Money Saving Tips

Reining in Impulse Purchases

Try as we may to be responsible, almost all of us end up spending money frivolously at one point or another. It’s good to recognize this and perhaps set aside money in your budget for discretionary purchases. However, on a day-to-day basis, it’s important to remain vigilant about spending habits and be aware of when those purchase impulses are likely to hit. The following are some tips to help you stay on track.1

  • Plan meals for the week, including what nights it would be most convenient for your schedule to dine out or pick up takeout. Break out your favorite slow cooker recipe and freeze the leftovers so you always have a meal on hand. Maintain a garden to grow fresh herbs and produce.
  • Don’t buy more than you plan to eat — with no more than one additional meal of leftovers. Too often, we think a large dish will last us all week, but we forget that we’ll get tired of eating it. Be realistic, and don’t waste money on food you may end up throwing away.
  • Don’t fool yourself into thinking that an impulse purchase is a reward. If you’re working toward a goal, budget a treat for yourself once you achieve it. That’s a reward. If you find something you suddenly can’t live without, don’t dream up some reason why you deserve to buy it. That’s a justification.
  • Don’t wait until you’re living well within your means to start saving and/or investing in a retirement account. Saving a little today can yield far better results than waiting to save more, years down the road — for some people that day never comes. Just tighten the belt a little more and start saving today. You may even feel good enough about the move that you don’t miss the money in your daily budget.
  • Don’t engage in “retail therapy” to make yourself feel better. A brisk walk in nature can yield the same results at far less cost.
  • Review your bank and credit card statements. Check to make sure you don’t have any incorrect charges, fraudulent purchases or penalty fees. In today’s environment of computer hacking, these things are far more common and can happen to anyone.
  • Don’t try to keep up with the Joneses. Establish your own goals and don’t let friends’ and neighbors’ new purchases distract you. When you try to keep up with others, you’re less likely to meet your own goals.

1 Nancy L. Anderson. June 22, 2016. “10 Expensive Habits You Can, And Should, Break Today.” https://www.forbes.com/sites/nancyanderson/2016/06/22/10-money-habits-you-need-to-break-today/#5255d64c31e8. Accessed Dec. 7, 2017.

Making Friends, Strengthening Relationships

In the early days of childhood, we start picking up communication skills that are continually developed throughout our lives. We make close friends, stay in touch with them and make sure we’re there for the people we care about.

But during retirement, it may take more effort to maintain those friendships. It’s important to remember that while we don’t typically lose these skills, we might lose the motivation to use them. Here are a couple of good reasons to keep up those social connections in retirement:1

  • A study by the Rush Alzheimer’s Disease Center in Chicago found that highly social seniors had a 70 percent lower rate of cognitive decline compared to those who were less social.
  • Researchers at the University of Alabama Birmingham found that using the internet was associated with a 30 percent decrease in depressive symptoms.

As financial professionals, we work with retirees every day helping them create retirement income strategies using a variety of insurance products. We’ve seen firsthand how easy it is to become more isolated when you stop working. You might find that by attending a financial seminar or client workshop, you’ll meet people in the same situation as you. Even if you feel like your retirement income strategy is well-established, we encourage you to continue monitoring your finances and participate in events where you not only have the opportunity to learn, but to spend time with people who may share your same interests and concerns.

When pre-retirees were asked what they would miss most about not working anymore, 17 percent predicted they’d miss their daily social interactions. However, when actual retirees were asked what they missed most from work, that number doubled — 34 percent said they missed their social connections from work.2

Another thing that’s different about retirement is that you’re no longer competing for career opportunities, so priorities can change. Hobbies you might have pursued during your career, like golf and tennis, may have been important to expand your network. But retirement can be a time for careful reflection; recognize that your energy, health and financial resources may be more limited now, so it’s important to prioritize what you want to do irrespective of anyone else’s expectations.3

By the same token, you may want to explore a deeper relationship with someone who’s been right there with you for decades: your spouse. Find out what your partner is like now. As you spend more time together, you might be surprised at how they’ve changed since you started working, and maintaining your relationship with your spouse can enhance your journey through retirement.4

New research has found that friendships in retirement may be even more valuable than family relationships. The quality of friendships proved to be a predictor of whether someone would acquire a chronic illness as they aged, whereas the quality of family relationships was not.5

Another interesting aspect of senior friendships is that women are more likely than men to make friends with others who are either much younger or much older. Researchers hypothesize this is because men tend to bond over activities, while women create more of an emotional connection — they don’t have to plan an event to nurture their relationships.6

One reason this phenomenon is particularly important is because seniors tend to lose similarly aged peers as they grow older. By establishing relationships with people from a younger generation, you’re more likely to maintain those friendships throughout your life.

Content prepared by Kara Stefan Communications

1 NEA. 2017. “The Value of Maintaining Social Connections Throughout Retirement.” https://www.neamb.com/the-value-of-maintaining-social-connections-throughout-retirement.htm. Accessed July 13, 2017.

2 Roger Whitney. The Retirement Answer Man. March 6, 2017. “One thing to do now to improve your social life in retirement.” http://rogerwhitney.com/social-life-in-retirement/. Accessed July 13, 2017.

3 Margaret Manning. Sixty & Me. 2016. “How to make friends as an adult in 4 simple steps.” http://sixtyandme.com/how-to-make-friends-as-an-adult-in-4-simple-steps/. Accessed July 13, 2017.

4 Emily Brandon. U.S. News & World Report. May 22, 2017. “7 Tips to Maintain Social Connections in Retirement.” https://money.usnews.com/money/retirement/aging/articles/2017-05-22/7-tips-to-maintain-social-connections-in-retirement. Accessed July 13, 2017.

5 Susie Neilson. New York Magazine. June 16, 2017. “In Old Age, Friendships Might Matter Even More Than Family.” http://nymag.com/scienceofus/2017/06/in-old-age-friends-might-matter-even-more-than-family.html. Accessed July 13, 2017.

6 Verena von Pfetten. New York Magazine. May 24, 2017. “When Your Best Friend Is Younger than Your Daughter.” http://nymag.com/scienceofus/2017/05/why-cross-generational-female-friendships-are-on-the-rise.html. Accessed July 13, 2017.

This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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How Much Retirement Income Should Come From Savings?

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

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

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

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

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

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

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

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

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

Content prepared by Kara Stefan Communications

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

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

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

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

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

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

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

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

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

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

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Tips for Bargain Hunters

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

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

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

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

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

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

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

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

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

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

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

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

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

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Divorce During Retirement

A funny thing happens when you get busy with trying to achieve all the things you want out of life: You lose a few along the way. Unfortunately, some people lose their marriage.1 However, for those who are truly unhappy and can’t see a way back to blissful partnership, a “gray divorce” isn’t necessarily all negative. Even in retirement, leaving a spouse can open up new avenues to be explored, the chance to pursue activities perhaps not supported before and new opportunities to reinvent yourself.

With that said, you also must deal with a myriad of details when it comes to dividing assets to help ensure each ex-spouse has enough income to live comfortably during retirement. Just as it takes a village to raise children, it can take a team of experienced and qualified professionals to help you do this, from attorneys to financial advisors to tax planners and perhaps even a therapist. The goal is to emerge confident about your financial future, and we’re here to help both spouses on this journey should you need it.

When it comes to Social Security, there are certain rules that apply to benefits for a divorced spouse based on the ex’s earning history. For example, the marriage must have lasted for at least 10 years, the couple must be divorced for at least two years and the claiming ex must be currently unmarried – if the claimer gets remarried, the ex’s spousal benefits will stop. Furthermore, the ex-spouses must both be at least age 62 to begin drawing spousal benefits, and the spouse/divorcee must be full retirement age to be eligible for the full spousal benefit.2

Another important component to address is life insurance. If there are alimony payments involved, life insurance can help cover the loss of that income should the payer die first. Depending on their circumstances, divorcing couples may want to update their named beneficiaries on their respective policies. If a policy has a cash value, that money belongs to the owner. While the policy is active, the owner may forgo the death benefit and instead take the cash value, a process known as cashing out your life insurance policy.3

Research has found that divorce may be a reason why many people are working long past traditional retirement age.4 Because of this, it’s important to set aside animosity and work on an equitable agreement for both spouses’ retirement. Divorcing spouses should be cognizant that if one ends up struggling financially, their adult children may have to pick up the slack.5

 Content prepared by Kara Stefan Communications

1 Linda Melone. Next Avenue. July 11, 2016. “Why Couples Divorce After Decades of Marriage.” http://www.nextavenue.org/slideshow/why-couples-divorce-after-decades-of-marriage/. Accessed June 6, 2017.

2 Social Security Administration. “Retirement Planner: If You Are Divorced.” https://www.ssa.gov/planners/retire/divspouse.html. Accessed June 6, 2017.

3 Greg DePersio. Investopedia. Nov. 25, 2015. “How Life Insurance Works in a Divorce.” http://www.investopedia.com/articles/personal-finance/112515/how-life-insurance-works-divorce.asp. Accessed June 6, 2017.

4 Ben Steverman. Bloomberg. Oct. 17, 2016. “Divorce Is Destroying Retirement.” https://www.bloomberg.com/news/articles/2016-10-17/divorce-is-destroying-retirement. Accessed June 6, 2017.

5 Charlotte Cowles. The Cut. May 12, 2017. “My Mom Is Broke. How Can I Help Her?” https://www.thecut.com/2017/05/my-mom-is-bad-with-money-how-do-i-help-her.html. Accessed June 6, 2017.

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.

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.

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

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

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Savings and Investment Updates

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

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

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

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

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

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

Content prepared by Kara Stefan Communications.

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

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

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

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

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

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

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

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

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