BRED Slices Mortgages Into Affordable Pieces

Baby boomers have long been the movers and shakers of the real estate market, but millennials are expected to be the biggest buyers in 2019. Millennials are projected to account for 45 percent of mortgages, compared to 37 percent for Generation X and 17 percent for boomers in the new year. This trend is expected to continue well into the future, as millennials climb the income ladder and trade up to homes in mid- to upper-tier prices.1

One big problem is people shopping for homes today tend to have more income than savings to contribute to a down payment. To help younger buyers qualify for a home loan, the mortgage market has rolled out a new type of mixed-rate mortgage, called the blended rate equity driver (BRED).

This type of loan pairs both fixed and variable mortgage structures into a single first‐lien mortgage using a combination of the 30‐year fixed rate mortgage (FRM), the 15‐year FRM and the 5/1 adjustable rate mortgage (ARM).2

The specific mix can be tailored to the buyer, but in each case, the goal is to have equity grow faster through principal payments. Typically, a homeowner garners home equity via three paths: down payment, price appreciation and principal payments over time. However, the real estate market moves fast and is unpredictable. Homebuyers are more transient these days and want the option to relocate, if necessary, so they don’t get stuck with an unaffordable mortgage.

While it’s important to match a home and mortgage to meet your specific needs, it’s also critical to do so with a long-term perspective toward your eventual retirement and financial goals. It’s normally advisable to live within one’s means, but when it comes to buying a home, better advice may be to live below your means. Be sure to consult with a professional mortgage lender or broker to help decide what’s best for your unique situation.

Purchasing a more affordable home frees up more discretionary income that can help create a better financial future. Please contact us if you’re looking for ways to add more confidence to your retirement income plans through the use of insurance products.

Content prepared by Kara Stefan Communications.

Aly J. Yale. Forbes. Dec. 6, 2018. “2019 Real Estate Forecast: What Home Buyers, Sellers And Investors Can Expect.” https://www.forbes.com/sites/alyyale/2018/12/06/2019-real-estate-forecast-what-home-buyers-sellers-and-investors-can-expect/. Accessed Dec. 9, 2018.

2 National Association of Realtors. 2018. “BRED Mortgage: More Money in Your Pocket.” https://www.nar.realtor/sites/default/files/migration_files/bred-mortgage-introduction-10-19-2015.pdf. Accessed Dec. 9, 2018.

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

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

Stock Buybacks Explained

When the 2017 Tax Cuts and Jobs Act reduced the corporate tax rate from 35 percent to 21 percent, the hope was companies would spend their influx of money on expansion and increased jobs and wages. Instead, public companies’ most popular way to spend the excess capital has been to buy back their own stock.1

Stock buybacks can be beneficial to both the corporation and its stockholders. Those selling their stock generally do so at a premium, so they’re happy. Shareholders who retain their stock are also pleased because the same amount of earnings is spread between fewer shares, creating higher earnings per share (EPS). Also, company executives generally buy back stock when they feel the current price, which may well be at a record high, is still below its intrinsic value. They benefit because, in many cases, their bonus is linked to EPS growth.2

Even the best-known investor in the world, Warren Buffett, has said, at Berkshire Hathaway’s 2004 annual meeting, “When stock can be bought below a business’s value, it is probably the best use of cash.”3 Buying back stocks is a simple move that can artificially inflate the value of shares without all those complicated expansion plans. However, critics decry the move as masking the true value of a publicly traded business.

Stock buybacks were illegal before the Reagan administration. Legislators believed companies diverting money from employee compensation, research and development would create an income and wealth discrepancy leading to stagnation of the working-class economy.4

The reality is common stockholders don’t have much control over the value of shares. If the price is high, they may want to sell. However, if the company is engaged in a buyback, that could be a clue they expect share prices to go higher, so it may make sense to hang on to shares.

It may be wise to consider why you’d want to sell anyway. Are the proceeds earmarked to pay for a particular financial goal, such as a wedding or college tuition? It’s important to keep your own financial objectives in mind, rather than selling based solely on a company’s dealings. If you find yourself in this situation, we’d be happy to review your portfolio and offer advice within the context of your goals, risk tolerance and investment timeline.

According to Goldman Sachs, U.S. companies were on track to reach $1 trillion in buybacks in 2018 – a pace nearly double that of 2017.5 Federal Reserve data shows buybacks are now equivalent to 4 percent of annual economic output.6

Some of the lowest-paying industries have been the most prolific participants in stock buybacks. From 2015 to 2017, the restaurant industry spent 140 percent of its profits on buybacks (borrowing or dipping into cash allowances to purchase the shares), the retail industry spent nearly 80 percent of its profits on buybacks, and food-manufacturing firms nearly 60 percent.7

Despite concerns that buybacks would reduce long-term investment, some companies have been spending capital at the fastest pace in 25 years. Unfortunately, this is not universally true. Goldman Sachs reports 79 percent of growth in S&P 500 capital spending came from a mere 10 companies.8

Furthermore, S&P 500 firms account for less than 50 percent of business profits and less than 20 percent of employment in the United States. A silver lining of buybacks is what shareholders do with the proceeds after selling. A common route is investing in smaller public and private firms, which does more to support innovation and job growth throughout the economy.9

Content prepared by Kara Stefan Communications.

Larry Light. Forbes. Aug. 31, 2018. “Stock Buybacks Outstrip Capital Spending For 2018’s 1st Half: Is That Bad?”  https://www.forbes.com/sites/lawrencelight/2018/08/31/stock-buybacks-outstrip-capital-spending-for-2018s-1st-half-is-that-bad/#6a16ea066615. Accessed Dec. 9, 2018.

2 Ibid.

3 Eric Rosenbaum. CNBC. Sept. 1, 2018. “Warren Buffett explains the enduring power of stock buybacks for long-term investors.” https://www.cnbc.com/2018/08/31/warren-buffett-explains-the-enduring-power-of-stock-buybacks.html. Accessed Dec. 9, 2018.

Annie Lowrey. The Atlantic. July 31, 2018. “Are Stock Buybacks Starving the Economy?” https://www.theatlantic.com/ideas/archive/2018/07/are-stock-buybacks-starving-the-economy/566387/. Accessed Dec. 9, 2018.

5 Eric Rosenbaum. CNBC. Sept. 1, 2018. “Warren Buffett explains the enduring power of stock buybacks for long-term investors.” https://www.cnbc.com/2018/08/31/warren-buffett-explains-the-enduring-power-of-stock-buybacks.html. Accessed Dec. 9, 2018.

Annie Lowrey. The Atlantic. July 31, 2018. “Are Stock Buybacks Starving the Economy?” https://www.theatlantic.com/ideas/archive/2018/07/are-stock-buybacks-starving-the-economy/566387/. Accessed Dec. 9, 2018.

Ibid.

Matt Egan. CNN. Sept. 17, 2018. “Corporate America is spending more on buybacks than anything else.” https://money.cnn.com/2018/09/17/investing/stock-buybacks-tax-cuts/index.html. Accessed Dec. 9, 2018.

Jesse M. Fried and Charles C.Y. Wang. Harvard Business Review. March-April 2018. “Are Buybacks Really Shortchanging Investment?” https://hbr.org/2018/03/are-buybacks-really-shortchanging-investment. Accessed Dec. 9, 2018.

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 or investment 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.

For Some Retirees, Home is Where the Debt is

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

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

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

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

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

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

Content created by Kara Stefan Communications.

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

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

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

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

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

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

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

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

Generation Fun

When we talk about planning for retirement, we’re usually referring to financial objectives and income strategies. These things are important, but they’re not the only ways to adequately prepare for retirement. In addition to creating an income strategy, consider developing a specific plan for what you want to do — day in and day out — for a retirement that could last 20 to 30 years.

After all, knowing what you want to do in retirement can help put a number on how much money you’ll need to save. For example, a retiree with big travel plans will likely need a larger nest egg than someone cultivating a vegetable garden. Give us a call; we’d love to meet with you to discuss your specific goals and begin drafting a detailed retirement income strategy.

For many people, retirement is a time to do all the things they never had time to do before. Merrill Lynch found that people between ages 65 and 74 reported having more fun than any other age group. However, it’s easy to sink into daily routines that can lead to boredom and lethargy.1

To help maximize your enjoyment in retirement, plan to have a plan. For example, carve out time for your passions or develop a new interest. Get out of the house regularly to discover places you’ve always wanted to visit — a local museum or restaurant, a neighboring city or a far-flung exotic locale. The top criteria retirees use when seeking new adventures are the arts, fine dining, learning, volunteering, outdoor water activities, outdoor land activities and — in its own category — golf.2


1 William P. Barrett. Forbes. July 14, 2017. “25 Great Places To Follow Your Passions In Retirement In 2017.” https://www.forbes.com/sites/williampbarrett/2017/07/14/great-places-to-follow-your-passions-in-retirement-in-2017/#3d003f0c92df.

Accessed May 10, 2018.

Ibid.

Music Plays Instrumental Role in Healing Ailments

Hearing a familiar song from a happy period in your life, such as childhood, can instantly make you feel joyful. It’s as if you’re right back there — toe tapping, head bopping and singing along. Just as with our sight, smell and taste senses, positive auditory memories can enhance mood and transport us back to a happier time.

The power of music has led researchers to study various applications of music therapy to help people overcome the pain of health conditions, emotional challenges and even the cognitive decline that often accompanies old age.1

It’s not enough to believe we will all grow old gracefully. This usually doesn’t happen without planning. A big part of planning for retirement isn’t just how to provide enough income for the rest of our life, but how to help ensure we still enjoy a high quality of life no matter our age.

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; just give us a call. As for creating a plan to help enhance quality of life, consider some of these music therapy applications.

Music therapy is now a board-certified health profession. With approximately 7,500 practitioners throughout the country, the practice has become prevalent in nursing homes and hospices. The American Music Therapy Association reports about 10 percent of musical therapists work with terminally ill patients in a new discipline called end-of-life music therapy.2

 A growing body of research indicates music therapy can help improve cognitive function in patients with Alzheimer’s disease.3 It also can be used to aid in stress and pain management, memory enhancement, communication and physical rehabilitation.4

Further, the discipline has been found to help people with psychiatric problems, such as depression, trauma and schizophrenia. Music can help calm patients as well as help them process emotions, trauma and grief.5

Interestingly, the military has used forms of music therapy since the post-World War I era. Trained musical therapists use it as a tool to help wounded, injured or ill soldiers express their thoughts nonverbally. Research also shows music can be effective at increasing neuroplasticity in the brain, which is an important role in helping veterans address symptoms of PTSD and traumatic brain injuries.6

 Content prepared by Kara Stefan Communications.

1 Sharon Otterman. The New York Times. Jan. 15, 2018. “Music Therapy Offers an End-of-Life Grace Note.” https://www.nytimes.com/2018/01/15/nyregion/music-therapy-nursing-home-hospice.html. Accessed April 13, 2018.

2 Ibid.

3 Sherry Christiansen. Alzheimer’s Universe. July 24, 2017. “Quick Alzheimer’s Prevention Pearl: Studies Show Music Improves Cognition in People with Alzheimer’s Disease.” https://www.alzu.org/blog/2017/07/24/how-music-helps-with-alzheimers-prevention/. Accessed April 18, 2018.

4 American Music Therapy Association. 2018. “What is Music Therapy?” https://www.musictherapy.org. Accessed April 13, 2018.

5 Molly Warren. National Alliance on Mental Illness. Dec. 19, 2016. “The Impact of Music Therapy on Mental Health.” https://www.nami.org/Blogs/NAMI-Blog/December-2016/The-Impact-of-Music-Therapy-on-Mental-Health. Accessed April 18, 2018.

6 Frank Otto. Drexel University News Blog. March 20, 2018. “3 Things to Keep in Mind About Music Therapy in the Military.” https://newsblog.drexel.edu/2018/03/20/3-things-to-keep-in-mind-about-music-therapy-in-the-military/. Accessed April 13, 2018.

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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Notes on U.S. Infrastructure

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

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

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

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

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

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

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

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

Content prepared by Kara Stefan Communications

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

2 Ibid.

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

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

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

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

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

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

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How Losing Sleep Could Translate to a Loss of Money

Some teenagers seem to sleep a lot. As parents and grandparents, we can find this rather aggravating. But the fact is, as we get older, our sleep patterns may change, and our sleep can be less restful.1 Perhaps it’s a good idea to let young people sleep in peace while they still can.

Scientists say young adults require about nine hours of sleep a day, on average. If they get less than eight hours, they may have a harder time paying attention. Full-grown adults, on the other hand, need an average of seven and a half hours. Unfortunately, studies show about one-third of adults in Western societies get less than that on a regular basis.2

A recent study by the University of Zurich and the University Hospital Zurich found a correlation between chronic lack of sleep and increased risk-seeking behavior. Scientists trace the link to the brain’s right prefrontal cortex, which is directly connected with higher risk-seeking behavior. The researchers theorize that when a person persistently does not get enough sleep, this area of the brain does not recover properly, which prompts behavioral changes. Interestingly, the researchers found that study subjects did not notice they engaged in riskier behaviors and therefore were not cognizant of this relationship with sleep patterns.3

The study’s authors observed that sound sleep, of the appropriate duration, is critical for good decision making — especially for political and economic leaders whose daily decisions impact the larger society.4 This advice is also worth pursuing in our own lives. In other words, avoid making important decisions when you haven’t been sleeping well.

As financial professionals, we are here to help guide you. We’ll give your retirement income goals our full attention; just give us a call to set up an appointment to discuss how we can help you create a retirement income strategy through the use of insurance products.

Although we often hear that everyone needs a full eight hours of sleep each night, the actual amount varies by individual — usually between seven and nine hours.Just one night of insufficient sleep can make us cranky and too tired for healthy activities — like engaging in exercise or preparing a nutritious meal.6

Over time, sleep deprivation can increase the risk of developing a variety of chronic health problems, including obesity, diabetes, high blood pressure and heart disease. It may make us more vulnerable to getting sick when exposed to a cold virus. Chronic lack of sleep also can make us more susceptible to experiencing depression and anxiety.7

Women are 40 percent more likely to suffer from insomnia or symptoms of insomnia compared to men, but the reasons for this are unclear. Some researchers hypothesize that women’s traditional role in society as caregivers could be a contributing factor. Furthermore, single parents who serve as both caregivers and financial providers are at higher risk of insomnia. Some scientists speculate the sleep circuitry for women could be different from men and, when combined with social roles as both worker and caregiver, this may result in a higher risk for sleep disorders.8

While the length and quality of sleep is a personal matter, it cumulatively has an impact on the economy. According to a study by RAND Europe, the United States loses approximately $411 billion a year due to workers who sleep less than six hours a night — which represents around 2.28 percent of U.S. gross domestic product. However, if those poor sleepers got one extra hour of sleep each night, the data suggests about $226.4 billion could be added back to the economy.9

Content prepared by Kara Stefan Communications.

National Sleep Foundation. “Aging and Sleep.” https://sleepfoundation.org/sleep-topics/aging-and-sleep. Accessed Dec. 29, 2017.

2 ScienceDaily. Aug. 28, 2017. “Chronic lack of sleep increases risk-seeking.” https://www.sciencedaily.com/releases/2017/08/170828102725.htm. Accessed Dec. 19, 2017.

3 Ibid.

4 Ibid.

5 William Kormos, M.D. Harvard Medical School. May 2016. “Ask the Doctor: The right amount of sleep.” https://www.health.harvard.edu/staying-healthy/ask-the-doctor-right-amount-of-sleep. Accessed Dec. 19, 2017.

6 Julie Corliss. Harvard Medical School. July 2017. “The health hazards of insufficient sleep.” https://www.health.harvard.edu/staying-healthy/the-health-hazards-of-insufficient-sleep. Accessed Dec. 19, 2017.

7 Ibid.

8 MedicalXpress. Dec. 18, 2017. “New guide aims to unmask unique challenges women face in getting healthy sleep.” https://medicalxpress.com/news/2017-12-aims-unmask-unique-women-healthy.html. Accessed Dec. 19, 2017.

9 Sandee LaMotte. CNN. Sept. 27, 2017. “Sacrificing sleep? Here’s what it will do to your health.” http://www.cnn.com/2017/07/19/health/dangers-of-sleep-deprivation/index.html. Accessed Dec. 19, 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.

Why It’s Important to Care for the Caregivers

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

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

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

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

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

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

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

2 Ibid.

3 Ibid.

4 Ibid.

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

6 Ibid.

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

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

9 Ibid.

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

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

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

Monitoring Insurance Needs Is a Good Policy

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

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

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

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

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

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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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