Strategic vs. Tactical Asset Allocation

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

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

3 Ibid.

4 Ibid.

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

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

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

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

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The Longevity Revolution

How old do you have to be before you’re considered “old”? This number may change depending on the age of the person making the assessment. For example, a child or a teenager might think someone age 40 is old. That view is less likely to be held by a 39-year-old.

History indicates you have to reach a lot more birthdays these days to be considered old. One way to judge this is to look at pictures of your parents, aunts, uncles and grandparents when they were your age. Apart from the improved clarity of photographs in the modern era, many of us have fewer wrinkles and an overall healthier appearance than our ancestors.1

The data backs this up. A study by a Stanford University economics professor found that back in the 1920s, males were considered old if they were age 55 and up, whereas today that’s considered “middle age.”2

Of course, how we feel can change from day to day. Some days we might feel like a teenager, while other days we feel older than our years. We don’t want our clients to have similar feelings of uncertainty when planning for retirement. First of all, we like to help our clients work toward a well-prepared financial future. Second, it’s important to  consider that no matter how old you are, you’re likely to live longer than your parents and thus should plan for that eventuality. That’s why we work with our clients to create retirement income strategies for a retirement income that lasts as long as they do.

From a societal perspective, some of the reasons we’ve experienced a longevity revolution include universal access to clean water, sanitation, waste removal, electricity and refrigeration, as well as vaccinations and continued improvements in health care.3 At the individual level, people have their own take on why they’re living longer. One woman from Maine, 100-year-old Florence Bearse, claims the secret to her longevity is drinking wine. That, and people shouldn’t “take any baloney” if they want to live to old age.4

Another centenarian, Manhattan jazz saxophonist Fred Staton, is still playing professionally at age 102, which gives credence to the notion that creativity and passion lend themselves to a longer life.5 While a healthy lifestyle might be a strong indicator of longevity, it is by no means a definitive measure. Staton admits to smoking up until age 60, and rocker Mick Jagger — not exactly the poster child for a clean-living lifestyle — is still performing at Rolling Stones concerts at age 73.6

As for saving enough money to live comfortably throughout a long retirement, global analysts have noticed an interesting trend in spending among retirees. In wealthier countries, retirees appear to be aware of the potential for outliving their income, with many saving more than necessary.7

Content prepared by Kara Stefan Communications.

1 Steve Vernon. CBS News. June 29, 2017. “What age is considered ‘old’ nowadays?” http://www.cbsnews.com/news/what-age-is-considered-old-nowadays/. Accessed July 8, 2017.

2 Ibid.

3 Ibid.

4 Time. July 7, 2017. “Secret to 100-Year-Old Woman’s Longevity Likely Wine.” http://time.com/4849191/100-year-old-old-age-secret-wine/. Accessed July 8, 2017.

5 Corey Kilgannon. New York Times. June 29, 2017. “At 102, a ‘Triple-Digit’ Jazzman Plays On.” https://www.nytimes.com/2017/06/29/nyregion/fred-staton-jazz-saxophonist-plays-on.html. Accessed July 8, 2017.

6 The Economist. July 6, 2017. “Getting to grips with longevity.” https://www.economist.com/news/special-report/21724745-ageing-populations-could-be-boon-rather-curse-happen-lot?fsrc=scn/tw/te/bl/ed/gettingtogripswithlongevity. Accessed July 8, 2017.

7 The Economist. July 6, 2017. “Financing longevity.” https://www.economist.com/news/special-report/21724751-lives-get-longer-financial-models-will-have-change-financing-longevity. Accessed July 8, 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.

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Retirement Plan Fees: Know What You Are Paying

Many large companies offer employees a 401(k) plan with some degree of matching contribution. Although this is a good employee benefit to have, you always should pay attention to the fees involved in your plan. Your plan provider charges various fees to invest, manage and administer the plan, and those fees are passed on to the participants who invest.

The Center for Retirement Research at Boston College reports that, in recent years, the fees charged by actively managed mutual funds — including those in 401(k) plans — have dropped. Since 2015, the average fee dropped from 0.78 percent to 0.75 percent. Around 15 years ago, fees averaged about 1 percent. However, fees for passively managed index mutual funds, generally referred to as index funds, average significantly less at 0.17 percent. Index funds passively track the investments of a specific market index; there is no manager actively choosing investments for the fund on a day-to-day basis.1

If you have a 401(k) plan through a current or former employer, we’re happy to help you determine what you are paying in fees and help you assess your financial situation. In many cases, the more investors learn about fees, the more they start choosing investments that cost less. The Center for Retirement Research suggests this by sharing that U.S. investors withdrew $627 billion from actively managed funds that charged the highest fees and invested $429 billion into lower-fee index funds in 2015 and 2016.2

The Department of Labor’s fiduciary rule, which took partial effect in June, has made it easier for investors to know what they are paying for by requiring the disclosure of all fees and commissions. This information must be in dollar form.3 In addition, FINRA, a self-regulatory organization that regulates broker-dealers in the United States, offers a Fund Analyzer tool on its website that can help investors estimate the impact of fees and expenses on an investment and research applicable fees and available discounts for specific funds.4

Are fees really that important? It can depend. If you are paying a money management firm to select investments and it does a great job of providing consistent performance over time, it may be worth what you pay in fees. But it may also be worth considering how your investments compare with the overall market. For example, over the past three years, the S&P 500 has increased by 26 percent (as of mid-June 2017).5 If you were invested in a low-expense S&P 500 index fund, you would have experienced impressive returns. But if you had been paying a high fee for an active manager yielding the same performance, it may not have been worth the expense.

Speaking of fees, be aware that the IRS permits investors to deduct certain expenses incurred on taxable investments, such as:6

  • Fees for investment counsel, including subscriptions to financial publications
  • IRA or Keogh custodial fees (if paid by cash outside the account)
  • Transportation to your broker’s or investment advisor’s office
  • Safety deposit box rent if you use it to store certificates or investment-related paperwork

If you have a 401(k) plan through a current or former employer and would like help determining what you are paying in fees, we’re happy to help you assess your financial situation. Using a variety of investment and insurance products, we can create a financial strategy that can help put you on the path toward your financial goals.

Content prepared by Kara Stefan Communications.

1 Center for Retirement Research at Boston College. June 29, 2017. “Mutual Fund Fees: Here’s What Matters.” http://squaredawayblog.bc.edu/squared-away/mutual-fund-fees-heres-what-matters/. Accessed July 5, 2017.

2 Ibid.

3 Investopedia. July 5, 2017. “DOL Fiduciary Rule Explained as of July 5th, 2017.” http://www.investopedia.com/updates/dol-fiduciary-rule/. Accessed July 13, 2017.

4 FINRA. “Fund Analyzer.” http://apps.finra.org/fundanalyzer/1/fa.aspx. Accessed July 5, 2017.

5 Dayana Yochim. Atlanta Journal Constitution. July 5, 2017. “This May Be Why You’re Down in an Up Market.” http://www.ajc.com/business/consumer-advice/this-may-why-you-down-market/hQWTwwUWlBhEKX8tJoyNHL/. Accessed July 5, 2017.

6 Rande Spiegelman. Charles Schwab. March 15, 2017. “Investment Expenses: What’s Tax Deductible?” http://www.schwab.com/insights/taxes/investment-expenses-whats-tax-deductible. Accessed July 5, 2017.

Neither the firm nor its agents or representatives may give tax advice. Be sure to speak with a qualified professional about your unique situation.

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.

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The Changing Job Outlook: Challenges and Opportunities

The workforce in the United States is changing. Some long-standing professions are becoming obsolete, there are fewer manufacturing jobs,1 and some companies are moving their headquarters overseas for tax reasons.2 Then there is the increasing phenomenon of automation and robotics replacing jobs.

It’s interesting to note, however, that the job market is not fixed. It’s not as if people are being replaced by robots, but rather that the nature of work is changing and has different requirements. For instance, there is a steady transition from manufacturing to service industries. While a robot may be able to assemble products, it cannot develop software, health insurance policies or other intangible products and services that encompass so much of our income these days.3

As such, today’s job market offers unique opportunities for older workers. While some retirees need to work to supplement their income, others may simply get bored and want a new challenge. After all, retirement can go on for decades. That’s a long time for a career worker to be out of the workforce. By the same token, that’s a long time for savings to provide income. If you’re wondering how long your retirement income savings might last, come see us for an independent analysis. We can help assess your current financial situation to see whether it might be worthwhile to consider other retirement income strategies.

Another aspect of today’s changing job market is the growing shortage of skilled workers.4 When you think about it, this shortage creates an opportunity for retirees who want to go back into the workforce and are willing to learn new skills. According to the World Economic Forum’s 2016 “Future of Jobs” report, 33 percent of the essential skills that will be needed in the workforce in 2020 are not considered important today.5 This may create a good opportunity for people re-entering the workforce.

In fact, it’s because machinery is automating many previous jobs that some experts believe human creativity is the coveted skill of the future. It is the one thing that cannot be replicated by machinery, and thus holds more economic value.6 Pair creativity with experience and knowledge of specific markets and industries, and this is an area where older workers may truly thrive.

The best occupations for retirees tend to be in the white-collar sector and require experience, coupled with the advantages of maturity, patience and wisdom. Some of the top job options for older adults include consulting, local government positions, substitute teaching and tutoring.7

Content prepared by Kara Stefan Communications.

1 Heather Long. CNN Money. March 29, 2016. “U.S. has lost 5 million manufacturing jobs since 2000.” http://money.cnn.com/2016/03/29/news/economy/us-manufacturing-jobs/index.html. Accessed July 13, 2017.

2 The Economist. Aug. 17, 2015. “What’s driving American firms overseas.” https://www.economist.com/blogs/economist-explains/2015/08/economist-explains-9. Accessed July 13, 2017.

3 Alanna Petroff. CNN Tech. March 24, 2017. “U.S. workers face higher risk of being replaced by robots. Here’s why.” http://money.cnn.com/2017/03/24/technology/robots-jobs-us-workers-uk/index.html. Accessed July 13, 2017.

4 Reuters/CNBC. July 20, 2015. “Survey shows growing US shortage of skilled labor.” http://www.cnbc.com/2015/07/20/survey-shows-growing-us-shortage-of-skilled-labor.html. Accessed July 13, 2017.

5 Stephane Kasriel. World Economic Forum. April 25, 2017. “Yes, our working lives are going through massive change, but that doesn’t mean we’re heading for a jobless world.” https://www.weforum.org/agenda/2017/04/as-long-as-we-have-problems-to-solve-we-wont-run-out-of-jobs. Accessed July 5, 2017.

6 Itai Palti. World Economic Forum. April 19, 2017. “Could creativity drive the next industrial revolution?” https://www.weforum.org/agenda/2017/04/why-creativity-will-drive-the-next-industrial-revolution. Accessed July 5, 2017.

7 Jennifer Lawler. Bankrate.com. Feb. 26, 2016. “10 part-time jobs for retirees.” http://www.bankrate.com/retirement/10-part-time-jobs-for-retirees/#slide=3. Accessed July 5, 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.

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3 Common Questions About Social Security

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

When can I start taking benefits?

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

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

 What happens to my benefits when I die?

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

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

 Can I work while receiving benefits?

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

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

Content prepared by Amy Ragland.

 1 Social Security. January 2017. “Understanding the Benefits.” https://www.ssa.gov/pubs/EN-05-10024.pdf. Accessed June 21, 2017.

2 Ibid.

3 Social Security. “Retirement Planner: Benefits By Year of Birth.” https://www.ssa.gov/planners/retire/agereduction.html. Accessed June 21, 2017.

4 Social Security. “Retirement Planner: Delayed Retirement Credits.” https://www.ssa.gov/planners/retire/delayret.html. Accessed June 21, 2017.

5 Joseph L. Matthews. Caring.com. Dec. 24, 2016. “What happens to the rest of a person’s Social Security money after they die?” https://www.caring.com/questions/social-security-benefits-after-death. Accessed June 21, 2017.

6 Ibid.

7 Ibid.

8 Social Security. June 15, 2017. “What happens if I work and get Social Security retirement benefits?” https://faq.ssa.gov/link/portal/34011/34019/Article/3739/What-happens-if-I-work-and-get-Social-Security-retirement-benefits. Accessed June 21, 2017.

9 Social Security. “Retirement Earnings Test Calculator.” https://www.ssa.gov/OACT/COLA/RTeffect.html. Accessed June 21, 2017.

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

 We are an independent firm helping individuals create retirement strategies using a variety of insurance 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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Is Feeling Younger the Secret to a Longer Life?

“You don’t stop laughing when you grow old, you grow old when you stop laughing.”

~George Bernard Shaw

While some people accept getting older as a natural part of life, many others are on a mission to fight the aging process and maintain a youthful attitude and appearance. Although we are often reminded to “age gracefully” – to accept our older selves just as they are – research shows those who stay young at heart may just be on to something.

If you’ve ever experienced the feeling that the image in the mirror doesn’t quite match up with how you feel on the inside, you’re not alone. In 2015, the Journal of the American Medical Association published the results of research conducted over an eight-year timespan.  The initial survey of about 6,500 people ages 52 and older revealed that almost 70 percent of respondents felt three or more years younger than their actual age.1

Eight years later, researchers went back and resurveyed the participants. They found 86 percent of the people who reported feeling younger than their actual age were still alive, as compared to 82 percent of the people who felt their actual age and 75 percent who felt older.2

What’s the lesson here? This study and a variety of others point to the idea that feeling young actually helps us live longer. It’s the idea to stay “psychologically young”: maintaining a positive outlook, staying active physically and mentally, and enjoying a life of quality even into our older years.3 But how can we feel younger? Here are four tips:

  1. Eat right. Maintain a healthy diet, including plenty of veggies, fruits and protein. Also, make sure you’re getting plenty of omega-3 fatty acids, found in salmon, nuts and seeds. These help prevent inflammation in your body, which affects you both mentally and physically.1
  2. Get some exercise – physical and mental. Feeling younger means moving more. You need to challenge not only your body, but also your brain. The Alzheimer’s Association suggests things like taking a college course, finishing a daily crossword and enjoying an occasional play or performance as ways to stay mentally active.5
  3. Set goals for the future. Goals give us something to work toward and look forward to, no matter your age. Your goals can be related to health, family, career, travel or anything that sounds interesting to you!
  4. Look on the bright side. A positive attitude can help you live longer. For example, a Harvard study of 70,000 female nurses found the most optimistic quarter of respondents had a 31 percent reduced risk of mortality.6 Sometimes keeping a positive outlook on life can keep you going, even when there may be negative external circumstances.

While it pays to think positive and keep a youthful mindset, lifespans of all people in general have gotten longer over the years. If you’re fortunate enough to live many years after retirement, you’re going to need a well-thought-out retirement income strategy. Using a variety of insurance products, we can help you create a strategy that helps you to live the kind of retirement you’ve worked hard for. Contact us today to get started on your retirement income strategy for a long life.

Content prepared by Amy Ragland.

1 Isla Rippon, MSc and Andrew Steptoe, DSc. American Medical Association.  February 2015. “Feeling Old vs. Being Old: Associations Between Self-Perceived Age and Mortality.”  http://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2020288. Accessed June 8, 2017.

2 Heidi Godman. Harvard Health Publications. Aug. 5, 2016. “Feeling Young at Heart May Help You Live Longer.” http://www.health.harvard.edu/blog/feeling-young-heart-may-help-live-longer-201412177598. Accessed June 7, 2017.

3 Ibid.

4 Marisa Fox. Fitness Magazine. “10 All-Natural Ways to Stay Young.” http://www.fitnessmagazine.com/mind-body/feeling/10-all-natural-ways-to-stay-young/. Accessed June 7, 2017.

5 Alzheimer’s Association. “Stay Mentally Active.” http://www.alz.org/we_can_help_stay_mentally_active.asp. Accessed June 8, 2017.

6 Deborah Netburn. Los Angeles Times. Dec. 9, 2016. http://www.latimes.com/science/sciencenow/la-sci-sn-optimists-longer-life-20161208-story.html. Accessed June 8, 2017.

 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 provided by third parties and has been obtained from sources 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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Tax-Deferred or Tax-Exempt? Potential Benefits to Having Both

Over the years, you may have heard it’s good to have different “kinds” of money as you head into retirement. A financial advisor may recommend a combination of tax-deferred and tax-exempt financial products, diversifying your money to help take advantage of the tax benefits both types of products provide.

What many people don’t understand, however, is why it’s important to take advantage of the different types of financial products available. What are the potential benefits of utilizing both tax-deferred and tax-exempt products? First, let’s take a look at the difference between the two.

A tax-deferred financial product means simply that: You owe taxes on the money, but those taxes have been deferred or pushed back. You haven’t paid any taxes on the contributions or the growth that’s occurred over the life of the product. When you take money out of it, those distributions are 100 percent taxable at ordinary income rates.1 Withdrawals taken prior to age 59 1/2 may also be subject to an additional 10 percent federal tax.

What types of financial products are tax-deferred? A 401(k), 403(b) or traditional IRA are all examples of tax-deferred investment products. Growth in some types of annuities or life insurance policies may also be tax-deferred.2

Tax-exempt means no taxes are owed on qualified distributions made from the financial product. A Roth IRA or Roth 401(k) is a good example of a tax-exempt account. Contributions to a Roth are made with money that’s already been taxed.3

So why can it be beneficial to have a mix of tax-deferred and tax-exempt financial products in your financial strategy? Mostly, it gives you flexibility in how you take distributions during your retirement. For example, you might use distributions from tax-deferred products to pay for your fixed expenses every month. If you have expenses that are outside of your “normal” spending — such as a vacation or a large purchase — you could use money from a tax-exempt product and not incur a taxable event.

While it could be tempting to go heavy in tax-exempt financial products when you’re establishing a financial strategy, using a tax-deferred product may put more money in your pocket in the long run. Many people are in a lower tax bracket during their retirement years. If that is the case, you may pay less taxes on distributions during retirement than if you were paying taxes on your contributions up front while still working.4

What’s the right mix of tax-deferred and tax-exempt financial products for you? Every situation is unique. If you’re not sure what types of financial products you should be using, give us a call. We can look at your existing financial strategy and make recommendations based on your specific circumstances. We can also help you determine if life insurance and annuities could play a part in your tax-efficient strategy. Our mission is to help you plan for the best retirement possible.

Content prepared by Amy Ragland

1 The Balance. “What is a Tax-Deferred Investment Account?” https://www.thebalance.com/tax-deferred-savings-account-and-investments-2388988. Accessed May 31, 2017.

2 Prudential. “Tax Strategies: Tax-Deferred Annuities.” http://www.prudential.com/view/page/public/12609?param=12624. Accessed June 1, 2017.

3 Teresa Mears. U.S. News & World Report. Dec. 19, 2014. “7 Retirement Savings Accounts You Should Consider.” http://money.usnews.com/money/personal-finance/articles/2014/12/19/7-retirement-savings-accounts-you-should-consider. Accessed May 31, 2017.

4 Arthur Pinkasovitch. Investopedia. “Retirement Savings: Tax-Deferred or Tax-Exempt?” Updated April 5, 2017. http://www.investopedia.com/articles/taxes/11/tax-deferred-tax-exempt.asp. Accessed May 31, 2017.

We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.

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.

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How to Help Avoid Struggling with Caregiver Burnout

Serving as a caregiver for a loved one can be a wonderful thing. It often allows ill or disabled individuals to remain in their own home, surrounded by familiar surroundings. However, it can often take a toll on the person providing care, and can sometimes lead to the caregiver feeling depleted or exhausted. This feeling is commonly known as caregiver burnout.1

The National Alliance for Caregiving reported an estimated 43.5 million adults provided care for a chronically ill, disabled or aged loved one in 2014. The organization also reported the average caregiver spends nearly 25 hours per week providing assistance, the equivalent of a part-time job.2

While being a caregiver can be rewarding, it can also be emotionally, physically and mentally taxing. Burnout tends to happen when the caregiver neglects his or her own needs — often without realizing it’s happening.

If you are providing care for an ill or disabled loved one, it’s important to recognize the symptoms of burnout in the early stages. The ALS Association reports some of these patterns as signs of burnout for caregivers:3

  • Irritability and impatience
  • Overreacting to small things or comments made by others
  • Problems sleeping
  • Abuse of food, tobacco, drugs or alcohol
  • Feelings of isolation, alienation or resentment
  • Increasing levels of stress

The time and money dedicated to helping someone else can also be a drain on the caregiver. While retirees in particular may feel they have the time available to take care of a friend in need, it’s important they consider how that kind of time commitment could affect their own energy levels and financial resources.

How do you avoid caregiver burnout? Here are five suggestions from the Caregiver Action Network:4

  1. Seek support. Providing care can be isolating. Reach out to family and friends, and tell them exactly what you need. Many of them want to help, but they aren’t sure how. Also explore online options. The AARP provides a list of resources for caregivers,5 including online communities where people can share experiences.
  2. Take breaks. Letting someone else provide care can be difficult, since others don’t do things quite the same way and it might be challenging for the person receiving care to adjust to someone new. Taking a break, however, is important for both mental and physical respite.
  3. Don’t neglect your own health. It might take some creativity, but find ways to work in activity, even if it’s taking a 15-minute walk. Pay attention to your own nutrition. Try not to let go of all the things that bolster your mental health; it can be easy to neglect your own hobbies and interests.
  4. Get the paperwork in order. Organize medical records, legal paperwork and other items so they’re easy to find. Introduce yourself to your loved one’s lawyer, accountant, financial professional and other service providers. Provide them with a copy of a power of attorney so you can have access to records if needed. If you have questions about how taking the time to care for someone else could affect you financially, don’t hesitate to reach out to your financial professional.
  5. Don’t be too hard on yourself. Caregiving is a tough job. Recognizing that you also have physical, mental and emotional needs will help you avoid burnout and continue to provide the best care to your loved one.

Content prepared by Amy Ragland.

 1 Senior Helpers. “Caregiver Burnout.” http://www.seniorhelpers.com/resources/family-caregiver-burnout.  Accessed May 21, 2017.

2 National Alliance for Caregiving in Collaboration with AARP. June 2015. Pages 6 and 33. “Caregiving in the U.S. 2015.” http://www.caregiving.org/wp-content/uploads/2015/05/2015_CaregivingintheUS_Final-Report-June-4_WEB.pdf. Accessed May 21, 2017.

3 ALS Association. “Symptoms of Caregiver Burnout.” http://www.alsa.org/als-care/caregivers/caregivers-month/symptoms-of-caregiver-burnout.html. Accessed May 21, 2017.

4 Caregiver Action Network. “10 Tips for Family Caregivers.” http://caregiveraction.org/resources/10-tips-family-caregivers. Accessed May 21, 2017.

5 AARP. “Resources Caregivers Should Know About.” http://www.aarp.org/home-family/caregiving/info-08-2012/important-resources-for-caregivers.html. Accessed May 21, 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.

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Preventing Elderly Financial Abuse

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

2 Ibid.

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

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

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

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

7 National Committee for the Prevention of Elder Abuse. “Financial Abuse.” http://www.preventelderabuse.org/elderabuse/fin_abuse.html. Accessed June 22, 2017.

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

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

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Tips for Bargain Hunters

For many of us, retirement means living on a fixed income, and that often means making a budget and watching expenses. One way to help stay on budget is to shop for the best prices on items that fall within our discretionary income budget.

According to Consumer Reports, even though consumers can now buy just about anything they want online at any time of the year, deep discounts for many products still tend to be seasonal.1 For example, the best time to buy summer clothes is halfway through the summer, when stores cut prices to move inventory and make room for the next season’s stock.2

The following list from Consumer Reports details the best months for buying certain consumer items.3

  • January — bathroom scales, ellipticals, linens and sheets, treadmills, TVs, winter sports gear and clothing
  • February — humidifiers, mattresses, winter sports gear and coats
  • March — boxed chocolates, digital cameras, ellipticals, humidifiers and treadmills
  • April — carpet, desktop and laptop computers and digital cameras
  • May — baby high chairs, desktop and laptop computers, interior and exterior paints, mattresses, strollers and wood stains
  • June — camcorders, ellipticals, indoor furniture, summer sports gear and treadmills
  • July — camcorders, decking, exterior and interior paint, siding, summer clothing and wood stains
  • August — air conditioners, backpacks and back-to-school goods, dehumidifiers, outdoor furniture and snow blowers
  • September — desktop and laptop computers, digital cameras, interior and exterior paint, lawn mowers and tractors, printers and snow blowers
  • October — desktop computers, digital cameras, gas grills, lawn mowers and tractors
  • November — camcorders, gas grills, GPS and TVs
  • December — Blu-Ray players, camcorders, e-book readers, gas grills, GPS, headphones, kitchen cookware, major appliances and TVs

According to US News & World Report, the best time to buy a car is not when you see all those ads on TV for Presidents Day, etc. Rather, the best months to shop for good deals are May, October, November and December. The best days to shop are Mondays, New Year’s Eve and New Year’s Day.4

When it comes to holiday gift giving, some of the spoils go to those who procrastinate. If your gift list doesn’t include popular items that will sell out, waiting until the last 10 days before Christmas frequently can net the highest savings. Looking for holiday lights and decorations? The best time to shop is just after the big day, when you can stock up for next year at clearance prices.5

If you’re in the market to buy or sell a house, note that the best time for sellers to list a home is in May, when the supply of houses is tight, thus commanding the highest prices. The best time to buy is at summer’s end, when sellers are cutting house prices that have been on the market for several months.6

As for where to find the best bargains, you’re probably already familiar with local discount stores and volume warehouses. If you’re a member of Amazon Prime, be on the lookout for “Prime Day” each year when the online retailer drastically reduces prices on select items for 24 hours for Prime members. If you’re not an Amazon Prime member, “Prime Day” is the time to join because the annual membership fee is usually reduced as well.7

Of course, one of the best ways to stay on budget during retirement is to help ensure your income is ongoing and reliable, which is something we can help with. Give us a call so we can talk about how we can help you create strategies using a variety of insurance products to help you work toward your retirement income goals.

Content prepared by Kara Stefan Communications.

1 Consumer Reports. “Best Time to Buy Things.” http://www.consumerreports.org/cro/money/best-time-to-buy-things/index.htm. Accessed June 22, 2017.

2 Nikki Willhite. All Things Frugal. “Shopping the Seasonal Sales.” http://www.allthingsfrugal.com/s_sale.htm. Accessed June 22, 2017.

3 Consumer Reports. “Best Time to Buy Things.” http://www.consumerreports.org/cro/money/best-time-to-buy-things/index.htm. Accessed June 22, 2017.

4 Eric C. Evarts. US News & World Report. March 31, 2017. “6 Best Times to Buy a Car.” https://cars.usnews.com/cars-trucks/6-best-times-to-buy-a-car. Accessed June 22, 2017.

5 Denise Groene. The Wichita Eagle. June 16, 2017. “When is the best time to buy a grill, and other stuff.” http://www.kansas.com/news/business/biz-columns-blogs/article156570289.html. Accessed June 22, 2017.

6 Susie Gharib. Fortune. June 21, 2017. “Do’s and Don’ts for Buying and Selling a House.” http://fortune.com/2017/06/21/zillow-tips-for-buying-and-selling-a-house/. Accessed June 22, 2017.

7 Matt Swider. TechRadar. June 28, 2017. “Amazon Prime Day deals 2017 in the US: Find the best sales for July 11.” http://www.techradar.com/news/amazon-prime-day-2017-usa-when-is-it-and-how-can-you-find-the-best-deals. Accessed June 30, 2017.

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

We are an independent firm helping individuals create retirement strategies using a variety of insurance 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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