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Women’s Top Retirement Concerns in a Post-COVID World

There is no doubt that the COVID-19 virus has had quite an impact on the world. Physically, psychologically and financially there will be fallout for years to come from this pandemic.

This article is not to argue points as to whether this or that party handled things optimally or whether you mask or don’t mask or even whether you should or shouldn’t get the vaccine. No, in these areas, I tend to hold to a position of liberty for the individual (freedom of thought and action) and charity (love) for those with whom we may disagree. In other words, no matter your position, just don’t be a jerk about it! Be thoughtful, caring, considerate and most of all, be flexible and teachable.

Specifically to the article’s title, in the area of finance and the economy, this virus has really impacted women particularly hard. According to a May through June 2020 Nationwide study of over 2,500 men and women, women seem to shoulder much of the worry when it comes to the economy and the growing concerns of preparedness and their ability to retire. This has been taken to even higher levels due to the pandemic. There are five areas that were found in the study that showcased the most common concerns.

According to the research, the first concern was that of reduced retirement income longevity with 72% of respondents expressing concern in this area. At our firm, we have found that this is a direct result of losses in investment asset value which is directly tied to investment risk management. There is typically a lack of understanding surrounding the risk management philosophy of their investments and how they are affected when markets correct to any degree but especially that of last year. Many women (and men for that matter) don’t know that there is more than one way to manage investment portfolio risk (that is, static versus dynamic). Also, understanding how much loss would be needed to knock their long-term income plan off the rails is not only freeing in the sense of just knowing the unknown (for many) but also helps build the parameters needed in the area of investment risk management.

The second was concern about a possible recession (82%) or an on-going bear market (74%). Since this market recovery has been the fastest on record, this fear may have subsided a bit since last year’s survey. However, one should not be complacent, the economy as a whole is not out of the woods yet. Also, bear markets typically last 1-2 years. 2020’s market recovery is an anomaly in many respects. There will be more bear market corrections, it’s inevitable and thus a typical bear market time-frame is not outside the realm of expectation. The question is how are you addressing that risk.

The third concern women expressed was the level of their market losses and lack of preservation for their investment assets (36%). This ties back to my comments in the first concern above but also highlights that many believe they have to have all their assets in the market to have a successful investment strategy. This may or may not be the case. Our philosophy is don’t have any more money in the market than what’s needed to meet a long-term retirement plan income goal. There are ways to off-lay certain risks to preserve your income in retirement but they should be coordinated with a sound financial plan.

The fourth concern involved not having enough guaranteed sources of income (as just discussed). Fifty-nine percent of women stated they’d feel more secure knowing a portion of their portfolio was used in a more predictable type asset like an annuity. I have nothing against annuities, we use them here in our office. However, they are complex products with wide-ranging applications. Using the wrong product in the wrong way with the wrong amount of money can devastate a retirement plan. We know, we have to fix many of these type of problem cases coming into our office. A product solution of any kind should be in the best interest of the client and always tied back to a sound financial plan. Anything different and you’re just being sold.

The fifth and final area of concern was being properly diversified. Diversification is important to any long-term investment strategy. However, not necessarily in the way many are used to. Doesn’t it make sense that you would want to be diversified into areas that actually show the potential of making money? Of course! Also, diversifying retirement income sources falls into this camp as well.

Women are aware of the challenges they face in a macro sense, they tend to be ahead of us gents in that regard. However, many may be unaware or behind in addressing the retirement plan gaps they may have and how those may have been exacerbated by the COVID crisis. This is where we have been able to help many of our female clients. Planning that is in their best interest to help meet their unique goals and challenges.

Fixed Annuities are long-term insurance contacts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
Diversification does not guarantee a profit or protect against a loss in a declining market.  It is a method used to help manage investment risk.
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Pandemic Highlights the Difference Between Economics and Finance

One of the more glaring lessons of the 2020 pandemic was that the economy and the stock market are not the same thing, nor do they necessarily move in lockstep. They are measurements of two different things, often indicating how the other will react. However, as we saw last year, the economy is a greater indicator of how Main Street is doing while the stock market is more a reflection of Wall Street.

The day-to-day performance of major stock indices, such as the S&P 500 and the Dow Jones Industrial Average, is not usually an accurate account of what’s happening in the lives of most Americans.1

As a general rule, economics is more of a social science. It conveys a picture that captures the interplay between real resources and human behavior. Finance, on the other hand, is a proactive measure. Its focus is on the tools and techniques of managing money.

We hear these two terms used interchangeably all the time, though, and that’s because they often do move in the same direction. That’s not what happened last year. While millions of Americans lost jobs and other sources of earned income, after an initial drop in the stock market, many investors saw their portfolios make ample gains. This was a good demonstration of how your money in the market could be working as another source of income. It’s another way of diversifying your assets, so that your investments can keeping earning money even if you can’t. Remember, we’re here to help you put your assets to work, so call on us if you need guidance.

Economics covers the production, consumption and distribution of goods and services and how people interact with them — through buying, selling, or working to buy or sell them — and how they react to price changes driven by supply, demand and inflation. It is, after all, people who drive economic activity and ultimately growth. There are two main branches of economics: macroeconomics and microeconomics.2

Macroeconomics measures the overall economy through factors such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP) and changes in employment levels.3 Microeconomics tracks specific factors within the economy, largely the choices made by people, households and industries. It is a study of the incentives behind those decisions and how they affect the use and distribution of resources.4

Finance, on the other hand, deals specifically with the use and distribution of money. As a discipline, it comprises three basic categories: public finance, corporate finance and personal finance. Within those realms, we often talk about the difference between Main Street and Wall Street. Main Street describes the average American investor as well as small independent businesses, while Wall Street consists of high net worth investors, large global corporations and the high finance capital markets.

There are inevitable conflicts between these two sectors. For example, government regulations frequently are designed to protect individual investors and/or small businesses, but they can pose a detriment to Wall Street profitability. The opposite can also be true, where benefits for large corporations can hurt small businesses, local jobs and small investors.5

Early on, the Federal Reserve and other central banks stepped up to infuse the economy with capital, thus stemming the tide of the economic decline. While these moves helped bolster the stock market, they did not prevent the loss of hundreds of thousands of jobs or stimulate consumerism. In other words, policy and even legislative intervention may have helped Wall Street, but it didn’t do that much to encourage economic growth or job creation.6

Content prepared by Kara Stefan Communications.
1 Clark Merrefield. Journalist Resource. Jan. 11, 2021. “The stock market is not the economy. Right? Here’s what the research says.” https://journalistsresource.org/studies/economics/stock-market-not-economy/. Accessed Feb. 4, 2021.
2 Stephen D. Simpson. Investopedia. Nov. 2, 2020. “Finance vs. Economics: What’s the Difference?” https://www.investopedia.com/articles/economics/11/difference-between-finance-and-economics.asp. Accessed Feb. 4, 2021.
3 Investopedia. Dec. 29, 2020. “Macroeconomics.” https://www.investopedia.com/terms/m/macroeconomics.asp. Accessed Feb. 4, 2021.
4 Investopedia. Nov. 2, 2020. “Microeconomics.” https://www.investopedia.com/terms/m/microeconomics.asp. Accessed Feb. 4, 2021.
5 Corporate Finance Institute. 2021. “What is Main Street vs Wall Street?” https://corporatefinanceinstitute.com/resources/knowledge/finance/main-street-vs-wall-street/. Accessed Feb. 4, 2021.
6 Shyam Sunder. Yale Insights. June 17, 2020. “Liquidity Injections May Have Driven the Stock Market Recovery.” https://insights.som.yale.edu/insights/liquidity-injections-may-have-driven-the-stock-market-recovery#gref. Accessed Feb. 15, 2021.
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.
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How Do Demographics Effect the Economy?

Back in 2019, economists claimed that the large population of older Americans, dubbed the “silver tsunami,” was creating a drag on the economy. The fear was that Americans were aging toward retirement at a faster rate than young adults were entering the workforce. Not only does this put a strain on our finance-as-we-go Social Security and Medicare programs, but a smaller workforce is less able to drive economic growth in the future.1

Then the COVID-19 outbreak descended in 2020, which could result in a dramatic shift in our demographic mix. While Americans 65 and older account for 16% of the population, they represent 80% of people who are dying of the coronavirus. In just the first five months of the pandemic, the 65-and-up cohort represented between 70% and 94% of COVID-19 deaths, with variance by state. People age 85 and older accounted for 33% of those deaths.2

These numbers don’t just change the demographic picture, they also represent a transition in wealth. While estimates in wealth transfer from baby boomers to younger generations have been projected as high as $70 trillion over the next few decades, that timeline could move up. Because people age 65 and older are more vulnerable to the severe complications of COVID-19, some of those windfalls could be occurring sooner. That means family members will have to figure out the best way to handle an unexpected inheritance ahead of schedule.3

If you are looking at an inherited windfall, we can help guide you with strategies for your unique situation. There are numerous new laws and rules associated with things like inherited IRAs, as well as strategies you can take advantage of to position yourself for both investment growth and a reliable stream of income during your retirement. Please contact us to discuss.

Meanwhile, Americans are having fewer babies. Because many of today’s young adults entered the job market when the country was in a severe economic recession, it has taken longer for many to get a foothold in their career and build up a financial war chest. To do this, many have delayed buying a home and starting a family. In fact, between the start of the financial crisis in 2007 and 2018, the total fertility rate in the U.S. fell by 23%, from 2.12 children per woman to 1.73.4

As such, our population is growing at the slowest rate since the 1930s. The pandemic has not helped that statistic. Between July 2019 and July 2020, the nation grew at the lowest yearly rate since at least 1900 as a result of reduced immigration and birth rates.5

The Economic Innovation Group, using July 2020 data from the U.S. Census Bureau, shows that population growth is uneven across states. While the population has declined in California, Illinois and New York in the past few years, states with the highest rates of population growth since 2010 include:

Utah (17.1%)
Idaho (16.3%)
Texas (16.3%)
Nevada (16.1%)
Arizona (15.8%)

Much of that migration could be due to baby boomers moving to warmer climates as they retire. However, recent trends also suggest that younger adults with their newfound ability to work remotely will be inclined to move out of highly populated cities to more affordable areas of the country.

Content prepared by Kara Stefan Communications.
1 Chris Farrell. Forbes. Aug. 25, 2019. “Is An Aging Population Hurting The U.S. Economy?” https://www.forbes.com/sites/nextavenue/2019/08/25/is-an-aging-population-hurting-the-u-s-economy/?sh=7a208e4d3aa1. Accessed Jan. 25, 2021.
2 Meredith Freed, Juliette Cubanski, Tricia Neuman, Jennifer Kates and Josh Michaud. Kaiser Family Foundation. July 24, 2020. “What Share of People Who Have Died of COVID-19 Are 65 and Older – and How Does It Vary By State?” https://www.kff.org/coronavirus-covid-19/issue-brief/what-share-of-people-who-have-died-of-covid-19-are-65-and-older-and-how-does-it-vary-by-state/. Accessed Jan. 25, 2021.
3 Kristen Beckman. BenefitsPro. Nov. 19, 2020. “The great wealth transfer: What boomers and their families need to know.” https://www.benefitspro.com/2020/11/19/the-great-wealth-transfer-what-boomers-and-their-families-need-to-know/. Accessed Jan. 25, 2021.
4 Gilles Pison. World Economic Forum. Jan. 13, 2021. “People have more children in the north of Europe than the south. Here’s why.” https://www.weforum.org/agenda/2021/01/children-europe-eu-north-south-divide-childcare-social-policy-children-mothers/. Accessed Jan. 25, 2021.
5 Stef W. Kight. Axios. Jan. 11, 2021. “America’s population growth is slowing down.” https://www.axios.com/america-losing-population-growth-census-data-0342f3b6-8e98-41a9-92de-209f823d0d63.html. Accessed Jan. 25, 2021.
6 Kaia Hubbard. U.S. News & World Report. Jan. 13, 2021. “Population Growth Rates Are Highest in These States.” https://www.usnews.com/news/best-states/articles/2021-01-13/us-population-growth-rate-slowed-in-past-decade-report-shows. Accessed Jan. 25, 2021.
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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Vaccines and the Stock Market

If there’s one thing that can move the economy and stock market forward, it’s hope. This year, that hope is being presented in the form of COVID-19 vaccines. Economists and Wall Street analysts have long proclaimed that comprehensive economic recovery is not possible until we have contained the virus. The prospect of wide distribution of effective vaccines and herd immunity by the end of the year has put recovery in our crosshairs.1

What does this mean for investors? Review your investment portfolio and get your financial house in order. If we are due for improvement, it could be beneficial to get into the market when prices are low, rebalance often and take advantage of market dips for additional investment opportunities. As always, we are here to help guide on the best way to meet your financial goals.

This hopeful sentiment was echoed by CNBC’s ever-enthusiastic “Mad Money” host, Jim Cramer. He recently proclaimed that the U.S. stock market will be poised for even greater heights if President Biden is successful in forging a plan to quickly and widely distribute the COVID vaccinations.2

Phil Orlando, Federated Hermes’ chief equity market strategist and one of Wall Street’s bullish market analysts, advocates a combination of vaccine rollout and additional fiscal stimulus. He believes one of the surefire ways to boost economic growth is to help lower-skilled unemployed people find work. He predicted that by July 4, the U.S. will be coronavirus-free, setting the stage for a “monster market year.”3

Unfortunately, European stocks continue to struggle despite market exuberance in the U.S. over a new presidential administration. Part of this concern may be that many EU countries have suffered setbacks due to subsequent and more virulent strains of the coronavirus. As before, the U.S. continues to lag on the worst of the effects of the virus as they occur.4 This foreshadowing makes it all the more important that vaccines get into as many arms as possible in the next few months.

Market sectors that have suffered terribly from calls for lockdowns and social distancing are likely to benefit the most from widespread distribution of the COVID-19 vaccine. This includes the aviation and hospitality sectors, as well as the office and retail property market in Europe and the U.S. Of course, the opposite could be true: Pandemic beneficiaries could see a loss in revenues once people get out and about — for example, Amazon, Netflix and Zoom Video.5

Content prepared by Kara Stefan Communications.
1 Robin Wigglesworth. Financial Times. Dec. 2, 2020. “The ‘everything rally’: vaccines prompt wave of market exuberance.” https://www.ft.com/content/d785632d-d9a0-45ae-ae57-7b98bb2fb8d6. Accessed Jan. 25, 2021.
2 Kevin Stankiewicz. CNBC. Jan. 20, 2021. “Jim Cramer says the stock market could ‘explode’ if Biden improves Covid vaccine rollout.” https://www.cnbc.com/2021/01/20/jim-cramer-stocks-could-explode-if-biden-improves-covid-vaccine-rollout.html?recirc=taboolainternal. Accessed Jan. 25, 2021.
3 Stephanie Landsman. CNBC. Jan. 20, 2021. “Covid-19 vaccines will end pandemic in U.S. by early summer, Federated Hermes’ chief equity market strategist predicts.” https://www.cnbc.com/2021/01/20/covid-19-vaccines-will-end-pandemic-in-us-by-early-summer-federated.html. Accessed Jan. 25, 2021.
4 Jim Armitage. Evening Standard. Jan. 25, 2021. “FTSE 100 rises slightly as investors balance surging Wall Street with Covid worries.” https://www.standard.co.uk/business/ftse-100-rises-covid-joe-biden-quarantine-b900967.html. Accessed Jan. 25, 2021.
5 Sumathi Bala. CNBC. Nov. 23, 2020. “Hopes for a coronavirus vaccine are creating market winners – and losers.” https://www.cnbc.com/2020/11/23/investing-coronavirus-vaccine-creates-market-winners-and-losers-.html. Accessed Jan. 25, 2021.
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.
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How Year-End Legislation May Have Affected Tax Season

In late 2020, Congress passed the Consolidated Appropriations Act, which included many tax provisions and extenders as well as additional COVID-19 stimulus relief.

For example, the ability to deduct up to $300 in charitable contributions if the taxpayer doesn’t itemize has been extended for an additional year. The business meal deduction has been increased from 50% to 100% through the end of 2022. The act also extended the repayment period through Dec. 31, 2021, for employers that opted to defer employee payroll taxes in the latter part of 2020.1

As we approach tax season, it could be beneficial to get up-to-date on provisions that may apply to your filing this year. We’re noting just a few here. We recommend you work with a qualified tax professional to understand the opportunities that may benefit you and ensure your taxes are filed accurately and on time. If you would like to learn how insurance products may help you create tax-efficient strategies moving forward, please feel free to reach out to our office.

One of the tax provisions the appropriations bill made permanent was the lower medical expense deduction floor. This means taxpayers may deduct unreimbursed medical expenses that exceed 7.5% of adjusted gross income — down from 10%. However, the bill also extended some tax provisions for another two years, including the residential energy efficient property credit.2

Speaking of energy efficiency, other credits extended for one year include the qualified fuel cell rules for alternative motor vehicles, the alternative fuel refueling property credit and the credit for two-wheeled plug-in electric vehicles.3

Penalty-free distributions from qualified retirement plans for COVID-related reasons expired at the end of 2020. However, the act offers a similar option for non-coronavirus-related disasters, such as wildfires and hurricanes. If a taxpayer is affected by any type of federally declared disaster, he may withdraw up to $100,000 from a qualified plan or IRA through June 25, 2021. Similar to the COVID-related withdrawal rules, disaster-related distributions are exempt from the 10% early withdrawal penalty that normally applies but are subject to ordinary income tax treatment. Taxpayers can repay the distribution over a three-year period with no tax implications.4

Note that individual COVID relief payments paid out by the Treasury are not taxable. However, eligible taxpayers who did not receive the full amount of last year’s two distributions can claim the missing amount as a Recovery Rebate Credit when they file their 2020 taxes this year.5

Content prepared by Kara Stefan Communications.
1 Gordon Gray. American Action Forum. Dec. 22, 2020. “Major Tax Policy Changes in the Consolidated Appropriations Act.” https://www.americanactionforum.org/insight/major-tax-policy-changes-in-the-consolidated-appropriations-act/. Accessed Feb. 4, 2021.
2 Alistair M. Nevius. Journal of Accountancy. Dec. 27, 2020. “Many tax provisions appear in year-end coronavirus relief bill.” https://www.journalofaccountancy.com/news/2020/dec/tax-provisions-in-covid-19-relief-bill-ppp-and-business-meal-deductibility.html. Accessed Feb. 4, 2021.
3 KPMG. Dec. 29, 2020. “United States – President Signs COVID-19 Relief Legislation, Tax Provisions Enacted.” https://home.kpmg/xx/en/home/insights/2020/12/flash-alert-2020-514.html. Accessed Feb. 4, 2021.
4 Robert Bloink and William H. Byrnes. ThinkAdvisor. February 02, 2021. “Year-End Stimulus: What Changed for Retirement Plan Participants.” https://www.thinkadvisor.com/2021/02/02/year-end-stimulus-what-changed-for-retirement-plan-participants/. Accessed Feb. 4, 2021.
5 IRS. Jan. 12, 2021. “IRS ready for the upcoming tax season; last-minute changes to tax laws included in IRS forms and instructions.” https://www.irs.gov/newsroom/irs-ready-for-the-upcoming-tax-season-last-minute-changes-to-tax-laws-included-in-irs-forms-and-instructions. Accessed Feb. 4, 2021.
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 to Help Maintain a High Credit Score

During the holiday shopping season, your credit score is probably the last thing on your mind. But as you start your seasonal spending, remember to use credit wisely so you can start the new year with a healthy credit score. The following tips can help you maintain or potentially improve your credit score throughout the holidays and beyond.

Know how your credit score is calculated

The most common credit score is expressed as a three-digit number ranging from 300 to 850. (Some lenders may calculate it differently, but this should be a good guideline.) The score is derived from a formula using five weighted factors: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and types of credit in use (10%).¹ Keeping these components in mind can help you stay on track with your credit.

Make payments on time

Set up alerts for every credit card you have so you don’t miss notifications of charges, statements, or due dates. To help avoid missed payments, set up automatic payments. If you do miss a payment, contact the lender and bring the account up-to-date as soon as possible.

Keep credit card balances low

If you carry a balance, consider paying down the cards with the highest balance-to-credit limit ratio first while keeping up minimum (or higher) payments on others. Don’t “max out” your available credit.

Be careful about opening and closing accounts

Some retailers may offer discounts on purchases if you sign up for a store credit card, but store cards often have high-interest rates and low credit limits. Unless you plan on shopping regularly at that store and the card offers useful bonuses or discounts, avoid applying for new credit cards solely to save money on purchases. Likewise, try not to close multiple accounts within a short period of time — this could actually hurt your credit score. Research before using credit boosting services. You might be tempted to sign up for a free service that promises to instantly boost your credit score, but they’re usually only worth considering if you have a thin credit file and/or a low credit score. These services can’t fix any late payments you’ve made or reduce the impact of an excessive level of debt.

Monitor your credit report regularly

You can order a free credit report annually* from each of the three major consumer reporting agencies at annualcreditreport.com. If you find incorrect information on your credit report, contact the reporting agency in writing, provide copies of any corroborating documents, and ask for an investigation. *Due to the COVID-19 pandemic, Equifax, Experian, and TransUnion are offering free weekly online reports through April 2021.

¹Fair Isaac Corporation, 2020
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Sharing Your Money Values Can Be Part of Your Legacy

When it’s time to prepare the next generation for a financial legacy, you might want to bring your family members together to talk about money. But sitting down together isn’t easy, because money is a complicated and emotionally charged topic. Rather than risk conflict, your family may prefer to avoid talking about it altogether.

If your family isn’t quite ready to have a formal conversation, you can still lay the groundwork for the future by identifying and sharing your money values — the principles that guide your financial decisions.

Define Your Own Values

What does money mean to you? Does it signify personal accomplishment? The ability to provide for your family? The chance to make a difference in the world? Is being a wise steward of your money important to you, or would you rather enjoy it now? Taking time to think about your values may help you discover the lessons you might want to pass along to future generations.

Respect Perspectives

The unspoken assumption that others share your financial priorities runs through many money-centered conversations. But no two people have the same money values (even relatives). To one person, money might symbolize independence; to another, money equals security. Generational differences and life experiences may especially influence money values. Invite your family members to share their views and financial priorities whenever you have the opportunity.

See Yourself as a Role Model

Your actions can have a big impact on those around you. You’re a financial role model for your children or grandchildren, and they notice how you spend your time and your money. Look for ways to share your values and your financial knowledge. For example, if you want to teach children to make careful financial decisions, help them shop for an item they want by comparing features, quality, and price. If you want teenagers to prioritize saving for the future, try matching what they save for a car or for college. Teaching financial responsibility starts early, and modeling it is a lifelong effort.

Practice Thoughtful Giving

How you give is another expression of your money values, but if a family member is the recipient, your generosity may be misconstrued. For example, your adult son or daughter might be embarrassed to accept your help or worried that a monetary gift might come with strings attached. Or you may have a family member who often asks for (or needs) more financial support than another, which could lead to family conflicts. Defining your giving parameters in advance will make it easier to set priorities, explain why you are making certain decisions, and manage expectations.

For example are you willing and able to:

  • Help fund a college education?
  • Provide seed money for a small business?
  • Help with a down payment on a home?
  • Pay for medical expenses?
  • Contribute to an account for a family member with special needs?
  • Offer nonfinancial help such as child care or transportation?

There are no right or wrong answers as long as your decisions align with your financial values and you are sure that your gift will benefit both you and your family member. Maintaining consistent boundaries that define what help you are willing and able to provide is key. Gifts that are not freely given may become financial or emotional obligations that disrupt family relationships.

Reveal Your Experiences with Money

Being more transparent about your own financial hopes and dreams, and your financial concerns or struggles, may help other family members eventually open up about their own. Share how money makes you feel — for example, the satisfaction you felt when you bought your first home or the pleasure of giving to someone in need. If you have been financially secure for a long time, your children may not realize how difficult it was for you, or for previous generations, to build wealth over time. Your hard-earned wisdom may help the next generation understand your values and serve as the foundation for a shared legacy.

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Five Tips to Regain Your Retirement Savings Focus in 2021

In early 2020, 61% of U.S. workers surveyed said that retirement planning makes them feel stressed ¹. Investor confidence was continually tested as the year wore on, and it’s likely that this percentage rose — perhaps even substantially. If you find yourself among those feeling stressed heading into the new year, these tips may help you focus and enhance your retirement savings strategy in 2021.

  1. Consider increasing your savings by just 1%. If you participate in a retirement savings plan at work, try to increase your contribution rate by just 1% now, and then again whenever possible until you reach the maximum amount allowed. The accompanying chart illustrates the powerful difference contributing just 1% more each year can make over time.
  2. Review your tax situation. It makes sense to review your retirement savings strategy periodically in light of your current tax situation. That’s because retirement savings plans and IRAs not only help you accumulate savings for the future, they can help lower your income taxes now. Every dollar you contribute to a traditional (non-Roth) retirement savings plan at work reduces the amount of your current taxable income. If neither you nor your spouse is covered by a work-based plan, contributions to a traditional IRA are fully deductible up to annual limits. If you, your spouse, or both of you participate in a work-based plan, your IRA contributions may still be deductible unless your income exceeds certain limits. Note that you will have to pay taxes on contributions and earnings when you withdraw the money. In addition, withdrawals prior to age 59½ may be subject to a 10% penalty tax unless an exception applies.
  3. Rebalance, if necessary. Market turbulence throughout the past year may have caused your target asset allocation to shift toward a more aggressive or conservative profile than is appropriate for your circumstances. If your portfolio is not rebalanced automatically, now might be a good time to see if adjustments need to be made. Typically, there are two ways to rebalance: (1) you can do so quickly by selling securities or shares in the overweighted asset class(es) and shifting the proceeds to the underweighted one(s), or (2) you can rebalance gradually by directing new investments into the underweighted class(es) until the target allocation is reached. Keep in mind that selling investments in a taxable account could result in a tax liability. Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss.
  4. Revisit your savings goal. When you first started saving in your retirement plan or IRA, you may have estimated how much you might need to accumulate to retire comfortably. If you experienced any major life changes during the past year — for example, a change in job or marital status, an inheritance, or a new family member — you may want to take a fresh look at your overall savings goal as well as the assumptions used to generate it. As circumstances in your life change, your savings strategy will likely evolve as well.

5. Understand all your plan’s features. Work-based retirement savings plans can vary from employer to employer. How familiar are you with your plan’s specific features? Does your employer offer a matching and/or profit-sharing contribution? Do you know how it works? Are company contributions and earnings subject to a vesting schedule (i.e., a waiting period before they become fully yours) and, if so, do you understand the parameters? Does your plan offer loans or hardship withdrawals? Under what circumstances might you access the money? Can you make Roth or after-tax contributions, which can provide a source of tax-free income in retirement? Review your plan’s Summary Plan Description to ensure you take maximum advantage of all your plan has to offer. All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.

¹ Employee Benefit Research Institute, 2020
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Spreading Generosity

Americans gave almost $450 billion to charity in 2019, an increase of 4.2% over the previous year. Individuals accounted for more than two-thirds of this amount, followed by contributions from foundations, bequests, and corporations. The holidays and end-of-year giving make up the bulk of when charitable donations occur so we felt this was a good time to highlight this for your consideration.

Here is a breakdown of the broadly-defined category recipients of this generosity, by percentage of total charitable contributions.


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Incapacity and Advance Medical Directives

At some point in your life, you may lose the ability to make or communicate responsible health-care decisions for yourself. Without directions to the contrary, medical professionals are generally compelled to make every effort to save and sustain your life. Depending on your attitude toward various medical treatments and your views on the quality of life, you may wish to take steps now to control future health-care decisions with one or more advance medical directives.

What Is an Advance Medical Directive?

The laws of your state may allow you to adopt one or more advance medical directives to manage your future medical care. There are three main types of advance medical directives:

  1. A living will
  2. A durable power of attorney for health care
  3. A do-not-resuscitate order.

Each has unique characteristics and is useful under specific circumstances. You may find that one, two, or all three advance medical directives are necessary to express all your wishes regarding medical treatment.

Living Will

A living will is a legal document that specifies the types of medical treatment you would want, or not want, under particular circumstances. In most states, a living will takes effect only under certain circumstances, such as a terminal illness or injury. Generally, one can be used solely to decline medical treatment that “serves only to postpone the moment of death.”

Durable Power of Attorney for Health Care/Health-Care Proxy

A durable power of attorney for health care (DPAHC), also known as a health-care proxy, is a legal document in which you appoint a representative to make medical decisions on your behalf if you become unable to make or communicate them yourself. It allows you to exercise control over your health care through this representative, who will have the authority to make most medical care decisions for you.

You may want to appoint such a representative to act on your behalf. If you don’t, medical professionals will generally be compelled to do everything possible to save and sustain your life. A DPAHC can resolve conflicts and help ensure that your choices regarding medical treatment are respected. A DPAHC may not be practical in an emergency — your representative must be present to act on your behalf.

Do-Not-Resuscitate Order

A do-not-resuscitate (DNR) order is a legally binding order, signed by both you and your physician, that directs medical personnel not to perform cardiopulmonary resuscitation (CPR) or other invasive procedures on you if you stop breathing or your heart stops beating. A DNR is the only advance medical directive specifically intended for use in an emergency. There are two types of DNRs: One is effective only while you are hospitalized; the other is used by people outside the hospital. ID bracelets, MedicAlert® necklaces, and wallet cards are some methods of noting DNR status.

More to Consider

  • The laws on advance medical directives vary considerably from state to state. If you spend a significant amount of time in a state other than where you live, you may want to research that state’s laws as well.
  • Review your advance medical directives periodically to ensure they reflect your current wishes and attitude.
  • Discuss your advance medical directives with appropriate persons (perhaps your doctor, your DPAHC representative, your family, and your friends).
  • If you have multiple advance medical directives, make sure your instructions are stated consistently throughout. In many states, the most recent document prevails in case of a conflict
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The Next Step?

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Or give us a call at 866-416-1703 OR 936-449-5952