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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Live Long or Prosper? How Retirees can do Both.

Some retirees underspend throughout their golden years, sacrificing quality of life to assure they don’t outlive their income. Others resist their desire to be philanthropic because of concerns that donations could leave them short on money down the road.1

A market downturn during the early years of retirement can be one of the biggest risks of running out of money. This may seem incongruous, since the earlier a downturn happens, the more time a portfolio has to recover. However, early loss of principal combined with steady withdrawals can lead to a challenging financial situation.

One common form of financial stability used to come in through a company pension plan. When combined with Social Security benefits, pensions gave retirees an idea of how much they could spend each month for the rest of their life.

Social Security is expected to be in good shape for the next 15+ years, but pensions are quickly becoming a thing of the past.2 If you don’t have or expect a pension when you retire, consider learning how you can create a steady and reliable income stream using an annuity from an insurance company. Annuities can help enhance quality of life throughout retirement by providing a similar sense of financial confidence that pensions once offered.

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

1 Bruce S. Udell. Kiplinger. January 2017. “Why Retirees Aren’t Enjoying Their Wealth.” http://www.kiplinger.com/article/retirement/T003-C032-S014-why-retirees-aren-t-enjoying-their-wealth.html. Accessed Feb. 8, 2017.

2 Carolyn Colvin. Social Security Administration. “Social Security Funded Until 2034, and About Three-Quarters Funded for the Long Term.” http://blog.ssa.gov/social-security-funded-until-2034-and-about-three-quarters-funded-for-the-long-term-many-options-to-address-the-long-term-shortfall/. Accessed Feb. 27, 2017.

Content prepared by Kara Stefan Communications & 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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Assessing Risk in Retirement Income

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

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

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

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

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

Investing involves risk, including the potential loss of principal. Any references to reliable income generally refer to fixed insurance products, never securities or investment products. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by company. Annuities are not a deposit of nor are they insured by any bank, the FDIC, NCUA, or by any federal government agency. Annuities are designed for retirement or other long-term needs.

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

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

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How Much Retirement Income Should Come From Savings?

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

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

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

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

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

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

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

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

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

Content prepared by Kara Stefan Communications

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

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

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

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

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

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

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

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

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

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

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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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Savings and Investment Updates

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

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

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

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

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

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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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