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Retirement Planning

Women & Retirement Planning: 2 Unique Challenges

Who handles the money in your household? If your home is like most, it depends on the kind of financial planning involved. A new study from UBS found that 85 percent of married women handle the day-to-day financial management in their household. However, the same survey found that only 23 percent of married are in charge of their long-term planning. The remainder defer that work to their husband.1

 

Why do so many women defer their long-term financial planning to their spouse? According to the study, 82 percent of women said they think their spouse is more knowledgeable about long-term financial planning.1

 

Partnership is always important in marriage, especially when it comes to financial planning. Finances are often a major cause of arguments and disagreements, so it’s helpful for both spouses to be involved in decision-making.

 

It’s also important for women to take control of their financial future because they may face challenges and risks that men do not face. Below are two such challenges. If you haven’t developed a long-term financial strategy, now may be the time to do so. A financial professional can help you get started.

Longevity

 

People are living longer than ever, primarily because of advances in health care and increased understanding about health and nutrition. However, women usually have the edge on men in terms of life expectancy.

 

According to the Society of Actuaries, the average 65-year-old man has a 50 percent chance of living to 87 and a 25 percent chance of living to 92. However, a 65-year-old woman has a 50 percent chance of living to 92 and a 25 percent chance of living to 96.2

 

This means that many women can expect to outlive their husbands. While that idea may not be pleasant to think about, it’s an important planning consideration. A longer lifespan means a longer retirement. That means you’ll need to make your assets and income last longer so you can live comfortably.

Career Earnings

 

Many women also may earn less over their career than their husbands or even their male counterparts in the workplace. According to a study from PayScale, a salary website, the average woman hits her peak in annual earnings at age 44. Men, on the other hand, hit their peak at age 55.3 PayScale also found that women earn less over the course of their career. The average woman has a peak annual income of $66,700. Men peak at just over $100,000.3

 

There are a number of reasons why this earnings gap exists. Some women may take time off to care for children. Others may sacrifice their career so their husbands can pursue a more demanding and time-consuming career. Others may suffer from the well-known pay gap that exists in the United States.

 

Regardless of the reason, it’s important for women to know that the earnings gap exists so they can plan accordingly. Career earnings often translates into savings. A woman who has less career earnings may also have fewer assets saved for retirement.

 

Ready to take control of your long-term financial planning? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

 

 

1https://www.thinkadvisor.com/2019/03/07/many-women-defer-to-spouses-on-big-financial-decisions-ubs/

2https://www.fidelity.com/viewpoints/retirement/longevity

3https://www.cnbc.com/2019/06/11/gender-pay-gap-womens-earnings-peak-11-years-before-mens-payscale.html

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

19093 – 2019/8/1

How Retirement Has Changed Over the Last 30 Years

Not Your Parents’ Retirement

The world has changed significantly in the past few decades. Thirty years ago, there weren’t cell phones. Computers weren’t widely owned. There was no Uber or Airbnb. Social media was unheard of and virtual reality was the stuff of science fiction.

The world changes quickly, and not just in terms of technology. Retirement has changed significantly in the past few decades as well. The next generation of retirees will face challenges that previous generations didn’t face.

The good news is that you can overcome these potential challenges if you plan ahead. Below are a few ways in which retirement has changed over time. Do you have a strategy to address these challenges? If not, now may be the time to develop one. A financial professional can help you get started.

Longevity

 

People are living longer than ever. Usually, that’s a good thing, but a long lifespan can create financial challenges. According to the Society of Actuaries, today’s retirees can plan on a long lifespan. They estimate that a 65-year-old couple has a 50 percent chance of one spouse living to age 94 and a 25 percent chance of one spouse living to 98.1

If you retire in your mid-60s, there’s a chance your retirement could last 30 years. That means you’ll need your assets and your income to last that long. That could be difficult, especially if you overspend in the early years of retirement.

Income Sources

 

There was a time when retirees could count on income from Social Security and an employer defined benefit pension to fund their retirement. Those days are long gone. Defined benefit pensions are quickly disappearing from employer benefit options. In fact, the percentage of Fortune 500 companies that offer defined benefit pensions has dropped from 59 percent in 1998 to 16 percent in 2017.2

While you can likely count on Social Security income, it may not be enough to fund a full retirement. That means you may need to take withdrawals from your savings and investments to generate income. You’ll likely need an income strategy to make sure you savings lasts through a long, fulfilling retirement.

Health Care

 

Health care costs have risen dramatically in recent decades. Medicare helps cover some of those costs, but it doesn’t cover everything. In fact, Fidelity estimates that the average retiree will spend $285,000 out-of-pocket on healthcare.3 That figure is above and beyond what is covered by Medicare, and includes things like premiums, deductibles, copays and more.

How do you plan for high out-of-pocket healthcare costs? One effective strategy is to budget for them. You also may want to consider an investment strategy that generates enough income to cover potential health care costs.

Complexity

 

Retirement income. Healthcare costs. Budgeting. Longevity. How do you plan a retirement strategy that considers all these potential challenges and more? For many retirees, the complexity of managing these issues is the real challenge.

Fortunately, you can address retirement issues head-on by developing a personalized retirement income plan. A retirement plan can help you project your income, budget your spending, and make sure that your assets last as long as you need them to.

Ready to plan for a 21st-century retirement? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.

1https://www.fidelity.com/viewpoints/retirement/longevity
2https://www.planadviser.com/mere-16-fortune-500-companies-offer-db-plan/
3https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs\

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

19094 – 2019/8/1

What is Your Income Floor in Retirement?

If you’re preparing for retirement, you’ve probably heard of the “retirement number.” It’s a commonly used benchmark to track retirement readiness. Essentially, it’s the amount of money you need to have saved before you retire.

 

The retirement number may not be the most effective benchmark, though. It’s a helpful target for knowing how much money you need to save before you retire. But what happens after you retire? It’s possible you may live several decades in retirement. If you spend too much money, especially in the early years, you could deplete your assets.

 

There may be another target that could help you manage your spending and protect your assets through retirement. It’s called an “income floor.” Your income floor is the minimum income you need to cover your most basic expenses and standard of living. It’s the amount you need to live comfortably.

 

The idea is to cover your income floor with sources that are guaranteed* for life, like Social Security or defined benefit pension benefits. If your basic expenses are covered, you can then use your savings to fund only your discretionary expenses, like shopping, travel, and more. In short, guaranteed* income covers your mandatory costs and your savings covers your fun spending.

How to Determine Your Income Floor

 

The first step is to estimate your income floor in retirement. A budget can be a helpful tool in this process. Start by listing all of your current expenses and then identify those that are necessary for you to maintain a comfortable standard of living. Your necessary expenses may include things like housing costs, car payments, utilities, groceries, and more. Look for those expenses that you couldn’t live without. Things like shopping or travel probably won’t make the cut.

 

Once you’ve identified your necessary expenses, estimate your current monthly spending in those categories. Will your spending change between now and retirement? For example, perhaps inflation will increase your energy or food costs. Maybe your debt costs will go down if you pay off balances before retirement. Think about how these expenses may change in the future.

 

Finally, look at steps to reduce your necessary expenses. For example, you could pay off your mortgage or even downsize to a smaller home. You and your spouse could go down to one car in retirement. Perhaps you could refinance outstanding debt to reduce your interest expense. The lower your necessary expenses, the easier it will be to cover them with guaranteed* income.

 

Tips to Fund Your Income Floor

 

There are a few ways to create guaranteed* income to cover your income floor. One is with Social Security benefits. Nearly 90% of adults over the age of 65 receive Social Security benefits.1 It’s a valuable income source for many retirees.

 

While Social Security benefits are undoubtedly helpful in retirement, they may not cover your entire income floor. The average benefit is just over $1,400 per month.1 If you have a lean budget, that may cover your full necessary expenses. However, for many retirees, Social Security only covers a portion of their budget.

 

Defined benefit pension benefits could also help you cover your income floor. However, many companies no longer offer pensions. A recent study found that only 18% of Fortune 500 companies offer pensions. That’s down from 59% in 1998.2

 

So, if Social Security doesn’t cover your income floor and you don’t have a defined benefit pension, what are your other options? One possibility is an annuity. There are a variety of different annuities that offer income that is guaranteed* for life.

 

One option is an immediate annuity. You contribute a lump sum into the annuity contract. The annuity provider then converts that lump sum into an income stream based on your life expectancy. The income is guaranteed* for life, no matter how long you live.

 

Another option is a deferred annuity with a guaranteed* withdrawal rider. Again, you contribute a lump sum into the contract. Your funds have the opportunity to grow over time. However, you also have the ability to withdraw a certain amount per year. As long as you stay within the withdrawal limits, your income is guaranteed* for life.

 

Ready to develop a strategy to fund your income floor? Let’s talk about it. Contact us today at Retirement Peace Project. We can help provide further education on  estimating your income floor amount and creating a plan. Let’s connect soon and start the conversation.

 

 

1https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf

2https://www.planadviser.com/mere-16-fortune-500-companies-offer-db-plan/

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

 

19006 – 2019/6/27

Do You Know Your Risk Tolerance?

In an ideal world, you could save money and prepare for retirement without any risks or threats. Unfortunately, risk is a natural part of any financial strategy. There are a wide range of risks that could potentially derail your plan. Medical emergencies, disability, job loss, and more could cut into your savings and limit your ability to retire comfortably.

Your savings and investments also face market risk. Volatility is a component in nearly every financial market. Assets rise in value, but they can also fall. Depending on your allocation, those declines could put your investments at risk.

Risk and return also tend to go hand-in-hand. Many of the assets that have the highest long-term historical returns also have the high levels of volatility. Assets that tend to have little risk exposure also may have limited return potential.

How do you grow your assets without taking on too much risk exposure? One effective strategy is to align your allocation with your risk tolerance. Your risk tolerance is your own personal threshold for downside movement. Everyone’s risk tolerance is different. It should be based on your specific needs and goals, as well as other factors.

Is your allocation aligned with your risk tolerance? Do you know your risk tolerance level? If not, now may be the time to review your plan. A financial professional can help you determine how much risk is right for you. Below are a few factors to consider as you get started:

 

Goals

 

Any risk tolerance analysis should start with a review of your goals. Why are you saving money? The size of your goal will influence your strategy.

For example, assume you’re saving for retirement, which is a sizable goal. You’ll likely need to grow your money over a long period of time to reach your objective, so you may need to take some risk to get your desired level of return.

However, assume you’re saving for a down payment for a home purchase. In this case, growing your money may not be as important as simply protecting it. An account or asset with little or no risk could be more appropriate for a goal of that size.

 

Time Horizon

 

When will you actually need to use your savings? The amount of time you have until you need to use your assets is known as your time horizon. The longer your time horizon, the more tolerance you may have for risk.

Assume you intend to retire in five years. You may not have much tolerance for market loss. If the market declines, you may not have time to participate in the recovery. On the other hand, assume you aren’t retiring for 30 years. If the market declines, you have plenty of time to recover, so it may make sense to take on greater risk exposure in the pursuit of higher returns.

 

Personal Preference

 

Every person is different, so there’s no universal correct answer on how much risk is appropriate. Your personal preferences should be an important consideration. Some people are naturally more comfortable with risk than others.

How do you feel when your investments decline in value? Does it cause stress and anxiety? Or does it barely register on your radar? If your risk level keeps you up at night or causes you to question your strategy, that could be a sign that you are allocated too aggressively.

 

Ready to learn more about your risk tolerance? Let’s talk about it. Contact us today at Retirement Peace Project. We can provide further education on needs and implementing a strategy. Let’s connect soon and start the conversation.

 

19014 – 2019/7/1

 

Do NCAA Tournament Winners Predict Market Returns?

If you’re a college basketball fan, this is your favorite time of year.

 

March Madness is in full swing. That means a full schedule of games every weekend, buzzer-beating finishes and unbelievable upsets. If you’re like many fans, your bracket is already a mess.

 

It’s nearly impossible to predict the outcome of the NCAA Tournament. According to a Duke University professor, the odds of predicting a perfect bracket are 1 in 2.4 trillion.1 Even getting the Final Four correct can be difficult: In last year’s Capital One Bracket Challenge, only 54 entries had the Final Four teams correct.2

 

It may also feel like it’s impossible to predict the movement of the financial markets. The major indexes can swing in any direction on any given day, influenced by an infinite number of events and updates from around the world. In the short term, it’s virtually impossible to predict where the markets are headed.

 

But can you use the winner of the NCAA Tournament to make a market prediction? Researchers from Schaeffer’s Investment Research recently studied S&P 500 index returns from April to December along with past NCAA Tournament champions to see if there’s any correlation between the two.

 

The research found that the market has consistently had positive annual returns when the NCAA Tournament champion has come from the Southeastern Conference (SEC). That’s happened 11 times. The S&P 500 has gone on to have a positive return the rest of the year in each of those instances. The median return from April to December when the champion is an SEC team is 9.56 percent.3

 

The market has also had positive returns at least 75 percent of the time when the champion has come from the ACC, Pac-12 or Big East. The ACC and Pac-12 have produced the most champions, with each conference winning 16 times. During years in which the ACC has won, the market had a positive return 75 percent of the time, with a median return of 9.59 percent. When the Pac-12 wins, the market has been positive 88 percent of the time, with a median return of 8.91 percent.3

 

When does the S&P 500 have a negative return from April to December? When the NCAA Tournament winner comes from the Big Ten Conference. In those years, the market has been positive only 36 percent of the time, with a median return of -4.76 percent.3

 

Coincidence Isn’t the Same Thing as Correlation

 

Of course, just because these patterns exist doesn’t mean there’s an actual correlation between the tournament winner and the returns of the market. There’s no factor tying the championship outcome to the S&P 500, so these patterns are entirely coincidental. They shouldn’t be used to try to make any kind of market predictions.

 

If you want to stabilize your investment performance and reduce volatility, there are other steps you can take besides relying on the outcome of a basketball tournament. Below are a few steps to consider:

 

Review your allocation. As you get older and approach retirement, it’s natural to become less tolerant of risk. You may not be able to stomach the ups and downs of the market like you used to. That’s understandable. After all, you’ll need to rely on those savings for income in the near future.

 

Now could be a good time to review your allocation with your financial professional. It’s possible that your current allocation isn’t right for your goals, needs and risk tolerance.

 

Rebalance. The market moves up and down, but not all asset classes move in the same direction at the same time. As some asset classes increase in value, others decline. That means your actual allocation is always in a state of flux. Over time, it may become far different than your desired allocation.

 

It’s helpful to regularly rebalance your portfolio so it always adjusts back to your target allocation. When you rebalance, you sell some of the assets that have increased in value and buy those that have declined. That can help you lock in gains and stay aligned with your desired strategy.

 

Use an annuity. An annuity can be an effective tool to potentially increase your assets but also limit downside risk. For example, a fixed indexed annuity pays an interest rate based on the performance of an index, like the S&P 500. The better the index performs over a defined period, the higher your rate. If it performs poorly, you may get little or no interest.

 

In a fixed indexed annuity, however, your principal is guaranteed*. There’s no risk of loss due to market performance. That means you get upside potential without the volatility.

 

Contact us today at Retirement Peace Project to learn more.

 

1https://ftw.usatoday.com/2015/03/duke-math-professor-says-odds-of-a-perfect-bracket-are-one-in-2-4-trillion

2https://www.ncaa.com/news/basketball-men/bracketiq/2018-03-26/54-ncaa-brackets-correctly-predicted-final-four

3https://www.schaeffersresearch.com/content/analysis/2017/03/23/march-madness-indicator-why-the-stock-market-should-root-for-kentucky

 

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

 

18583 – 2019/2/27

4 Tax Tips to Consider for 2019

The deadline for filing your 2018 tax return is right around the corner. Have you filed your return yet? If so, were you satisfied with the outcome? Or were you surprised by how much you paid in taxes last year?

The recent tax law dramatically changed the tax code. For many Americans, the law means reduced taxes. If you don’t plan accordingly, however, it’s possible that you could owe money to the IRS after your filing. It’s also possible that you could pay more in taxes than necessary.

Now is a great time to review your strategy and identify action steps that could reduce your tax exposure. If you haven’t reviewed your financial plan recently, you may be missing out on a number of tax-efficient tools and products. Below are a few tips to consider as you review your taxes:

Review your deductions.

 

One of the biggest changes of the Tax Cuts and Jobs Act is the elimination and reduction of a wide range of deductions. Most itemized deductions were eliminated, including those for alimony payments and interest on many types of home equity loans. Caps were also implemented for state, local and property tax deductions. The law also eliminated personal exemptions.1

To make up for these changes, the law more than doubled the standard deduction.1 For many people, that means it will be more advantageous to take the standard deduction than to itemize deductions. If you’ve planned your spending based on the ability to itemize and deduct certain expenses, you may want to reconsider your strategy. Those deductions may no longer be allowed under the new law.

Check your withholding amount.

 

The law also reduced tax rates across the board and changed the income brackets for each rate level. As a result, many employers adjusted their withholding amounts. Not all did, however. And some may have adjusted their withholdings incorrectly.

In fact, according to a study from the Government Accountability Office, 30 million people, or just over 20 percent of taxpayers, are not withholding enough money from their paychecks to cover taxes.2 Are you part of that group? If you’re not sure, talk to your financial professional about whether you should increase your withholdings.

Maximize your tax-deferred savings.

 

Tax deferral is a great way to reduce current taxes and save for the future. In a tax-deferred account, you don’t pay taxes on growth in the current year as long as your money stays in the account. You may face taxes in the future when you take a distribution.

Many qualified retirement accounts, such as 401(k) plans and IRAs, offer tax-deferred growth. In 2019 you can contribute up to $19,000 to your 401(k), plus an additional $6,000 if you are age 50 or older. You can put as much as $6,000 into an IRA, or up to $7,000 if you’re 50 or older.3

Want more tax deferral beyond your 401(k) and IRA? Consider a deferred annuity. Annuities offer tax-deferred growth. They also offer a variety of ways to increase your assets. Some pay a fixed interest rate and have no downside risk. Others let you participate in the financial markets according to your risk tolerance and goals. A financial professional can help you find the right annuity for your strategy.

Develop sources of tax-efficient retirement income.

 

Taxes don’t stop when you quit working. If you’re approaching retirement, now may be the time to plan ahead and minimize your future tax exposure. You can take steps today to create tax-efficient income for your retirement.

For example, distributions from a Roth IRA are tax-free assuming you’re over age 59½. You may want to start contributing to a Roth or even consider converting your traditional IRA into a Roth.

You can also use a permanent life insurance policy as a source of tax-efficient income. You can withdraw your premiums from your life insurance cash value tax-free. Also, loans from life insurance policies are tax-free distributions. You may want to discuss with your financial professional how life insurance could reduce your future taxes in retirement.

Ready to take control of your tax strategy in 2019? Let’s talk about it. Contact us today at Retirement Peace Project.. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.

 

1https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968

2https://www.cnbc.com/2018/08/01/30-million-americans-are-not-withholding-enough-pay-for-taxes.html

3https://www.cnbc.com/2018/11/01/heres-how-much-you-can-sock-away-toward-retirement-in-2019.html

 

18582 – 2019/2/27

 

 

Is the Downturn Threatening Your Retirement? 3 Tools to Protect Your Nest Egg

Worried about the direction the financial markets have taken over the past few months? You’re not alone. After nine consecutive years of growth, the markets ended 2018 on a down note. The S&P 500 finished the year down more than 6 percent, the first time it has ever finished a year negative after being positive through the first three quarters.1

In fact, some indexes have already entered bear market territory. The Nasdaq dropped more than 23 percent from its Aug. 29 high. The Wilshire 5000 and Russell 2000 also dropped more than 20 percent from their respective peaks in early September.1

If you’re approaching retirement, these losses could be stressful. When you’re younger and just starting your career, you have time to absorb losses and recover. That may not be the case if you’re only a few years from retirement. You’ll soon need to use your assets to generate income. A substantial decline may force you to delay retirement or make cuts to your planned lifestyle.

Fortunately, there are steps you can take to protect your nest egg and your retirement. Below are three tools that can help you reduce your exposure to downside risk. Talk to your financial professional to see how these may play a role in your financial strategy.

Fixed Indexed Annuity

 

When it comes to investing, risk and return usually go hand in hand. Those assets that offer the most potential return often come with the highest exposure to risk. Assets that have little risk also offer little potential growth. It’s difficult to find growth opportunities that don’t have downside market risk.

There are some tools available, though. One is a fixed indexed annuity. In a fixed indexed annuity, allows your money the potential to grow on a tax-deferred basis. The potential growth comes in the form of interest credited to the contract typically anually.

Your interest credited each year is based on the return of a specific external index, like the S&P 500. The better the index performs in a given period, the higher the potential for the interest credits, up to a certain limit. If the index performs poorly, you may receive less or zero interest, but your contract won’t decline in value.

Fixed indexed annuities have guarantees* on the value of the contract. That means you’ll never lose premium because of market declines. A fixed indexed annuity could be an effective way to plan for retirement income without exposing yourself to market risk.

Deferred Income Annuity

 

Are you concerned about your ability to generate retirement income in the future? Or are you worried that your retirement income isn’t guaranteed*? A deferred income annuity, also known as a longevity annuity, could be an effective option.

With a deferred income annuity, you contribute a lump-sum amount and pick a date in the future to begin receiving income. At the specified time, the annuity company will begin paying you an income stream that’s guaranteed* for life, no matter how long you live. Work with your financial professional to project your income and see if a deferred income annuity can help you fill any gaps.

Life Insurance

 

You’ve probably purchased life insurance at some point in your life with the goal of protecting your spouse, children or other loved ones. Life insurance is a highly effective protection tool, but it can also do more.

Some life insurance policies have a cash value account. Each time you make a premium payment, a portion goes into the cash value. Those funds grow on a tax-deferred basis over time. The growth usually comes in the form of dividends or interest, depending on the policy. You can also use the life insurance policy to generate tax-free income in retirement via loans or withdrawals.

If you have a life insurance policy, you may want to explore how you can use it to achieve low-risk, tax-deferred growth and possibly create supplemental income in the future. Or you may want to look at new policies and see how they can help you protect your assets.

 

Ready to protect your nest egg? Let’s talk about it. Contact us at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.

 

1https://www.nasdaq.com/article/is-a-recession-coming-heres-how-to-survive-cm1081931

 

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

 

 

18412 – 2019/1/16

Can Baby Boomers Learn Financial Lessons From Millennials?

It’s graduation season. Perhaps you have family members such as children, grandchildren, nephews, nieces or others who are graduating from high school or college this year. Members of the current generation of graduates are known as millennials, a group loosely defined as those born between the mid-1980s and early 2000s.1

Millennials sometimes get a bad rap as being entitled and self-focused. However, their relationship with technology has given them a unique worldview. They grew up with cellphones, internet access and other technology that previous generations couldn’t even imagine. Millennials recognize how to use technology to their advantage, and they may see opportunities that older generations don’t recognize.

Technology isn’t the only factor that’s had an impact on the thinking of millennials. They’re influenced by major world events like 9/11 and the economic collapse of 2008. They also struggle with student loans, which may influence their view on money and debt.

As a baby boomer, you may feel it’s your responsibility to impart wisdom to millennials. However, there could also be important financial lessons you can learn from them, especially as you approach retirement. Below are three ways you can think like a millennial as you enter retirement:

 

Use the sharing economy to generate side income.

 

Sharing is a basic life skill that most people learn in kindergarten. However, technological advances have helped reshape the economy through the idea of sharing. The “sharing economy” is based on the concept that anyone can earn income by sharing the use of their assets, such as cars, homes, tools and even their time.

Millennials have embraced the sharing economy, as both users and sellers. You may be able to do the same in retirement to generate side income. For example, you could use your car to drive part time for a ride-hailing company. You could earn extra income by renting out a room in your home to travelers. There are even sharing services that allow you to make money by running errands for others or loaning out your tools. Do some research and be creative to find moneymaking opportunities.

 

Budget your spending so you can enjoy memorable experiences.

 

Many millennials say they would rather spend their money on experiences than on stuff. They value activities like travel, concerts, parties and other social events. To finance those experiences, they often take a minimalist approach to the accumulation of “stuff,” such as clothing, furniture and more.

That could be a wise approach to take in retirement. If you’re like many retirees, your plans may include travel, hobbies, dining out and spending time with family and friends. Those activities require money.

If experiences are important to you, consider funding them by cutting spending in other areas of your budget. For example, cut back on shopping for new clothes. Consider downsizing to a smaller home, which would reduce your costs for things like mortgage payments, utilities, maintenance and more. That could give you more money for the activities that are most important to you.

Use technology to your advantage.

 

There’s no doubt that many millennials are much more tech-savvy than their baby boomer counterparts. You may even turn to your children or grandchildren for help with your tablet, cellphone or other devices.

However, now could be the time to embrace technology and learn how to use it to your advantage. For example, a number of apps can help you budget and track your spending in real time. That could keep you on the right path so you don’t deplete your assets. Also, your financial professional could help you take advantage of planning tools that can forecast your retirement and monitor your investments. Look for technology that can help you keep your retirement on track.

 

Ready to implement these tips into your retirement? Let’s talk about it. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

 

1https://www.theatlantic.com/national/archive/2014/03/here-is-when-each-generation-begins-and-ends-according-to-facts/359589/

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16694 – 2017/5/23

What Can You Expect From the New Tax Law in 2019?

A new year is here, and with it comes a flood of year-end tax documents like W-2s, 1099s and others. Before you know it, the April 15 tax filing deadline will be upon us, and it will be time to submit your return.

It’s always wise to meet with your financial professional at the beginning of the year. It gives you an opportunity to discuss the past year, your goals for the coming year and your tax strategy. However, a consultation with your financial professional could be especially helpful this year.

 

The Tax Cuts and Jobs Act was signed into law in late 2017 by President Trump. While some of its changes went into effect last year, 2018 was the first full calendar year under the new law. The return you file in April will likely be the first that reflects much of the law’s changes. Below are a few of the biggest changes and how they could affect your return:

 

Increased Standard Deduction

 

The new tax law impacted a wide range of credits and deductions, from the deduction of medical expenses to credits for child care. Those who itemize deductions may have felt the brunt of these changes.

 

However, the tax law significantly increased the standard deduction. In 2017 the standard deduction was $6,350 for single filers and $12,700 for married couples. The new law increased those numbers to $12,000 and $24,000, respectively.1

 

Given the changes to itemized deductions and the increased standard deduction, you may want to consult with a financial or tax professional before you file your return. If you’ve traditionally itemized deductions in the past, that may no longer make sense.

 

New Tax Brackets

 

The new tax law also made significant changes to the tax brackets. There are still seven different brackets, just as there were before the passage of the law. And the lowest rate is still 10 percent. The top income tax rate is down to 37 percent, however, from 39.6 percent.2 There are similar cuts throughout the rest of the brackets as well.

 

The law also made changes to the income levels for each bracket. Generally, the bracket levels were increased throughout the tax code, which means you have to earn more before moving into a higher bracket. Under the old tax code, for example, a married couple earning $250,000 would be in the 33 percent bracket. Under the new law, that same couple would be in the 24 percent bracket. A single individual earning $80,000 would be in the 28 percent bracket under the old law but is now in the 22 percent bracket.2

 

Itemized Deduction Changes

 

As mentioned, the new tax law increased the standard deduction amounts. However, those increases came at the expense of many itemized deductions. The new law eliminated or reduced many common deductions, including those for state and local taxes, real estate taxes, mortgage and home equity loan interest, and even fees to accountants and other advisers.

 

However, there could be other opportunities to boost your itemized deductions above the standard deduction level. Charitable donations are still deductible, as are medical expenses assuming they exceed the 7.5 percent threshold. If you’re a business owner, you can deduct many of your expenses, including up to 20 percent of your income assuming you meet earnings thresholds.3

 

Ready to develop your tax strategy? Let’s connect soon and talk about taxes and your entire financial picture. Contact us today at Retirement Peace Project. We can help you analyze your needs and goals and implement a plan.

 

1https://www.nerdwallet.com/blog/taxes/standard-deduction/

2https://www.hrblock.com/tax-center/irs/tax-reform/new-tax-brackets/

3https://money.usnews.com/investing/investing-101/articles/know-these-6-federal-tax-changes-to-avoid-a-surprise-in-2019

 

18326 – 2018/12/26

What is Long-Term Care?

If you’re planning for retirement, you’ve probably heard about long-term care and the need to plan for it. It’s a common need for retirees. In fact, the U.S. Department of Health and Human Services estimates that today’s 65-year-olds have a 70 percent chance of needing long-term care at some point in their lives.1 The average senior will need care for three years.

But what exactly is long-term care? How is it provided? And what kind of health issues cause a need for long-term care? Long-term care is a broad term that applies to a variety of services. It’s difficult to plan for something when you don’t know exactly what it will look like or how much it will cost.

Long-term care is generally defined as extended assistance with basic living activities, like mobility, bathing, eating, household chores and more. It can be provided in the home or in a facility. It’s often caused by cognitive issues like Alzheimer’s but can also be needed as a result of stroke, cancer, heart disease, joint issues and a wide range of other conditions.

You can’t predict what kind of health issues you’ll face in the future, but you can plan for potential costs. Below are three common ways in which long-term care is administered. A financial professional can help you develop a strategy to pay for your future care needs.

 

Family Support

 

For many seniors, long-term care is progressive. It often starts with support for simple tasks like meal preparation, cleaning or running errands. As health issues become more intense, they need more hands-on assistance with things like mobility or bathing.

You may be able to count on a family member or friend for help in the early stages of care. However, family-based care usually doesn’t last forever. At some point, your care needs may progress to a level that is beyond your family’s capability. For instance, you may reach a point where your spouse can no longer transfer you from a bed to a wheelchair. Or you may need round-the-clock support and that may be too much for your family to provide.

While these thoughts aren’t pleasant, they’re a reality for many seniors. According to projections, it’s likely that most seniors will need paid, professional care at some point. Even if your family is able to help, don’t count on that low-cost assistance to meet all your needs.

 

Home Care

 

Even if your needs have progressed beyond what your family can provide, that doesn’t necessarily mean you’ll have to move into a facility. You may be able to stay in your home and get the care you need, especially if you’ve developed a strategy to pay for care.

For example, you could modify your home to accommodate health equipment such as a bed, a wheelchair or even grab bars. You might be able to hire an in-home health aide to provide custodial care and possibly even skilled nursing.

Genworth estimates that a full-time in-home health aide costs an average of $4,195 per month.2 Most long-term care insurance policies cover home care, even if it’s provided by a family member. Many policies also cover home modifications and equipment.

Facility Care

 

The U.S. Department of Health and Human Services estimates that 35 percent of all seniors spend at least a year in a nursing or assisted living facility at some point.1 You may need skilled nursing as the result of a specific injury or illness. Or you may decide to move into an assisted living facility, so you have full-time support available.

Either way, your facility care is likely to be a costly proposition. Genworth estimates that the average room in an assisted living facility cost $4,000 per month in 2018. A room in a nursing home cost more than $7,000.2

It’s possible that these costs will be covered by Medicare or Medicaid, but that’s not usually the case. Medicare only covers skilled nursing that’s related to a specific hospitalization. Even if you qualify for Medicare, the coverage typically lasts only several months. Medicaid only covers nursing home care if you have few assets and little income. You may want to think about alternatives to Medicare, like long-term care insurance, to pay for your stay in a facility.

 

Do you have a strategy to pay for long-term care? If not, let’s talk about it. Contact us today at Retirement Peace Project. We can help you develop a plan. Let’s connect soon and start the conversation.

 

1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

2https://www.genworth.com/aging-and-you/finances/cost-of-care.html

 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

18148 – 2018/10/17