisor on the same page regarding your expectations and comfort level, says Ken Heise, a financial advisor with Heise Advisory Group in St. Louis.

How Much Retirement Income Should Come From Savings?

By | Uncategorized

According to the Bureau of Economic Analysis, Americans’ personal savings rates are about half of the amount they once were. For the past few years, the personal savings rate has hovered around 5 percent, but that’s still significantly lower than the savings rate from 1950-2000, which averaged 9.8 percent.1

For many retirees, a big concern during retirement is running out of money. So how can you help make your retirement savings last? We help clients create individual financial strategies using insurance and investment products — and the strategy isn’t the same for everyone. For some, it may be maintaining an annual withdrawal rate of between 4 to 5 percent from their investments.2 For others, it might make sense to consider working full-time longer, taking a part-time job during retirement or even repositioning a portion of assets into an annuity that can provide income guaranteed by the issuing insurance company.

However, each of these strategies comes with advantages and drawbacks that could affect long-term financial goals. That’s why we work closely with each client to customize a retirement income strategy based on their specific financial situation.

Fewer retirees have a pension plan to help fund their retirement, which can mean personal savings — ranging from an investment portfolio to IRAs to company 401(k) plans — may now be a primary source for retirement income.

Social Security provides 34 to 40 percent of retirement income for the average retiree,3 and that share is higher for elderly unmarried women; nearly half of this demographic relies on Social Security benefits to provide 90 percent or more of their income.4

The Center for Retirement Research at Boston College recently conducted a study to find out just how much Americans may need to rely on 401(k) plans for retirement income. Here are the results:5

  • Low-income households: 25%
  • Middle-income households: 32%
  • High-income homes: 47%

While those are general numbers, it’s important to point out that, overall, women are 80 percent more likely to live in poverty during retirement than men. There’s a big combination of factors that cause this, including lower pay, time out of the workforce for caregiving and the fact that women tend to live longer. Other ancillary variables can make the situation worse, such as divorce, loss of spouse and being forced to retire due to poor health.6

One way individuals are shoring up their savings is by working longer. If you plan to continue working full-time or part-time in retirement, you won’t be alone. As of May 2016, there are approximately 9 million U.S. employees who are 65 and older.7

 

Content prepared by Kara Stefan Communications

 

1 NerdWallet. Aug. 16, 2017. “Average American Saves Less Than 5%; See How You Stack Up.” https://www.nerdwallet.com/blog/banking/american-personal-saving-rate/. Accessed Aug. 21, 2017.

2 Fidelity. June 5, 2017. “How can I make my savings last?” https://www.fidelity.com/viewpoints/retirement/how-long-will-savings-last. Accessed July 13, 2017.

3 American College of Financial Services. Dec. 28, 2016. “How much of your client’s retirement income should come from a 401(k)?” http://knowledge.theamericancollege.edu/blog/how-much-of-your-clients-retirement-income-should-be-from-a-401k. Accessed July 13, 2017.

4 Anna-Louise Jackson. NerdWallet. March 31, 2017. “3 Ways Women Can Bridge the Retirement Gap.” https://www.nerdwallet.com/blog/investing/3-ways-women-can-bridge-the-retirement-gap/?trk=nw-wire_305_375718_26766. Accessed July 13, 2017.

5 American College of Financial Services. Dec. 28, 2016. “How much of your client’s retirement income should come from a 401(k)?” http://knowledge.theamericancollege.edu/blog/how-much-of-your-clients-retirement-income-should-be-from-a-401k. Accessed July 13, 2017.

6 PBS Newshour. July 10, 2016. “Women more likely than men to face poverty during retirement”. http://www.pbs.org/newshour/rundown/women-more-likely-than-men-to-face-poverty-during-retirement/. Accessed August 21, 2017.

7 NerdWallet. Aug. 16, 2017. “Average American Saves Less Than 5%; See How You Stack Up.” https://www.nerdwallet.com/blog/banking/american-personal-saving-rate/. Accessed Aug. 21, 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.

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.

 

AE08175097C

 

 

Potential Reasons to Put the Retirement Countdown on Hold

By | Uncategorized

Retirement is still something most people look forward to, but over the years, some of the reasons for anticipation have dwindled. During the industrial age, more people worked jobs requiring manual labor that were hard on the body.

By mid-century, many rank-and-file workers could look forward to a pension waiting for them upon retirement. Workers simply had to accumulate enough credits to retire knowing that a pension would provide income for the rest of their lives.

Now, physically demanding jobs are more of a rarity for pre-retirees, and modern-day ergonomic training is available to help ease the aches and pains of the daily grind. Pensions are also more uncommon, giving way to employee-contribution retirement vehicles like 401(k)s. Instead of looking forward to retiring, working longer can enable employees to save and invest longer.1

Workers today understand they may have to provide for a substantially greater share of their retirement income thanks to longer average lifespans. There’s also the possibility retirement could last multiple decades, and some retirees might miss the daily intellectual and social engagement a job provides.

This makes retirement income planning different than, say, college planning. When saving for a child’s education, parents have the advantage of knowing when the student will go to college and generally how many years he or she will be there. The “when” and “how long” are unknown factors when it comes to retirement.

As financial professionals, these are the types of variables we help address when advising clients. It is important to have the experience of helping clients make financial decisions and contingency plans throughout their retirement — experience we can use to guide the financial strategies we help our clients create every day.

Here are some other reasons today’s workers may be inclined to keep working past the traditional retirement age:

Increase Savings

According to a recent survey, the most common financial reasons older employees work in retirement are to:2

  • Give their nest egg more time to grow (19%)
  • Earn “fun money” for discretionary purposes (31%)
  • Leave a better legacy to heirs or charities (6%)

Increase Social Security Benefit

Sometimes it’s necessary for retirees to start taking Social Security benefits early, but that doesn’t mean they can’t continue or go back to work; nor does it mean they necessarily lock into a lower benefit for life. If you earn more than $16,920 in 2017 while receiving benefits prior to full retirement age, Social Security will deduct one dollar in benefits for every two dollars in earnings above $16,920.3 However, once you reach full retirement age, your benefit will be increased to account for benefits withheld due to earlier earnings and working once you reach full retirement age doesn’t affect your benefits. The agency will also recalculate your benefit based on your “new” highest 35 years of annual earnings, which could increase your overall benefit.4

Company Benefits

Some seniors continue to work because their employer’s health insurance is better and less expensive than Medicare.5 Please note that even if you have coverage through a current or former employer, you may still need to make some important Medicare enrollment decisions.

Switch Jobs, Work Longer

Some people retire because they dislike their job. However, a new study revealed that when workers take the initiative to switch to a more enjoyable position say, in their 50s, they tend to work longer — increasing both their income potential and job satisfaction. That’s no small improvement on both fronts.6

Feel Valued

Retirees have been known to go back to their old jobs because they get bored. At least one retiree observed that returning to work in a part-time capacity not only led him to enjoy the job more, but he felt better valued by his employer.7 We all know that sometimes we don’t appreciate what we have until it’s gone, and that can certainly apply to employers.

 

 

 

 

Content prepared by Kara Stefan Communications

 

1 Kim Blanton. Center for Retirement Research at Boston College. May 25, 2017. “Fewer Older Americans Work Part-time.” http://squaredawayblog.bc.edu/squared-away/fewer-older-americans-work-part-time/. Accessed July 10, 2017.

2 Emily Brandon. U.S. News & World Report. Feb. 17, 2017. “8 Reasons to Work in Retirement.”

https://money.usnews.com/money/blogs/planning-to-retire/articles/2017-02-17/8-reasons-to-work-in-retirement. Accessed July 10, 2017.

3 Social Security Administration. 2017. “Fact Sheet: 2017 Social Security Changes.” https://www.ssa.gov/news/press/factsheets/colafacts2017.pdf. Accessed Aug. 7, 2017.

4 ElderLawAnswers.com. April 1, 2016. “Incentives to Keep Working While You Collect Social Security.” https://www.elderlawanswers.com/incentives-to-keep-working-while-you-collect-social-security-15312. Accessed July 10, 2017.

5 Jean Chatsky. CNBC. Jan. 20, 2017. “Retirement doesn’t have to be the end: How working longer benefits you.” http://www.cnbc.com/2017/01/20/retirement-doesnt-have-to-be-the-end-how-working-longer-benefits-you.html. Accessed July 10, 2017.

6 Kim Blanton. Center for Retirement Research at Boston College. March 23, 2017. “The Benefits of Late-career Job Changes.” http://squaredawayblog.bc.edu/squared-away/the-benefits-of-late-career-job-changes/. Accessed July 10, 2017.

7 Kim Blanton. Center for Retirement Research at Boston College. April 20, 2017. “A Californian’s ‘Retirement’ is Part-Time.” http://squaredawayblog.bc.edu/squared-away/a-californians-retirement-is-part-time/. Accessed July 10, 2017.

 

We are able to provide you with information but not guidance or advice related to Social Security and Medicare benefits. Our firm is 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.

 

 

 

AE07175091C

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

 

Preventing Elderly Financial Abuse

By | Food for thought

A recent study by the Center for Retirement Research at Boston College concluded that many retirees who do not suffer from any cognitive impairment can still manage their money through their 70s and 80s.1 The study reports that financial capacity relies on accumulated knowledge and that knowledge stays mostly intact as we age.

However, the study points out that it generally is not a good idea to start managing financial decisions in your late 70s and 80s if you haven’t had experience doing this before — such as after the death of a spouse who handled the finances.2 We work closely with our clients to help them develop financial strategies designed to last a lifetime, with the goal of reducing the need to make dramatic financial changes later in life. However, we are here to address any questions or concerns of our clients no matter what stage of their financial planning. Please give us a call; we’re here to help.

Having a plan for late-stage financial management is important due to the increase in elderly financial fraud. With more than 45 million seniors in America, this is a large and tempting market for scammers. One study estimated that about 5 million older Americans are financially exploited each year. In New York state alone, allegations of elderly financial abuse spiked by more than 35 percent between 2010 and 2014.3

In response to this growing problem, several government regulatory agencies have stepped up efforts to help prevent and address elder financial abuse, including the following:

  • The SEC requires brokers to make “reasonable efforts” to identify a “trusted contact” for investment accounts and allows them to prevent the disbursement of funds from the account and notify the trusted contact if the broker suspects abuse.4
  • The Financial Industry Regulatory Authority, or FINRA, set up a senior help line at 844-57-HELPS (844-574-3577)5
  • In 2016, four state legislatures approved a rule requiring advisors to notify adult protective services and state regulators if they detect abuse; 10 more states are expected to adopt similar rules this year, and three other states already had such rules in place.6

According to the National Committee for the Prevention of Elder Abuse, some of the most common ways the elderly are taken advantage of financially are: forging their signature; getting them to sign a deed, will or power of attorney through deception, coercion or undue influence; using their property or possessions without permission; and telemarketing scams. Some of the most likely perpetrators of elder financial abuse are: family members; predatory people who seek out vulnerable seniors; and unscrupulous business professionals.7 If you believe you are a victim of fraud, contact your local law enforcement, state agency on aging and/or a community senior services group.

 

Content prepared by Kara Stefan Communications.

1 Anek Belbase and Geoffrey T. Sanzenbacher. Center for Retirement Research at Boston College. January 2017. “Cognitive Aging and the Capacity to Manage Money.” http://crr.bc.edu/briefs/cognitive-aging-and-the-capacity-to-manage-money/. Accessed June 22, 2017.

2 Ibid.

3 Christine Idzelis. Investment News. April 23, 2017. “Advisers on front lines in battle against financial abuse of the elderly.”  http://www.investmentnews.com/article/20170403/FEATURE/170339977. Accessed June 22, 2017.

4 Mark Schoeff Jr. Investment News. April 3, 2017. “Advisers taking steps to protect elderly.” http://www.investmentnews.com/article/20170403/FREE/170339979?utm_campaign=socialflow&utm_source=twitter&utm_medium=social. Accessed June 22, 2017.

5 FINRA. “FINRA Securities Helpline for Seniors.” http://www.finra.org/investors/highlights/finra-securities-helpline-seniors. Accessed June 22, 2017.

6 Mark Schoeff Jr. Investment News. April 3, 2017. “Advisers taking steps to protect elderly.” http://www.investmentnews.com/article/20170403/FREE/170339979?utm_campaign=socialflow&utm_source=twitter&utm_medium=social. Accessed June 22, 2017.

7 National Committee for the Prevention of Elder Abuse. “Financial Abuse.” http://www.preventelderabuse.org/elderabuse/fin_abuse.html. Accessed June 22, 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.

AE07175084C

The Mental Mistake Hurting Millennial Investors

By | US News

An Excerpt from the Article:

A decade after the economic collapse, a new generation of investors are still feeling its impact.

Despite having been mainly on the sidelines during the peak of the financial crisis, 82 percent of millennials say their investment decisions are influenced by it, according to a recent Legg Mason survey. An even larger share – 85 percent – say they invest conservatively, making millennials the most risk-averse generation of investors

Accepting that the market periodically swings widely could ease fears and curb emotional decision-making. As your mindset shifts, your risk tolerance may shift along with it. Ken Heise, a financial advisor with Heise Advisory Group in St. Louis, says a down market can benefit younger investors. When stock prices drop, that’s the time to buy, Heise says. Rather than fearing market cycles, millennials “should seize the opportunity and turn it into an advantage.

“Smooth out the roller-coaster ride. Learning to manage risk will help millennials brave the ups and downs of the market. A diversified portfolio, Heise says, can “smooth out the roller-coaster” ride, easing investor anxiety.

Kirkwood Des Peres Area Chamber of Commerce
International Association for Registered Financial Planners