Retirement: The New Status Symbol

A lack of savings among many U.S. households could mean a change in the perception of retirement. It used to be a foregone conclusion that once you were too old to work, you retired. That’s not always the case anymore.

More than a third of U.S. households in prime earning years or later have no retirement savings and no access to a traditional pension.1 It’s become increasingly uncommon for people to retire in their early 60s, and those who fail to plan ahead for their future retirement income needs could end up with a retirement lifestyle worse than the one they had while working.

This doesn’t mean these middle-aged households are broke. Retirement income planning may just not be a priority yet. No matter your age, it’s never too late to start building strategies so you can enjoy your post-working years, and as financial professionals, that’s what we’re here for.

It takes diligence and focus to create a retirement income plan. Dwight D. Eisenhower once said, “Plans are worthless, but planning is everything.”2 This reiterates the point that planning for retirement should be strategic and committed, while at the same time fluid and flexible. Nobody knows what will happen in the future, but we can help you create a retirement income strategy designed to help meet your specific goals.

It can be difficult in the moment, but turning your back on pricey, impulse purchases, such as an expensive car, an outdoor kitchen or backyard pool, can help improve the prospects of your retirement down the road. Many people with good credit can borrow money to purchase these things, but good credit doesn’t fund a long retirement.3

Some workers might argue it’s not worth giving up indulgences today for a better (and earlier) retirement lifestyle. It’s a matter of examining individual priorities. One grandmother did just that when her 8-year-old grandson asked if she would be around when he got married. She had to rethink her priorities for what it might take to accomplish that goal. This led to a stronger pursuit of healthier living, including wholesome food, daily exercise and supportive social connections.4

While it may sound daunting to put in the years of hard work it takes to reach retirement, in some ways long hours at the office is a status symbol of its own. In Italy, the leisure class is perceived to have a higher status than the working class. But in the United States, there’s a certain prestige associated with working long hours and constantly being busy.5

Some people work 70+ hour weeks, not to earn more money and buy more things, but because that is what the working elite do.6 While this may not be the way all people wish to align their priorities, it does offer the distinct advantage of being able to save more money for retirement. For some, retiring is the ultimate status symbol.

Content prepared by Kara Stefan Communications

1 Stan Choe. The Denver Post. Nov. 18, 2016. “Easy retirement for Americans? It’s only for a privileged few.” http://www.denverpost.com/2016/11/17/easy-retirement-privileged-few/. Accessed July 10, 2017.

2 Jonathan Look. NextAvenue. June 23, 2017. “What I Did to Stop ‘Awfulizing’ Retirement.” https://www.forbes.com/sites/nextavenue/2017/06/23/how-i-stopped-awfulizing-retirement/#1d5429451baf. Accessed July 10, 2017.

3 Holly Johnson. Club Thrifty. May 15, 2017. “My Plan to Achieve the Ultimate Status Symbol.” http://clubthrifty.com/my-plan-to-achieve-the-ultimate-status-symbol/. Accessed July 10, 2017.

4 Jane E. Brody. The New York Times. April 20, 2016. “Thriving at Age 70 and Beyond.” https://well.blogs.nytimes.com/2016/04/25/thriving-at-age-70-and-beyond/. Accessed July 10, 2017.

5 Lisa Tolin. NBC News. April 3, 2017. “The Busy Trap: How Keeping Busy Became a Status Symbol.” https://www.nbcnews.com/better/careers/busy-trap-how-keeping-busy-became-status-symbol-n742051. Accessed July 10, 2017.

6 Ben Tarnoff. The Guardian. April 24, 2017. “The new status symbol: it’s not what you spend — it’s how hard you work.” https://www.theguardian.com/technology/2017/apr/24/new-status-symbol-hard-work-spending-ceos. Accessed July 10, 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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Global Trade: Problems and Potential Solutions

Global trade and investment have increased dramatically over the past 30 years.1 On one hand, importing lower-cost goods from other countries has saved Americans money. On the other, it has cost American jobs.

How many jobs? About 6 million from the manufacturing sector alone between 1999 and 2011, according to the Bureau of Labor Statistics. However, while outsourced jobs to China explains 44 percent of the decline in U.S. jobs from 1990 to 2007, automation and more efficient processes have also played a role.2

Some experts claim innovation, automation and new technology are responsible for up to 80 percent of manufacturing job losses over the past two decades.3 There are also economists who believe global trade is crucial to American prosperity and disagree with Donald Trump’s plans to implement tariffs or cut down trade with countries like China and Mexico.4

Thanks to the digital revolution, smaller companies have the capacity to compete on a global level, but comparatively few are doing so. It is estimated that fewer than 1 percent of the nearly 30 million U.S. companies registered to sell abroad actually engage in global sales.5 This means more U.S. firms have the potential to expand growth and productivity to global markets.

Digitization makes it easier for small startups to reach global customers; consider how eBay and Amazon got their start.6

Global expansion advocates say the U.S. government could play a role in connecting individual cities and smaller companies with foreign investors. It also could introduce more policies and funding to help job losses with reinvestment in affected communities.7

In one of his first acts as president, Trump signed an executive order to withdraw the U.S. from the 12-nation Trans-Pacific Partnership trade pact. This withdrawal gives China — not a participant in the TPP — the opportunity to forge leadership in Asian trade agreements. The president has indicated that he is interested in negotiating individual trade deals with TPP countries in order to procure better terms for the U.S.8

Some analysts believe the U.S. should renegotiate agreements to lower tariffs and other regulatory barriers to encourage various nations to specialize in certain exports in which they have operational expertise.9

Presently, the U.S. imports about $500 billion more than it exports.10 However, the U.S. remains the world’s largest economy and, despite the loss of manufacturing jobs to other countries, its share of global gross domestic product has remained relatively consistent over the past 36 years, ranging from 26 percent in 1980 to 25 percent in 2016.11

Content prepared by Kara Stefan Communications

1 Gary Pinkus, James Manyika and Sree Ramaswamy. Harvard Business Review. Jan. 10, 2017. “We Can’t Undo Globalization, but We Can Improve It.” https://hbr.org/2017/01/we-cant-undo-globalization-but-we-can-improve-it. Accessed Feb. 12, 2017.

2 Mark Broad. BBC. Jan. 25, 2017. “Will Donald Trump mean the end of global trade?” http://www.bbc.com/news/business-38731812. Accessed Feb. 5, 2017.

3 Kirtika Suneja. Economic Times. Feb. 8, 2017. “WTO provides the means to deal with trade concerns: Roberto Azevedo.” http://economictimes.indiatimes.com/opinion/interviews/wto-provides-the-means-to-deal-with-trade-concerns-roberto-azevedo/articleshow/57033349.cms. Accessed Feb. 12, 2017.

4 Jason Margolis. PRI. July 21, 2016. “Trump’s trade policies are worrying economists.” https://www.pri.org/stories/2016-07-21/trump-s-trade-policies-are-worrying-economists. Accessed March 9, 2017.

5 Gary Pinkus, James Manyika and Sree Ramaswamy. Harvard Business Review. Jan. 10, 2017. “We Can’t Undo Globalization, but We Can Improve It.” https://hbr.org/2017/01/we-cant-undo-globalization-but-we-can-improve-it. Accessed Feb. 12, 2017.

6 Ibid.

7 James Manyika, Gary Pinkus, Sree Ramaswamy, Scott Nyquist, Jonathan Woetzel and Arvind Sohoni. McKinsey Global Institute. November 2016. “Can the US economy return to dynamic and inclusive growth?” http://www.mckinsey.com/global-themes/employment-and-growth/can-the-us-economy-return-to-dynamic-and-inclusive-growth. Accessed Feb. 12, 2017.

8 Fox News. Jan. 24, 2017. “What Trump’s trade and geopolitical moves mean for China.” http://www.foxnews.com/world/2017/01/24/what-trump-trade-and-geopolitical-moves-mean-for-china.html. Accessed Feb. 12, 2017.

9 Peter Morici. Fox News. April 25, 2016. “How to fix free trade.” http://www.foxnews.com/opinion/2016/04/25/how-to-fix-free-trade.html. Accessed Feb. 12, 2017.

10 Ibid.

11 Bob Davins. Fox Business. Nov. 9, 2016. “Trump Will Need to Leverage Power of U.S. Economy to Remake Global Trade.” http://www.foxbusiness.com/politics/2016/11/09/trump-will-need-to-leverage-power-u-s-economy-to-remake-global-trade.html. Accessed Feb. 12, 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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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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What is a “safe” retirement withdrawal rate?

In an investment portfolio, the withdrawal rate is the monetary percentage from which a retiree draws from his account each year.  A “safe” withdrawal rate is a fixed percentage distributed as a systematic withdrawal that reasonably expects portfolio funds to last throughout the retiree’s lifetime. When determining your personal retirement withdrawal rate, it’s important to include adjustments for inflation and the portfolio’s ability to generate earnings throughout a specific time frame, ensuring the account isn’t entirely depleted.1

These are the basic parameters for calculating a “safe” withdrawal rate, but your specified rate can vary, depending on the total portfolio value, safeguards against market risk and inflation, living expense requirements and life expectancy. We’re here to help you determine your retirement withdrawal rate for your individual situation.

The “safe” withdrawal rate strategy was originally based on financial planner William Bengen’s research in the 1990s. At the time, a prevailing theory was if an investment portfolio generated an average annual return of 7 percent, then that was the percentage that could be withdrawn each year. However, Bengen introduced the “sequence of returns risk” concept, recognizing that an average annual return represents a series of higher and lower returns. If an individual experiences significantly low returns early in retirement, the portfolio would be too depleted to sustain a high withdrawal rate, even if that rate is justified by a higher average annual return during a 15-year time period. Bengen concluded at that time that 4 percent is generally considered a “safe” withdrawal rate.2

Other financial advisors assert that if the returns sequence is favorable in early retirement, retirees could theoretically be able to increase their spending rate. In some scenarios, the 4 percent rule could even double or triple a retiree’s wealth by the end of retirement because his conservative withdrawal rate would not spend the bulk of his portfolio gains during that time period.3

Another point to consider is that the original 4 percent guideline was based on retirees spending the same amount each year throughout retirement. However, recent research has shown that retirees tend to decrease spending as they get older. Based on this decreased spending premise, analysts have determined that the 4 percent rate could be underestimated by 0.32 to 0.75 percent. In other words, because spending tends to decrease throughout retirement, the “safe” withdrawal rate guideline may be closer to a 4.5 percent.4

When developing a retirement withdrawal rate, remember that an investment portfolio should be sufficiently diversified to allow for growth opportunity paired with risk-mitigation financial vehicles.5

 Content prepared by Kara Stefan Communications

1 Bogleheads.org. Jan. 10, 2017. “Safe Withdrawal Rates.” https://www.bogleheads.org/wiki/Safe_withdrawal_rates.

Accessed March 3, 2017.

2 Wade Pfau. Forbes. April 19, 2016. “The 4% Rule and The Search for a Safe Withdrawal Rate.” https://www.forbes.com/sites/wadepfau/2016/04/19/the-4-rule-and-the-search-for-a-safe-withdrawal-rate/#772ae67f5a10. Accessed March 3, 2017.

3 Michael Kitces. Nerd’s Eye View. June 3, 2015. “The Ratcheting Safe Withdrawal Rate – A More Dominant Version Of The 4% Rule?” https://www.kitces.com/blog/the-ratcheting-safe-withdrawal-rate-a-more-dominant-version-of-the-4-rule/. Accessed March 3, 2017.

4 Derek Tharp. Nerd’s Eye View. Feb. 22, 2017. “The Impact of Decreasing Retirement Spending on Safe Withdrawal Rates.” https://www.kitces.com/blog/safe-withdrawal-rates-with-decreasing-retirement-spending/. Accessed March 3, 2017.

5 Fidelity. “Diversify Your Portfolio.” https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/diversify-your-portfolio. Accessed April 10, 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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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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