Economic Growth Prospects for the Future

Are life-changing innovations a thing of the past in the United States? While today’s technology seems to advance in leaps and bounds, one economist believes it won’t change the fabric of the average American’s life the way inventions like electricity, indoor plumbing and the elevator did in the 20th century.1

Yes, the internet is an amazing resource, and smartphones are nearly ubiquitous, but in terms of economic growth and productivity, they have not contributed as much as you might expect. Social media and infinite sources of information actually may serve to reduce our productivity both at home and at work.2

Nearly everyone can think of ways innovations have increased productivity, whether it’s looking up information online rather than consulting the library or using modern kitchen appliances that make cooking prep and cleanup much easier. However, this increased technology and efficiency may not translate to any improvement in one’s financial situation. While technology and online tools can allow you to better monitor your finances, please feel free to contact us for help in assessing your current retirement income strategy. As an independent financial services firm, we help people create retirement strategies using a variety of insurance products to custom suit their needs and objectives.

Today, two of the fastest-growing industries in the U.S. are construction and computer systems design.3 While both of these disciplines certainly have the capacity to improve people’s lives and productivity, they are not likely to present the quantum leap of, say, refrigeration.

One industry poised for rapid growth is satellite manufacturing. While costly in its upstart, prices are likely to align with greater demand for navigation, transportation management, disaster management, military intelligence and telecommunication applications.4

Some say the advancement of automation will replace jobs, but proponents are quick to point out that automation can help the American workforce become more productive. Amazon is a good example of a company that has embraced automation yet continues to offer more new jobs.5

What’s interesting is that while we measure economic growth on a national scale, contributions are not balanced. Certain regions, states and metropolitan areas contribute more substantial gains to the U.S. growth rate than others. For example, the labor force in Massachusetts is currently growing at the fastest rate in the country, having added 300,000 more jobs in the past 10 years. This is primarily because the state is home to a variety of strong and growing industries such as health care, financial services, high-tech manufacturing and higher education.6

And while controversial in its mix of documented and undocumented workers, the Latino population is considered a major contributor to U.S. GDP. Between 2010 and 2015, the Latino workforce increased by about 2.5 million while non-Latino workers shrank by about 4,000. This may be explained in part by the willingness of this demographic to pursue a higher education. Latino college graduates grew by 40.6 percent in that same timeframe, compared to 13.6 percent for non-Latinos.7 Economists tend to agree that the better educated the workforce, the higher a country’s economic growth prospects.

Content prepared by Kara Stefan Communications

1 Knowledge@Wharton. Feb. 3, 2016. “Are America’s Best Years of Innovation Over?” http://knowledge.wharton.upenn.edu/article/dazzling-yet-disappointing-why-u-s-growth-productivity-will-underperform-the-past/. Accessed Sept. 4, 2017.
2 Ibid
3 Mary Ellen Biery. Forbes. April 9, 2017. “The 10 Fastest-Growing Industries in The U.S.” https://www.forbes.com/sites/sageworks/2017/04/09/the-10-fastest-growing-industries-in-the-u-s/#56fdb5471ef2. Accessed Sept. 4, 2017.
4 Business Insider. Sept. 4, 2017. “Satellite Bus Market Worth $13.64 Billion USD by 2022.” http://markets.businessinsider.com/news/stocks/Satellite-Bus-Market-Worth-13-64-Billion-USD-by-2022-1002306432. Accessed Sept. 4, 2017.
5 Steve Cousins. TechCrunch. Sept. 4, 2017. “Can robots help the U.S. get its economic mojo back?” https://techcrunch.com/2017/09/04/can-robots-help-the-u-s-get-its-economic-mojo-back/. Accessed Sept. 4, 2017.
6 Shira Schoenberg. MassLive.com. Sept. 4, 2017. “Study: Massachusetts has fastest growing labor force in US.” http://www.masslive.com/politics/index.ssf/2017/09/study_massachusetts_has_fastes.html. Accessed Sept. 4, 2017.
7 Mark Bloomfield. The Hill. Aug. 14, 2017. “Look to Latinos to drive US economic growth.” http://thehill.com/blogs/pundits-blog/economy-budget/346464-latinos-could-lead-us-out-of-economic-malaise. Accessed Sept. 4, 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 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.

How AI May Impact Jobs

In recent years, there has been a concentrated effort to encourage more students to pursue careers in science, technology, engineering and math industries (STEM). However, jobs in those fields could be more likely to be replaced by artificial intelligence (AI) technology than jobs emanating from a liberals arts education.1

In an article penned for The Guardian late last year, renowned theoretical physicist Stephen Hawking observed that, “the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”2

Research by Citibank concluded that 47 percent of U.S. jobs are at risk of automation, 35 percent in the United Kingdom and 77 percent in China.If you think those are just middle- and working-class manufacturing jobs, think again. It is projected that 40 percent of jobs in the U.S. banking industry could be eliminated.4

Consider that some investors now rely on “robo-advisors,” which use algorithms to make automated investment recommendations. Other white collar industries that currently deploy AI include paralegal, medical, marketing, education and even technology. There are even AI “journalists” used for fact checking and writing stories about sports, weather and other simple topics.5

Facebook uses an AI algorithm that identifies its worldwide database of members using facial recognition of photos, an application that offers ample potential for the law enforcement industry. And AI’s ability to assess patterns from sets of data can make it more effective than the human eye at detecting tumors in medical imaging.6

Companies like Google and Microsoft are investing in AI to develop computers that will be able to automate office work like preparing sales reports with just a verbal request.However, not all jobs of the future can or will be replaced with AI. In fact, for the time being, the technology is largely used to increase productivity by making some jobs easier.

1 Larry Alton. “What Will Happen When AI Starts Replacing White Collar Jobs?” Forbes. May 25, 2016. Web; http://www.forbes.com/sites/larryalton/2016/05/25/what-will-happen-when-ai-starts-replacing-white-collar-jobs/print/. Accessed Feb. 10, 2017.

2 Stephen Hawking. “This is the most dangerous time for our planet.” The Guardian. Dec. 1, 2016. Web; https://www.theguardian.com/commentisfree/2016/dec/01/stephen-hawking-dangerous-time-planet-inequality. Accessed Feb. 10, 2017.

3 Oscar Williams-Grut. “Robots will steal your job: How AI could increase unemployment and inequality.” Business Insider. Feb. 15, 2016. Web; http://www.businessinsider.com/robots-will-steal-your-job-citi-ai-increase-unemployment-inequality-2016-2?r=UK&IR=T. Accessed Feb. 10, 2017.

4 Leena Lao. “Here’s How Artificial Intelligence Is Going to Replace Middle Class Jobs.” Fortune. Oct. 17, 2016. Web; http://fortune.com/2016/10/17/human-workforce-ai/. Accessed Feb. 10, 2017.

5 Larry Alton. Forbes. May 25, 2016. “What Will Happen When AI Starts Replacing White-Collar Jobs?” https://www.forbes.com/sites/larryalton/2016/05/25/what-will-happen-when-ai-starts-replacing-white-collar-jobs/#710d3f221639. Accessed Feb. 27, 2017.

6 The Economist. May 14, 2015. “How machine learning works.” http://www.economist.com/blogs/economist-explains/2015/05/economist-explains-14?fsrc=scn/tw/te/bl/ed/howmachinelearningworks. Accessed Feb. 10, 2017.

7 Ibid.

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.

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.

IRS News to Know

As we head into the final quarter of 2017, it’s a good idea to stay cognizant of any tax issues that may affect your finances come April 2018. Now is the time to review your investments and income distribution plans to help ensure you don’t trigger additional taxes or penalties later on.

We can help retirees create income distribution strategies that provide a reliable stream of income. As some income-generating strategies could increase your tax liability in a single year, we recommend clients also consult with an experienced tax professional to understand issues regarding their specific situation. We are happy to make a recommendation from our network of professional colleagues.

One common income distribution strategy is to transfer assets from an employer-sponsored 401(k) plan to a self-directed IRA. This move can give some individuals more investment choices. The IRS encourages eligible taxpayers to consider requesting a direct trustee-to-trustee transfer, rather than doing a rollover. However, if you do not conduct a direct trustee-to-trustee transfer, it’s important to understand the rules related to personally withdrawing money from one account and depositing it to another. The IRS allows a 60-day window to do this without penalty. If an individual misses that deadline, he may qualify for a waiver to extend the deposit window. The IRS will generally allow an extension for one or more of 11 circumstances, including the death of a family member or because the taxpayer becomes seriously ill. Furthermore, a taxpayer can use a new self-certification procedure to apply for the waiver of the 60-day period to avoid possible early distribution taxes.1

Speaking of IRAs, one income distribution strategy that early retirees may be able to take advantage of is IRS Rule 72(t). Normally, someone who retires before age 59 ½ would be subject to a 10 percent penalty on early withdrawals from a retirement plan. However, Rule 72(t) waives this penalty for individuals who make a series of “substantially equal periodic payments” for five years or until the retirement account owner reaches age 59 ½ – whichever is longer. The allowable amount is based on life expectancy and must be calculated using one of the IRS approved methods.Since every situation is different, individuals are encouraged to consult with a qualified tax professional before making any decisions.

A 2011 rule from the IRS relates to the “portability deadline.” This is the rule that allows a surviving spouse to absorb any unused portion of a deceased spouse’s estate tax exemption amount. The surviving spouse must file an estate tax return on behalf of the decedent in order to qualify for the portability rule, even if the estate is under the filing threshold and typically would not be required to file an estate tax return. A new IRS guideline grants a permanent automatic extension of the time to file an estate tax return just to claim portability, extending it from nine months to up to two years after the decedent’s death.3

Also, as a reminder, 2017 is the first tax year in which taxpayers age 65 and over are subject to the same 10 percent threshold of adjusted gross income (AGI) for deducting unreimbursed medical expenses as all other taxpayers (in previous years the threshold was 7.5 percent for those 65 and over). Eligible medical and dental expenses must be over 10 percent of the taxpayer’s 2017 AGI in order to claim the deduction.4

Content prepared by Kara Stefan Communications.

1 IRS. April 19, 2017. “2016 Tax Changes.” https://www.irs.gov/newsroom/2016-tax-changes. Accessed Aug. 14, 2017.

Investopedia. 2017. “Rule 72(t).” http://www.investopedia.com/terms/r/rule72t.asp. Accessed Aug. 18, 2017.

3 Michael Kitces. Nerd’s Eye View. June 28, 2017. “IRS Extends Portability Deadline (Retroactively) Under Rev. Proc. 2017-34.” https://www.kitces.com/blog/rev-proc-2017-34-automatic-extension-deadline-form-706-portability-dsue-amount/?utm_source=FeedburnerRSS&utm_medium=feed&utm_campaign=Feed%3A+KitcesNerdsEyeView+%28kitces.com+%7C+Nerd%27s+Eye+View%29. Accessed Aug. 18, 2017.

4 IRS. Dec. 15, 2016. “Questions and Answers: Changes to the Itemized Deduction for 2016 Medical Expenses.” https://www.irs.gov/individuals/questions-and-answers-changes-to-the-itemized-deduction-for-medical-expenses. Accessed Aug. 14, 2017.

The content provided in this blog is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

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.

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.  Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

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 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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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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A 100-Year Lifespan: Ways to Help Increase Enjoyment

The average life expectancy of a baby born in the U.S. today is 80 years. However, this prediction assumes prevailing patterns of mortality at the time of birth stay the same throughout a person’s life.1

In reality, patterns of mortality improve over time thanks to discoveries and innovations in nutrition and medical science. If you extrapolate the data to represent the same pace of mortality improvement in the future, people up to age 30 today can reasonably expect to live to an average age of 100.2

However, just as important as how long you live is how well you live. Below are some ideas on steps you can take to help ensure you enjoy your retirement years.

One way to prepare for an active retirement is to engage in work-life balance early in life. Many people work long hours and don’t take enough vacation time. Over time, this can lead to mental and physical exhaustion. If we don’t take care of ourselves when we’re younger, we have less chance of enjoying a higher quality of life when we’re older.

Or, consider your perspective – are you pursuing your own happiness or trying to find meaning in life? Studies have demonstrated that the pursuit of happiness may not be as good for our well-being as the pursuit of a more meaningful life. In other words, being directed and motivated by valued life goals, which often can take more effort and cause more stress, may be more rewarding. To illustrate, consider the rewards of raising children versus embarking on a series of exotic vacations. Researchers have found that, over the long term, people who pursued more meaning and purpose were more deeply satisfied than those chasing temporary happiness.3

Another study even found a correlation between greater engagement in day-to-day life with a higher degree of financial success, possibly because this type of person tends to place a high value on pursuing long-term goals.4

Exercise is also key. According to the Centers for Disease Control and Prevention, about 32 percent of older adults do not engage in any physical exercise. Understandably, people who don’t prioritize exercise when they’re younger are not likely do so in retirement, so it’s important to make it a habit early on.5

It’s also important to choose activities you can continue as you age. Classes growing in popularity among the over-50 set include dance, strength training, gentle yoga, “gentle stretch,” “Pilates fusion,” ballet barre and tai chi. According to the American College of Sports Medicine, programs for older adults are among the top 20 fitness trends for 2017.6

Retirees may be familiar with the SilverSneakers program, celebrating its 25th anniversary. The program is free for adults over age 65 who are covered by Medicare Advantage, Medicare Supplement and many other plans.7

In addition to things you should do to enrich a 100-year life, there are things that would make it less enjoyable. One of those things is dementia. While there are many risk factors for dementia, including age, alcohol use, smoking, diabetes, hypertension and genetics, a recent study discovered a few other common triggers that can increase the risk of cognitive decline:8

  • Taking anticholinergic drugs, which includes over-the-counter sleep aids, sedating allergy meds (e.g., Benadryl), sedating pain meds (e.g., Tylenol PM) and prescription meds such as some antidepressants and urinary incontinence treatments. The study also found that once people stop taking these meds, their risk dropped back to normal levels.
  • Lack of vitamin D
  • Heartburn medications with proton pump inhibitors (PPIs) such as Prilosec and Prevacid (complete list here)

We can help you prepare for longer life expectancies by utilizing insurance products within your overall retirement income strategy. Please feel free to contact us to discuss how we can help.

Content prepared by Kara Stefan Communications

1 Peter Vanham. World Economic Forum. Sept. 15, 2016. “You’ll Probably Live to Be 100. Here’s How You Need To Prepare For It.” https://www.weforum.org/agenda/2016/09/you-ll-probably-live-to-be-100-here-s-how-you-need-to-prepare-for-it/. Accessed March 3, 2017.

2 Ibid.

3 Emily Esfahani Smith and Jennifer Aaker. New York Magazine. Dec. 30, 2016. “In 2017, Pursue Meaning Instead of Happiness.” http://nymag.com/scienceofus/2016/12/in-2017-pursue-meaning-instead-of-happiness.html. Accessed March 3, 2017.

4 Drake Baer. New York Magazine. Jan. 4, 2017. “Living with Purpose Yields a Longer Life and Higher Income.” http://nymag.com/scienceofus/2017/01/living-with-purpose-yields-a-longer-life-and-higher-income.html. Accessed March 3, 2017.

5 Lynn Langway. Next Avenue. Jan. 30, 2017. “Boomers Took Fitness and Made It Their Own.” http://www.nextavenue.org/boomers-fitness-trends/. Accessed March 3, 2017.

6 Ibid.

7 Ibid.

8 Beth Levine. Next Avenue. May 25, 2016. “3 Surprising Things That Raise Your Dementia Risk.” http://www.nextavenue.org/3-surprising-things-raise-dementia-risk/. Accessed March 3, 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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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.

Our firm is not affiliated with the U.S. government or any governmental agency and does not provide federal benefits advice.

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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