Consider Having a Backup Plan

When looking ahead in anticipation of Social Security benefits, many people expect to wait until an average age of 66 to make a claim.1

However, Nationwide Retirement Institute’s fifth annual Social Security survey found many retirees start drawing Social Security at the earliest possible age of 622 — frequently the result of being laid off or health issues.

Thirty-six percent of respondents reported health problems got in the way of living the retirement they expected, and of those, 80 percent say health problems occurred as many as five or more years earlier than expected.3

This tells us something we already know but are constantly reminded of: Life does not always go as planned. Many financial professionals tell their clients one of the most effective ways to help ensure enough income throughout retirement is to continue working through their 60s. This may not be preferable, but it’s an option.

Others may plan to work longer but end up retiring for reasons beyond their control. It’s good to have a contingency plan. As an independent financial services firm, we help people create retirement income strategies using a variety of insurance products to custom suit their needs and objectives. Give us a call if you’re interested in finding out more.

It’s important to have a backup plan because there are many challenges for people working longer. For example, as jobs move further into technology, artificial intelligence and automation, new job skills are constantly required. It’s good to challenge the brain, but young college graduates typically have a firmer grasp on today and tomorrow’s technology — it’s a steep learning curve.4

A Washington Post article recently referred to the “gray ceiling.” As women have faced the “glass ceiling” as an obstacle to career advancement, age discrimination is sometimes manifested in the hiring, continued employment, development and advancement of older workers.5

Fortunately, recent workforce trends have made it easier for older workers to continue earning income past traditional retirement age. Many employers have embraced the work model of the “gig economy,” staffing up (and down) as needed with independent contractors. Older workers have proven to be well-suited for this type of employment due to their laser-like experience in certain roles, reliability and stability. A recent study suggests older white-collar professionals are driving the growing demand for gig workers among businesses in certain industries.6

While employers may embrace the gig economy to add and drop staff as needed, remember workers can do the same. Establishing yourself as a freelancer or independent contractor gives you the freedom to work as much or as little as needed.7 You can take off a month to go on vacation, or six months to fly south for the winter. You can also take on work only when you have big bills coming up, like homeowner’s insurance or property taxes.

A 2017 survey found one-third of future retirees are planning part-time work to provide at least 25 percent of their household income. Besides income, many gig workers ages 51 to 70 say a primary reason for freelancing is simply to stay active in retirement.8

Content prepared by Kara Stefan Communications.

1 Nationwide Retirement Institute. April 2018. “Social Security 5th Annual Consumer Survey.” https://nationwidefinancial.com/media/pdf/NFM-17422AO.pdf. Accessed May 10, 2018.

2 Ibid.

3 Ibid.

4 James Manyika, Susan Lund, Michael Chui, Jacques Bughin, Jonathan Woetzel, Parul Batra, Ryan Ko and Saurabh Sanghvi. McKinsey Global Institute. November 2017. “What the future of work will mean for jobs, skills, and wages.” https://www.mckinsey.com/featured-insights/future-of-organizations-and-work/what-the-future-of-work-will-mean-for-jobs-skills-and-wages#part%205. Accessed May 1, 2018.

5 Susan Williams. Booming Encore. March 2018. “Older Workers Watch Your Head – Breaking Through the Gray Ceiling.” http://www.boomingencore.com/older-workers-watch-head-breaking-gray-ceiling/. Accessed May 1, 2018.

6 Valerie Bolden-Barrett. HR Dive. Oct. 3, 2017. “Older workers — not millennials — are driving the gig economy.” https://www.hrdive.com/news/older-workers-not-millennials-are-driving-the-gig-economy/506349/. Accessed May 1, 2018.

7 Elaine Pofeldt. Forbes. Aug. 30, 2017. “Why Older Workers Are Embracing the Gig Economy.” https://www.forbes.com/sites/elainepofeldt/2017/08/30/why-older-workers-are-embracing-the-gig-economy/#642f904a42ce. Accessed May 1, 2018.

Ibid.

This material is intended to provide general information to help you understand basic retirement income 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.

For Some Retirees, Home is Where the Debt is

Today’s pre-retirees and retirees tend to have far more debt than those in years past. In addition to factors like credit card payments and medical expenses, this generation is seeing the effects of higher home prices and easily obtained low down-payment mortgages in the early 2000s.1

Between 2003 and 2016, Americans 60 and older nearly tripled their household debt — composed of mortgages, home equity loans, auto loans, student loans and credit cards.2 According to the Employee Benefit Research Institute, households headed by a person age 75 or older held an average debt load of $36,757 in 2016.3

If you’re still carrying a fair amount of debt and nearing retirement, we can help you review your household budget to help plan for a more confident retirement. Please give us a call if you’d like to schedule a meeting.

One of the challenges in the new tax law is the interest-cap deduction on mortgage loan payments, meaning homeowners with high mortgage balances may be required under the new law to deduct less mortgage interest. The mortgage limit on new homes purchased is $750,000, while the limit on mortgages purchased before Dec. 15, 2017, remains $1 million. These numbers are important if downsizing is part of your debt-reduction strategy.4

Another major contributor to debt is the rising cost of sending children to college. Of the 3.5 million Americans who owe an average of $24,000 in Parent PLUS student loan debt, about half of them are parents older than age 50. Worse yet, the number of parents with student loans is rising at a faster rate than students.5 Unfortunately, all those debt payments could be used to save for retirement.

The No. 1 reason individuals file for bankruptcy is medical debt.6 Whether nearing retirement or already there, unexpected health care costs can seriously curtail retirement funds. It’s a good idea to work with a financial professional to develop a strategy for paying potential health care costs down the road.

Content created by Kara Stefan Communications.

1 Rebecca Moore. PlanAdvisor. Jan. 10, 2018. “Debt Causing Financial Vulnerability for Pre-Retirees.” https://www.planadviser.com/debt-causing-financial-vulnerability-pre-retirees/. Accessed May 11, 2018.

2 Michelle Singletary. The Washington Post. Feb. 26, 2018. “Should you retire your debt before retiring?” https://www.washingtonpost.com/news/get-there/wp/2018/02/26/should-you-retire-your-debt-before-retiring/?noredirect=on&utm_term=.d3d26dc8cda2. Accessed May 11, 2018.

3 Annie Nova. CNBC. May 9, 2018. “Almost half of Americans don’t expect to have enough money to retire comfortably — but there’s some good news.” https://www.cnbc.com/2018/05/09/almost-half-of-americans-dont-expect-to-have-enough-money-to-retire-comfortably–but-theres-some-good-news.html. Accessed May 11, 2018.

4 Anthony P. Curatola. MarketWatch. May 10, 2018. “Watch for these pitfalls if you want to deduct mortgage interest under the new tax law.” https://www.marketwatch.com/story/watch-out-for-these-pitfalls-if-you-want-to-deduct-mortgage-interest-under-the-new-tax-law-2018-05-09. Accessed May 11, 2018.

5 Kathy A. Bolten. Des Moines Register. April 2, 2018. “Thousands of Iowa parents are going into debt to pay for their kids’ college (and they probably shouldn’t).” https://features.desmoinesregister.com/news/parent-plus-student-loans-college-debt/. Accessed May 11, 2018.

6 Sharon Epperson. CNBC. Nov. 16, 2017. “Don’t let surprise medical bills drain your retirement.” https://www.cnbc.com/2017/11/15/dont-let-surprise-medical-bills-drain-your-retirement.html. Accessed May 11, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income 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.

Medicare News

Earlier this year, Congress passed a last-minute budget deal that included provisions affecting Medicare benefits. Specifically, one provision will permit certain therapies to continue beyond the previous caps, subject to conditions. All therapy (physical, speech and occupational) must continue to be classified as “reasonable and necessary to treat the individual’s illness or injury.” 1

There had been ambiguity in the past as to whether Medicare would continue paying for sessions without measurable improvement. Now, however, therapy sessions may continue per the provider’s recommendation. Retroactive for this year, once therapy billing has reached $2,010 (about 20 sessions at $100 per visit), a provider must add an extra billing code to ensure payment. However, if total expenses subsequently pass a $3,000 threshold, they may be subject to medical reviews and audits.2

The federal budget agreement also accelerated the share-cost reduction during the so-called “doughnut hole” period in Medicare drug plans. Starting one year earlier — in 2019 — Medicare beneficiaries will pay 25 percent (instead of 35 percent) of drug expenses once they reach the stated annual limit (currently $3,750 in 2018).3

Medicare rules are always changing. It’s a lot like trying to make retirement planning decisions throughout your career — the bar is a moving target. One potential solution is to over-plan and overfund your share of expected health care expenses in retirement. If you’re looking for ways to help plan for possible increased health care expenses in the future, contact us.  We’d be happy to discuss your options based on your unique situation.

In April, the Centers for Medicare & Medicaid Services (CMS) issued a final ruling with updates for Medicare Advantage (MA) plans to provide more choices. Specifically, the rule expands the definition of “primarily health-related” benefits to cover products and services not considered direct medical treatments. Examples include air conditioners for people with asthma, healthy groceries, rides to medical appointments and home-delivered meals. Paid benefits also may include home modifications for mobility and balance, such as installing a wheelchair ramp or bathroom grab bars. Plans may offer benefits to help pay home aides who help with dressing, eating and other personal, daily-living care. MA plans must submit their bids for CMS approval by June 4 to begin offering these benefits in 2019.4

The new CMS rule also includes initiatives to address the national prescription opioid epidemic. Specifically, Medicare Part D plans now limit new opioid prescriptions for acute pain management to no more than a seven-day supply. The Overutilization Monitoring System (OMS) is expanding, increasing pharmacist accountability for patients already taking opioids.5

The CMS rule is part of a hardline approach to combating the opioid crisis. The White House has established a Safer Prescribing Plan initiative with specific goals that include cutting nationwide opioid prescription fills by one-third within three years.6

Content created by Kara Stefan Communications.

1 Judith Graham. Kaiser Health News. March 29, 2018. “Scrutinizing Medicare Coverage For Physical, Occupational And Speech Therapy.” https://khn.org/news/scrutinizing-medicare-coverage-for-physical-occupational-and-speech-therapy/. Accessed May 4, 2018.

Ibid.

3 Susan Jaffe. Kaiser Health News. March 14, 2018. “Lifting Therapy Caps Is A Load Off Medicare Patients’ Shoulders.” https://khn.org/news/lifting-therapy-caps-proves-a-load-off-medicare-patients-shoulders/. Accessed May 4, 2018.

4 Bruce Japsen. Forbes. April 5, 2018. “How Trump’s New Medicare Rules Boost Amazon And Walmart.” https://www.forbes.com/sites/brucejapsen/2018/04/05/how-trumps-new-medicare-rules-boost-amazon-and-walmart/#600a42d6786c. Accessed May 4, 2018.

CMS. Fact Sheets. April 2, 2018. “2019 Medicare Advantage and Part D Rate Announcement and Call Letter.” https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2018-Fact-sheets-items/2018-04-02-2.html. Accessed May 4, 2018.

6 The White House. Fact Sheets. March 19, 2018. “President Donald J. Trump’s Initiative to Stop Opioid Abuse and Reduce Drug Supply and Demand.” https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-initiative-stop-opioid-abuse-reduce-drug-supply-demand/. Accessed May 4, 2018.

We are able to provide you with information but not guidance or advice related to Medicare. 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 products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income 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.

Strategies for Optimal Social Security Payouts

Social Security benefits are typically synonymous with retirement income. It would be inefficient to create a retirement plan without first estimating how much you will receive from the government.1 According to a 2018 report, Social Security benefits represent approximately:2

  • 33% of elderly income
  • 50% or more of income for about half of elderly married couples
  • At least 50% of income for 71% of elderly singles
  • At least 90% of income for 23% of married couples and 43% of singles

In a recent survey, more than half of pre-retirees said they expect Social Security to be their primary source of retirement income.3 With so many people relying on Social Security payouts, it makes sense to explore strategies to receive the largest possible distribution. In some cases, this could mean tapping into your personal investment portfolio to delay drawing Social Security.

If you’d like to discuss various insurance and investment strategies to help supplement part-time income or bridge the gap between retirement and Social Security, please come talk to us.

The earlier you start drawing benefits, the lower the payout will be — and your payout level is locked in for life (with the exception of periodic cost of living adjustments). Unfortunately, the most common age that people start taking benefits is the first year they are eligible. If possible, it often makes sense to wait longer so that benefits can accrue.4

If you can wait until age 70, benefits will earn an additional 8 percent a year past full retirement age for a maximum boost of up to 32 percent. Delayed retirement credits are technically accrued on a monthly basis, so even if you don’t wait until age 70, every month you delay past full retirement age will increase your payout.5

Delayed retirement credits also apply toward surviving spouse benefits. In other words, should you pass away before drawing benefits, your spouse will receive the amount you qualified for as of the month of your death.6

Social Security benefit strategies are complex, but considering the importance this income is to most retiree households, it’s a good idea to learn as much as possible to help optimize benefits for your particular situation. This Social Security quiz is a good place to start.7

Content provided by Kara Stefan Communications.

1 Social Security Administration. 2018. “Retirement Estimator.” https://www.ssa.gov/benefits/retirement/estimator.html Accessed May 1, 2018.

2 Social Security Administration. 2018. “Fact Sheet.” https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf.

Accessed May 1, 2018.

Mary Beth Franklin. Investment News. April 25, 2018. “Future retirees expect Social Security to be main source of income.” http://www.investmentnews.com/article/20180425/BLOG05/180429953/future-retirees-expect-social-security-to-be-main-source-of-income. Accessed May 1, 2018.

Ray Martin. CBS News. April 30, 2018. “How to claim your Social Security benefits wisely.” https://www.cbsnews.com/news/how-to-claim-your-social-security-benefits-wisely/. Accessed May 1, 2018.

5 Rachel L. Sheedy. Kiplinger. February 2017. “Why Your First Social Security Check May Be Smaller Than Expected.” https://www.kiplinger.com/article/retirement/T051-C000-S004-when-delayed-social-security-credits-get-delayed.html. May 1, 2018.

6 Laurence Kotlikoff. Forbes. April 27, 2018. “Ask Larry: ​​​​​​What If Either Of Us Dies Before 70?”

https://www.forbes.com/sites/kotlikoff/2018/04/27/ask-larry-%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8Bwhat-either-of-us-dies-before-70/#6f18b1ea4081. Accessed May 1, 2018.

Mary Kane. Kiplinger. April 18, 2018. “Do You Really Understand Social Security?” https://www.kiplinger.com/quiz/retirement/T051-S009-do-you-really-understand-social-security/index.html.

Accessed May 1, 2018.

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.

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.

Notes on U.S. Infrastructure

The American Society of Civil Engineers has given the U.S. an overall infrastructure grade of D+. Throughout the next decade, it will take more than $4.5 trillion to fix our aging infrastructure — including upgrades to roads, mass transit, wastewater treatment plants and the electrical grid.1

We’ve reached the mission-critical stage. One industry analyst observed, “We’re at the point where our infrastructure is becoming an impediment to productivity and long-term economic growth.”2

The idea of national infrastructure may remind us of personal retirement preparation. If you are still working and thinking about retirement options, consider your own “infrastructure” situation. First, are you considering relocating or downsizing, or are you committed to aging in your own home? If you prefer the latter, it’s a good idea to check out your home from top to bottom to see whether you need any major repairs or maintenance while you’re still earning a paycheck.

This inspection should include considering a new roof, checking for mold buildup in your crawl space and researching new windows or other energy-efficient features that can help lower your utility bills. Even replacing older appliances could impact your household budget once you’re living on a fixed income.

Given our dramatic weather pattern swings, we should also prepare for the possibility of a natural disaster that could affect our daily living. Consider how you might plan for a long-term disruption in power or clean water supplies, such as installing a generator, solar panels, tiles and/or a battery pack. While it may seem farfetched, remember that the citizens of Puerto Rico probably never thought they would have to adapt for long-term power outages, as seen after Hurricane Maria.3

One way the U.S. is trying to address some of these issues is by incorporating green stormwater infrastructure (GSI) in sewer overflow control and integrated wet-weather plans. The idea is to evaluate the performance of GSI systems for future development.4

With all the discussion about funding at the federal level, one little-known fact is how much infrastructure is controlled at the local level. In fact, 40 percent of the nation’s bridges and 46 percent of all public roads are owned and maintained by counties. Furthermore, counties help fund one-third of the nation’s airports and 78 percent of public transportation programs.5

The news isn’t all bad. According to the World Economic Forum, the U.S. international ranking for overall infrastructure quality improved from 25th to 12th place last year out of 138 countries. However, when it comes to specific categories, we show mixed results — the U.S. ranks second in road infrastructure spending but ranks 60th for road safety. The U.S. also lags behind other developed countries when it comes to infrastructure resilience and future sustainability.6

Content prepared by Kara Stefan Communications

1 Merrill Lynch. 2018. “Getting a Bigger Bang for the Infrastructure Buck.” https://www.ml.com/articles/getting-a-bigger-bang-from-the-infrastructure-buck.html#financial-research-and-insights. Accessed April 20, 2018.

2 Ibid.

3 Camilla Domonoske. NPR. April 18, 2018. “Puerto Rico Loses Power — Again.” https://www.npr.org/sections/thetwo-way/2018/04/18/603569966/puerto-rico-loses-power-again. Accessed April 20, 2018.

4 Water Environment Federation. April 4, 2018. “Data analyses confirm GSI value in overflow control.” http://stormwater.wef.org/2018/04/data-analyses-confirm-gsi-value-overflow-control/. Accessed April 20, 2018.

5 Mary Scott Nabers. Infrastructure USA. April 9, 2018. “County government — a critical component of America’s greatness.” https://www.infrastructureusa.org/county-government-a-critical-component-of-americas-greatness/. Accessed April 20, 2018.

6 Hiba Baroud. PBS News Hour. Feb. 18, 2018. “Measuring up U.S. infrastructure against other countries.” https://www.pbs.org/newshour/nation/measuring-up-u-s-infrastructure-against-other-countries. Accessed April 20, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income 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.

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Why It’s Important to Care for the Caregivers

If you picture yourself receiving long-term care at some point, you likely envision a medical professional sitting bedside, tending to your needs. However, the bulk of long-term care in the U.S. is actually provided by family caregivers.1

According to a recent Merrill Lynch study, 20 million Americans become caregivers each year. Moreover, family caregivers collectively spend $190 billion a year of their own money on adult care recipients. And the toll doesn’t end there. In addition to 92 percent of caregivers using their own money and/or coordinating or managing finances to aid loved ones:2

  • 98% provide emotional support
  • 92% provide household support
  • 79% provide care coordination
  • 64% provide physical care

Women usually do more caregiving than men, the study found, averaging six years of caregiving in their lifetime compared to four for men. As a result, caregiving can bring more of a financial burden for women because of the time they may need to take away from their careers to care for loved ones.3

The financial burden of caregiving, for both men and women, should not be underestimated. The study shows 53 percent of respondents have made financial sacrifices as caregivers, and 21 percent have dipped into their savings.4

If you’re in a similar situation and are concerned about having enough income in retirement, please contact us. We work with clients to create retirement strategies through the use of insurance products that help them work toward their long-term retirement income goals.

Increasing attention is also being given to the psychosocial burden experienced by family caregivers. The responsibility and stress can contribute to their own physical conditions, including chronic diseases caused by unhealthy eating habits, sleeping poorly and not getting enough physical activity.5

Caregivers have twice the incidence of heart attack, arthritis, heart disease and diabetes compared to non-caregivers. Their chronic stress can even lead to cognitive reduction such as short-term memory loss and attention deficits. To cope with their complex lives, caregivers also may be prone to develop dependence on alcohol, smoking, prescription drugs and psychotropic drugs for mood enhancement. Caregivers also tend to have higher obesity rates.6

To help family members who are caring for a loved one with cancer, the Memorial Sloan Kettering Cancer Center in New York developed a support program that included webcasts with staged therapeutic interactions between therapists and informal caregivers, and a message board where study participants could post responses to experiential exercise questions. Initial results found that program participants experienced reduced symptoms of depression.7

Technological advances may also help ease caregiving challenges. For example, wearable devices can monitor heart rate and blood pressure, among other vitals. These devices can be linked to mobile phone apps, alerting a caregiver of any changes that might trigger a serious health issue.8

Some wearable devices use GPS and geofencing technologies to track patients, allowing them more mobility while also helping caregivers monitor patients’ locations. Newer devices use artificial intelligence to recognize trends in vital signs or movement that can lead to health or injury concerns.9

Regardless of what innovations the technology industry creates to aid caregivers, there is some comfort in knowing that the primary skills necessary in a caregiver cannot be replicated by artificial intelligence or a robot. Human caregivers not only offer compassion, empathy and the ability to meet retirees’ emotional needs, but these soft skills can be learned and improved — which will prove to be a critical sector of our workforce in years to come.10

Content prepared by Kara Stefan Communications.

1 Advisor News. Nov. 1, 2017. “92% Of Caregivers Are Financial Caregivers.” https://insurancenewsnet.com/oarticle/92-caregivers-financial-caregivers#.WgOptLaZOfU. Accessed Dec. 4, 2017.

2 Ibid.

3 Ibid.

4 Ibid.

5 Kathy Birkett. Senior Care Corner. “How Are YOU, Family Caregiver — Are You Caring for Yourself?” http://seniorcarecorner.com/family-caregiver-caring-for-yourself. Accessed Dec. 4, 2017.

6 Ibid.

7 Meg Barbor. The ASCO Post. April 25, 2017. “Attrition High but Positive Trends Observed in Web-Based Intervention Addressing Caregiver Burden.” http://www.ascopost.com/issues/april-25-2017/attrition-high-but-positive-trends-observed-in-web-based-intervention-addressing-caregiver-burden/. Accessed Dec. 4, 2017.

8 1-800-HomeCare. Oct. 12, 2017. “What Are the Top Emerging Tech Trends for Home Care In 2017?” https://www.1800homecare.com/homecare/new-tech/. Accessed Dec. 4, 2017.

9 Ibid.

10 Harry Welchel. ChirpyHire. July 31, 2017. “Senior Care and The Future of Work.” http://blog.chirpyhire.com/senior-care-and-the-future-of-work/. Accessed Dec. 4, 2017.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income 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.

Monitoring Insurance Needs Is a Good Policy

Life insurance is something you purchase, then hopefully don’t need to use until many years down the road. But that doesn’t mean you should stop paying attention to it. As you age, it’s important to monitor the policies you own.

Some policies may no longer be needed, while others may be needed now more than ever. It’s a matter of evaluating your personal situation as you move through life. Since insurance is meant to help protect us from major financial loss, it’s important to continually assess how our goals and needs change over time, and determine if our insurance coverage is aligned with them.1

If it’s time for you to get a customized insurance review, please give us a call.

Many people may assume they no longer need life insurance during retirement. For some, this may be true. Once children are out on their own, retirees who feel they have saved enough to provide income for both spouse’s lifetimes are likely to drop their policies.However, before making this decision, it’s important to review your retirement and legacy goals. Some people decide to keep life insurance during retirement in order to provide a tax-free death benefit for their beneficiaries when they die. This can free up other assets for use in retirement without concerns about whether they will have money to leave to their children.

For large estates, policy owners may use life insurance proceeds to help pay state and federal inheritance taxes. Still others may want life insurance to provide the surviving spouse with additional funds for unexpected expenses.3

In some cases, it may be appropriate for retirees to purchase life insurance for the death benefit, as well as a complementary strategy for additional retirement income. Some permanent life insurance policies offer a cash value account that grows over time and can be used to supplement retirement income, typically through the use of policy loans. At the same time, the policy can provide tax-advantaged proceeds to help protect loved ones upon the owner’s death.Please note that policy loans and withdrawals will reduce the available cash value and death benefit.

Retirees who stop paying premiums for policies they determine they no longer need can use that excess money to help pay for the policies they may need during retirement, such as long-term care insurance.5 This is even true of policies we often take for granted, such as homeowners and auto insurance. If you downsize to a less expensive home, your homeowners premium will likely drop as well. If you downsize to one car or, eventually, no car at all, you can free up extra cash, which can help defray any new transportation costs.

Content prepared by Kara Stefan Communications.

1 Lisa Brown. Kiplinger. June 2017. “Rethink These 3 Financial Strategies Every Decade (or sooner!)” http://www.kiplinger.com/article/retirement/T023-C032-S014-rethink-these-3-financial-strategies-every-decade.html. Accessed Aug. 20, 2017.
2 Tim Grant. Times-Union. Aug. 12, 2017. “Rethink dropping life insurance.” http://www.timesunion.com/business/article/Rethink-dropping-life-insurance-11813300.php. Accessed Aug. 20, 2017.
3 Cheryl Winokur Munk. The Wall Street Journal. July 5, 2017. “Should Retirees Have Life Insurance?” https://www.wsj.com/articles/should-retirees-have-life-insurance-1499261075?utm_campaign=Q32017%20Thought%20Leadership. Accessed Aug. 20, 2017.
4 Jacob Alphin. Forbes. May 11, 2017. “How To Use Life Insurance In Your Retirement Planning.” https://www.forbes.com/sites/forbesfinancecouncil/2017/05/11/how-to-use-life-insurance-in-your-retirement-planning/#85e67b469cff. Accessed Aug. 20, 2017.
5 Jennifer Fitzgerald. Betterment. March 3, 2016. “3 Important Types of Insurance to Have When Preparing for Retirement.” https://www.betterment.com/resources/retirement/planning-ahead/3-important-types-of-insurance-when-preparing-for-retirement/. Accessed Aug. 20, 2017.

Life insurance policies are contracts between you and an insurance company. Life insurance product guarantees rely on the financial strength and claims-paying ability of the issuing insurer. If properly structured, proceeds from life insurance are generally income tax free.

 We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives.This material is intended to provide general information to help you understand basic retirement income 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.

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Strategies for Early Retirement

Many people find they have to retire earlier than planned, often for health reasons or due to layoffs, and need to figure out how to make their retirement savings last.1 That’s why it’s important to determine the base amount of income you’ll need to live during retirement; examine your expenses and determine what is a necessity and what can be cut out. Be sure to also factor in possible health care needs.

Bear in mind that one retiree might fall short of a financial goal that another would consider a windfall, so determining what you can live on is completely subjective. Many people can live on less; the question is: How much less?

Next, estimate how long you (and your spouse) might live. You can find longevity calculators online, including the Social Security Administration’s at www.ssa.gov/oact/population/longevity.html.2 Then factor in the amount you’re scheduled to receive from Social Security; you can find that out by establishing an account at www.ssa.gov/myaccount.3

Once you’ve determined your Social Security benefit, along with any pension money you’ll receive, subtract that amount from the annual income you need. This will determine how much you need to withdraw each year from personal savings, such as a 401(k). To the extent you can limit withdrawals early on, either by getting part-time work or reducing living expenses, the longer your money can last.

Here are some potential strategies to help effectively utilize the retirement assets available to you:

  1. Convert to Lifetime Income – A retiree might consider using a portion of his or her savings to buy an immediate annuity. This irrevocable purchase exchanges a lump sum for a lifetime stream of fixed income guaranteed by an insurance company.
  2. Pay off Debt – If a homeowner is paying a mortgage after retirement, he or she might consider selling the home and using the proceeds to buy a less-expensive residence outright.
  3. Share Assets – Another option is for a homeowner to rent out space to help pay the mortgage and utilities, or to provide income if the house is already paid for.
  4. Apply for Benefits – Some people who are forced to retire due to poor health may qualify for Social Security disability benefits; learn how to apply at ssa.gov/disabilityssi.4

We can help you determine your income needs in retirement and work with you to create strategies through the use of insurance products to help you work toward your long-term retirement income goals – just give us a call.

Annuity 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 insurance company. Annuities are not FDIC insured.

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.

1 Marlene Y. Satter. BenefitsPRO. Dec. 4, 2017. “What is forcing workers to retire earlier than they planned? http://www.benefitspro.com/2015/12/04/what-is-forcing-workers-to-retire-earlier-than-the. Accessed June 22, 2017.

2 Social Security Administration. “Retirement & Survivors Benefits: Life Expectancy Calculator.” https://www.ssa.gov/oact/population/longevity.html. Accessed June 22, 2017.

3 Social Security Administration. https://www.ssa.gov/myaccount/. Accessed June 22, 2017.

4 Social Security Administration. “Disability Benefits.” https://www.ssa.gov/disabilityssi/. Accessed June 22, 2017.

Content provided by Kara Stefan Communications and Advisors Excel.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income 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.

Retirement Matters 

If you’re wondering how much of a Social Security payout you may receive, one number to keep in mind is 35.

Your benefit is based on your 35 highest years of earnings. If you work less than 35 years, the calculation uses zero for your annual income in the years you’re short. Here is an article that provides a description of how Social Security benefits are calculated.1

Social Security benefits were established during the Great Depression to help ensure Americans would not retire in poverty.2 However, they’re not meant to be the “end-all” retirement income plan. If you haven’t taken a good, hard look at all of the savings and assets that you’ve acquired to create a financial strategy for retirement, that’s where we can help. We can help identify potential retirement income gaps and create a financial strategy using a variety of investment and insurance products to help you pursue your financial goals.

It’s also important to assess your current financial strategy and determine what assets to draw from first, particularly in light of their tax status during retirement and the option to delay taking Social Security to potentially optimize your benefit. You should talk to a financial advisor and tax advisor about how to create a tax-efficient retirement income withdrawal strategy.

A common mistake in retirement planning is underestimating your life expectancy — maybe based on your parents’ or grandparents’ age — and not saving as much as you need. However, it’s more likely for people to live longer than previous generations, and also have higher medical bills.3 Even if one spouse dies young, it doesn’t mean the other won’t live late into their 90s.

Women who took time out of the workforce to care for dependents can be particularly vulnerable during retirement. One recent study found that, in a 10-year break early in their career, the shortage of contributions to Social Security and a retirement plan could result in a loss of up to $1.3 million in retirement savings.4

You also should consider the impact of inflation throughout retirement. Even though the inflation rate has been low in recent years, it can still make an impact over the long term. For example, an average 2 percent inflation rate over a 20-year timeframe can reduce the buying power of a dollar to just 67 cents.5

Also investigate the investment fees associated with your retirement account, as they can have a tremendous impact. A recent analysis revealed that many teachers who invested in 403(b) retirement plans could have account balances 20 to 50 percent higher had they invested in lower-cost holdings over their savings period.6

The same issues can be found with company-sponsored 401(k) plans. A plan that offers funds from only one fund family may not give you enough choices. It is also important to understand the fees you are paying.7

Our firm is not affiliated with or endorsed by the Social Security Administration or any governmental agency and does not provide tax or legal advice.

Content prepared by Kara Stefan Communications. 

Squared-Away Blog. Center for Retirement Research at Boston College. Oct. 20, 2016. “Your Social Security: 35 Years of Work.” http://squaredawayblog.bc.edu/squared-away/your-social-security-35-years-of-work/. Accessed Oct 23, 2016.
2 Ibid.
3 Jeff Brown. U.S. News & World Report. Aug. 3, 2016. “What’s Your Plan B for Retirement?” http://money.usnews.com/investing/articles/2016-08-03/whats-your-plan-b-for-retirement. Accessed Oct. 23, 2016.
4 Financial Planning. Oct. 9, 2016. “How retired clients can deal with small COLA: Retirement Scan.” http://www.financial-planning.com/news/how-retired-clients-can-deal-with-small-cola-retirement-scan. Accessed Oct. 23, 2016.
5 Jeff Brown. U.S. News & World Report. Oct. 13, 2016. “Pros and Cons in Investing with TIPS.” http://money.usnews.com/investing/articles/2016-10-13/pros-and-cons-in-investing-with-tips. Accessed Oct. 23, 2016.
6 Tara Siegel Bernard. The New York Times. Oct. 21, 2016. “Think Your Retirement Plan Is Bad? Talk to a Teacher.” http://www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html?_r=0. Accessed Oct. 23, 2016.
7 Jill Cornfield. Bankrate.com. Sept. 27, 2016. “Q&A: Fees and Your Retirement Plan.” http://www.bankrate.com/one-to-million/qa-fees-and-your-retirement-plan/. Accessed Oct. 23, 2016.

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 complete 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. 

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Retiring Takes Effort 

The first things that come to mind when thinking about retirement may be rest and relaxation, but before you reach that point, you need a financial strategy that can support your post-career plans.

A recent study found many current retirees are worried about just making day-to-day expenses:1

  • The median annual income for married retirees is $48,000; $19,000 for singles
  • 25% of today’s retirees are still paying off credit card debt
  • 60% retired sooner than expected, typically due to downsizing or other employment-related reasons or health issues

Even if you are sufficiently prepared for retirement, it’s good to establish a budget and stick to it. The Employee Benefit Research Institute recently found that nearly half of households spend more money in the first two years of retirement than they did while they were still employed.2

It’s important to recognize that retirement is much like your career — you get out of it what you put into it. That goes for both your finances and your enjoyment. Being financially prepared for retirement means more than just having enough income, you also need to plan for unexpected expenses, potentially large health care bills and the possibility of long-term care.3

We’re here to help you create a financial strategy to help you feel confident that these types of expenses won’t prevent you from living your preferred retirement lifestyle.

But let’s talk about something other than financial preparedness for just a moment. Keeping in mind that people live longer — but not necessarily healthier — lives these days, have you thought about what you’ll do on a day-to-day basis during retirement? Without a “lifestyle plan,” many retirees sink into a state of isolation, lack of mobility and bad habits.

Some people think, “I’m doing nothing but playing golf when I retire” — an admirable goal indeed. But if you eventually grow tired of walking the course five to seven days a week, it’s good to have fallback options to fill your schedule. Here’s a possible idea: Most community colleges offer courses for retirees, so why not go back to school and study something you’ve always been interested in? Not only will you engage your mind, you’re likely to meet other retirees who share your interests. Maybe team up and start an “encore career.”4

In Australia, a nonprofit organization started an initiative called the “Men’s Shed,” a place where retired men show up every day to drink coffee, debate the issues and work on community projects.5

There are plenty of occupations and hobbies out there that let you work on what you enjoy, without the constraints of working 40 hours a week. Whether you’re already retired or getting ready for it, just remember that what you put into retirement is often what you’ll get out of it.

Content prepared by Kara Stefan Communications.

Transamerica Center for Retirement Studies. April 2016. “The Current State of Retirement: A Compendium of Findings about American Retirees.” http://www.transamericacenter.org/docs/default-source/retirees-survey/tcrs2016_sr_retiree_compendium.pdf. Accessed Sept. 29, 2016.
2 Tanisha A. Sykes. USA Today. Sept. 28, 2016. “More free time could mean risky spending for new retirees.” http://www.usatoday.com/story/money/personalfinance/2016/09/28/spending-overspending-new-retirees-free-time/90498760/. Accessed Sept. 29, 2016.
Emily Zulz. ThinkAdvisor. Oct. 3, 2016. “Morningstar’s ‘Must-Know’ Stats About Long-Term Care.” http://www.thinkadvisor.com/2016/10/03/morningstars-must-know-stats-about-long-term-care. Accessed Oct. 11, 2016.
4 Knowledge@Wharton. Jan. 14, 2016. “The Retirement Problem: What Will You Do with All That Time?” http://knowledge.wharton.upenn.edu/article/the-retirement-problem-what-will-you-do-with-all-that-time/. Accessed Sept. 29, 2016.
Gavin Fisher. CBC News. March 17, 2016. “Kelowna’s ‘Men’s Shed’ replaces isolation with purpose in retirement.” http://www.cbc.ca/news/canada/british-columbia/kelowna-s-men-s-shed-replaces-isolation-with-purpose-in-retirement-1.3496600. Accessed Sept. 29, 2016.

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 complete 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.

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