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Retirement Planning

The Nature of Risk

When you invest money, you are putting it at risk — all investments can lose money. The key is to gauge your risk, and to not put more money at risk than you are willing to lose.

This is a relative concept. If you have only $10,000 to invest, then putting $9,000 in a high-risk investment means you could lose almost all of your savings. However, if you have a million-dollar portfolio, putting $10k in a high-risk investment would not be considered all that risky, because a loss of $10k wouldn’t obliterate your portfolio.1

As you can see, evaluating risk is just as personal as your financial goals. In fact, defining your financial goals — how much money you need based on what you want it to fund — is a main factor in establishing your risk tolerance, as is determining your timeline. If you are young and don’t need your investment money for 10 years or more, you can afford to invest in more aggressive holdings than if you need it in six months. The longer you hold an investment, the more time it has to recover from temporary setbacks.

The final risk consideration is just how much you can stomach when it comes to market volatility. If you get nervous when the market declines and keep checking your portfolio every day, you may be better off with a more balanced portfolio. If you would like a professional evaluation of your risk profile based on these factors, please feel free to contact us. Determining your tolerance for risk, your financial goals and timeline for achieving them are essential first steps to creating a suitable investment portfolio.

In addition to your personal approach to risk, it’s important to understand the various types of risk that exist in investment markets. For example, if you invest in bonds, you need to pay attention to credit risk, measured by independent ratings agencies that determine the viability and financial strength of various bond issuers. Each receives a rating from the agencies based on the likelihood that the issuer may default on bond payments. The higher the rating, the more reliable the issuer. Lower-rated issuers may pay out higher yields on their bonds to make up for the higher risk.2

Risk ratings address more than the ability to deliver on financial obligations. Take Russia, for example. Once the war on Ukraine began, the U.S. and other countries imposed widespread sanctions on Russian companies and individuals, basically freezing their ability to do business outside of the country. As a result, Russia’s ratings dropped because its companies lost their ability to trade with global partners, reducing potential revenues and increasing investor risk in those companies — in both stocks and bonds. The Russian government itself was downgraded due to weakened ability to pay debt obligations,3 as were Russian insurance companies.4

There are strategies that investors can deploy — such as diversification, strategic asset allocation and periodic rebalancing — to help mitigate investment risk. But ultimately, investment risk may not go away entirely. Leveraging a small amount of money to potentially earn a higher amount is the basic premise of investing, and it always has the potential to incur risk.

TD Ameritrade. January 10, 2022. “Risk Management: The Un-Fun, Must-Know Part of Trading.” https://tickertape.tdameritrade.com/trading/options-risk-management-18874. Accessed April 10, 2022. Fidelity. “Bond Ratings.” https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-ratings. Accessed May 4, 2022. Bill Chappelle. NPR. March 3, 2022. “Russia’s credit rating is cut to junk, and the dollar hits a new high vs. the ruble.” https://text.npr.org/1084177384. Accessed April 10, 2022. Fitch Ratings. March 14, 2022. “Fitch Downgrades 6 Russian Insurers.” https://www.fitchratings.com/research/insurance/fitch-downgrades-6-russian-insurers-14-03-2022. Accessed April 10, 2022.
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.
Asset allocation or diversification does not ensure a profit or guarantee against loss; it is a method used to help manage risk.
 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.
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Balancing Real Life with Caregiving

During 2020, more than 65 million American women provided unpaid care for their children, family members and elderly relatives.1 It’s easy to imagine that many of them likely juggled caring for a combination of these types of dependents. If you’ve ever provided ongoing caregiving duties for a parent, partner, child, sibling or someone else, you may recognize common feelings of being overwhelmed, exhausted, out of your depth and even somewhat resentful — and then feeling guilty.

Everyone has different circumstances, but when the caregiving begins to interfere with your mental, physical and/or financial health, you should re-evaluate how you might be able to manage better. In most cases, it is possible to get help if you’re willing to ask.

We can help by becoming your partner for long-term financial planning with insurance products — for both your caregiving charge and your own finances. Please give us a call if you’d like to learn more. In the meantime, the following are some tips to help you balance the burdens of caregiving with the rest of your life.

Establish a Team

You may already have a network of people in your life who can help. They may not initially offer because they believe you have everything under control or because they don’t realize you could use some help, or they don’t want to share that burden. Regardless, you should choose people you know have the capability and ask each person to take on at least one aspect of your tasks. This may include helping with medical issues, legal issues, caregiving supervision/scheduling and financial management.

Help Everyone Become More Independent

Caregiving may become overwhelming because it can feel like too many people in your life are depending on you. It’s important to encourage independence among friends and family so that you don’t become overwrought. You can start with your caregiver charge, by not getting into the habit of doing things that he can do for himself.2

That approach should also work for your family. Explain that you will always be there for them, but not to do everything for them. In time, even small children can learn to fix a bowl of cereal and your teenagers can find their own cleats/ballet bag/homework somewhere in the house — or at least look first before asking for help. Likewise, husbands and wives can work on better interdependence by establishing healthy boundaries, actively listening to each other, making time for personal interests, and taking personal responsibility for their own behavior.3

Schedule Regular Time for Yourself

Regular exercise is important, as well as attending routine check-ups for your health so you have the stamina to juggle your life and caregiving duties.4 Pursue goals or activities you want to try, such as yoga, golf lessons or learning to play a musical instrument. Join a gym or book club or regularly meet up with friends — even when you feel tired — because it will likely energize you. Look for opportunities to laugh often. Spend time by yourself and with people you like. Whatever your passions, don’t lose sight of them. You must do the things you love to nourish your soul and replenish your strength to handle all of life’s responsibilities.

It’s like being on an airplane and putting on your oxygen mask before you help someone else. Doing one small thing for yourself can make you more able and responsive to others.

Get Help When Needed

The stress and even depression associated with caregiving is real, debilitating and highly prevalent throughout today’s society. When you need help, do not hesitate to speak with a mental health professional who can help guide you through your feelings and develop coping strategies. Consider resources you can rely on for when you absolutely need a break, be it another family member, caregiver service or adult daycare center.5

Commune With Other Caregivers

Consider joining a caregiver support group to help recognize that you are not the only one with these burdens. In fact, you have likely developed skills and knowledge that can be very helpful to other caregivers in the same situation. And, when you share your experiences, you may find others who can offer knowledge and resources that help you in turn.

1 National Partnership for Women & Families. May 2021. “Women Carried the Burden of Unpaid Caregiving in 2020.” https://www.nationalpartnership.org/our-work/resources/economic-justice/women-carried-the-burden-of-unpaid-caregiving-in-2020.pdf. Accessed March 22, 2022..Jackie Gillard. Today’s Parent. Sept. 29, 2020. “Help yourself! 8 tips for teaching kids to be more independent.” https://www.todaysparent.com/kids/teaching-kids-to-be-more-independent/. Accessed March 22, 2022.
Jodi Clarke. verywellmind. July 26, 2021. “How to Build a Relationship Based on Interdependence.” https://www.verywellmind.com/how-to-build-a-relationship-based-on-interdependence-4161249#toc-how-to-build-an-interdependent-relationship. Accessed March 22, 2022.
American Heart Association. Oct. 25, 2021. “Top 10 Caregiver Tips for Maintaining Health and Well-Being.” https://www.heart.org/en/health-topics/caregiver-support/top-10-caregiver-tips-for-staying-healthy-and-active. Accessed March 22, 2022.
Mayo Clinic. March 22, 2022. “Caregiver stress: Tips for taking care of yourself.” https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/caregiver-stress/art-20044784. Accessed March 22, 2022.
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. 4/22-2105671B
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The Financial Stress Toll

In a recent survey by the American Psychological Association, more than 80% of American adults said they were feeling increased financial stress due to:

  • Higher inflation (87%)
  • Ongoing supply chain issues caused by the pandemic (81%)
  • Global uncertainty due to the war in Ukraine (81%)

Furthermore, hardships related to the pandemic — including poor health, loss of loved ones, difficult work and family situations, isolation and inconvenience — have affected the entire nation and the world. In the U.S., 63% of respondents said COVID-19 has changed their life forever.1

A 2021 Employee Financial Wellness Survey by PwC found that since the onset of the pandemic, workers were two times more likely to use a payday loan service, take a loan or distribution from their retirement account or consider postponing retirement altogether. They also were four times more challenged in paying their regular household expenses.2

Following the initial impact of COVID-19, the U.S. has followed a somewhat “K”-shaped recovery. This happens when the lower “arm” of the K drops because certain demographics become financially worse off than they were before, while the top arm shoots upward as other demographics benefit from higher savings rates and the stock market recovery.3 According to a Pew Research study, 20% of adults under age 50 were earning more than before March 2020, while 58% of people older than 50 reported earning lower wages than before the pandemic.4

Regardless of which trajectory your household may have experienced, high inflation is affecting everyone. Some economists predict that prices will stabilize as we move through 2022.5 However, note that throughout history the economy has gone through cyclical stages when inflation has reared its ugly head. It is particularly important that you plan for this contingency during your retirement years, when most people live on a fixed income. If you’re interested in learning ways to position your assets to help accommodate periods of rising prices during retirement, feel free to contact us.

The financial toll of stressed-out employees also has impacted companies. One study concluded that workers who are chronically worried about money are far less productive each week, which has led to a combined $4.7 billion in losses per week for employers.6 In an effort to ease money concerns among the workforce, some companies have begun offering more financial wellness programs, such as low-interest installment loans, medical deductible financing repaid through payroll deductions, and student loan repayment programs (including employer contributions toward student debt and the ability to convert PTO hours to student loan payments).7

American Psychological Association. March 2022. “Stress in America.” https://www.apa.org/news/press/releases/stress/2022/march-2022-survival-mode. Accessed March 28, 2022. PwC. 2002. “2021 PwC Employee Financial Wellness Survey”. https://www.pwc.com/us/en/services/consulting/workforce-of-the-future/library/employee-financial-wellness-survey.html. Accessed March 28, 2022. Erin Gobler. The Balance. April 5, 2021. “What is a K-Shaped Recovery?” https://www.thebalance.com/k-shaped-recovery-5120738. Accessed April 14, 2022. Pew Research Center. March 5, 2022. “A Year Into the Pandemic, Long-Term Financial Impact Weighs Heavily on Many Americans”; https://www.pewresearch.org/social-trends/2021/03/05/a-year-into-the-pandemic-long-term-financial-impact-weighs-heavily-on-many-americans/. Accessed March 28, 2022. Daniel Bachman. Deloitte. March 17, 2022. “United States Economic Forecast.” https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis.html. Accessed March 28, 2022. Ted Godbout. American Society of Pension Professionals & Actuaries. Aug. 25, 2021. “Employee Financial Stress Costs Companies Nearly $5B a Week.” https://www.asppa.org/news/employee-financial-stress-costs-companies-nearly-5b-week. Accessed March 28, 2022. Nick Ott. Human Resource Executive. May 24, 2021. “4 benefits that will help workers improve their financial health.” https://hrexecutive.com/4-benefits-that-will-help-workers-improve-their-financial-health/. Accessed March 28, 2022.
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.
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How Inflation Could Affect Your Retirement

In recent months, Procter & Gamble has raised prices for its Tide, Gain, Downy and Bounce product portfolio. It recently announced that this spring, consumers also will start paying more for many of its personal health care brands. The company is hardly alone. Nestle, Danone, Unilever and other consumers goods giants say their prices will continue to rise due to high inflation.1

Inflation is a two-faced beast. On one side, a healthy increase in prices indicates a growing economy. However, when prices increase substantially over a short period of time, it can signal other problems. The obvious problem is the world is still in the throes of a pandemic, and periodic flare-ups cause supply chain disruptions and inventory shortages. Also, the Federal Reserve has altered its monetary policy to allow higher levels of inflation in order for slow-growing areas of the economy to benefit. The sum total of these factors is that, right now, we are seeing greater inflation than we have in more than 20 years.

The thing that makes inflation more controversial than other economic factors is that it has an immediate impact on household budgets in a way that global trade agreements and adjusted interest rates typically do not. While, in time, fiscal and monetary intervention will set in to curb short-term price hikes, today’s environment is a great reminder of just how harmful rising prices can be on a household budget. While many working families can cut back or alter product choices, a lot of retirees already made those types of adjustments to their budgets when they stopped working. That makes it harder for those living on fixed incomes to adjust to rising consumer prices.2

For example, the value of a pension declines when inflation climbs at an annual rate that exceeds the pension yearly increase. Let us know if you’d like to find new ways to supplement your household income as inflation rises during retirement.

If you look at inflation in the United States from a historical point of view, today’s rising prices are not nearly as bad as they used to be. In fact, baby boomers lived through “The Great Inflation” era from 1965 to 1982 — so they are well aware of the devastating impact of runaway inflation. A recent survey discovered that people nearing retirement view today’s inflationary hike as a cautionary tale and are planning for the worst:3

  • 33% expect to need a bigger nest egg for retirement
  • 36% say the pandemic has reduced or will reduce their standard of living
  • 21% say they will need to work longer and delay their retirement to make ends meet
  • Although most participants say their portfolio has outperformed in recent years, most don’t think it will be enough to fund their retirement needs

As for steps they are taking, baby boomers and near-retirees are boosting their nest eggs by reducing their current spending (62%), taking a part-time job (32%), increasing investments (25%), delaying retirement (21%), and adopting a more conservative withdrawal rate from their savings (14%).4

Unfortunately for many pre-retirees, their retirement savings are not where they need to be — especially if they hope to offset inflation while living on a fixed income for 20-plus years. Not only does today’s typical boomer household still have an average of $28,672 in debt, but the median 401(k) account balance is $61,738 for 55- to 64-year-olds. The lack of retirement preparedness is even worse for women. According to a Census Bureau report, approximately 50% of women ages 55 to 66 have no personal retirement savings (compared to 47% of men).5

Avery Hartmans. Business Insider. Jan. 19, 2022. “P&G warns that price hikes for everyday products aren’t over yet.” https://www.businessinsider.com/procter-gamble-price-increases-laundry-detergent-healthcare-products-inflation-2022-1. Accessed Feb. 2, 2022. Peter G. Peterson Foundation. April 14, 2021. “What is inflation and why does it matter?” https://www.pgpf.org/budget-basics/what-is-inflation-and-why-does-it-matter. Accessed Feb. 2, 2022. Megan DeMatteo. Money Talks News. Oct. 15, 2021. “The Top Reason Baby Boomers Are Putting More Away for Retirement.” https://www.moneytalksnews.com/slideshows/the-top-reason-baby-boomers-are-putting-more-away-for-retirement/. Accessed Feb. 2, 2022. Ibid. Jason Lalljee and Hillary Hoffower. Business Insider. Jan. 19, 2022. “Boomers don’t have nearly enough retirement savings, especially women.” https://www.businessinsider.com/boomers-dont-have-retirement-savings-women-have-less-than-men-2022-1. Accessed Feb. 2, 2022.
­­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.
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COVID, Life and Insurance

By mid-January 2022, the United States had recorded more than 865,000 deaths attributed to COVID-19. Once the vaccine was available in early 2021, life insurance companies expected COVID-related deaths to decline. However, the inability to effectively contain the virus has led to the highest death rates ever seen in the history of the life insurance business.

What does that mean for life insurance premiums going forward? Given the number of benefit payouts over the past two years, it could mean stricter underwriting. After all, if people are going to die earlier than their expected lifespan, there will be less time to accumulate premiums — so they may have to increase rates to pay for more people dying at younger ages.

Presently, insurers are not asking new applicants whether they are vaccinated, but some are requiring blood and fluid testing — which may give them those answers. The way insurers stay solvent is by being good at identifying risk, and COVID is a risk that’s going to make life expectancy more difficult to gauge as the virus continues. While some underwriters use nonmedical factors to establish risk — such as population statistics — the current wave of premature deaths due to the pandemic does not bode well for premiums established this way either.1

It has always been important to have safety net solutions to secure your family’s finances should the main breadwinner pass away. The pandemic has not changed that in any way, but it has raised the risk of premature death. While Social Security, Medicare and Medicaid are the government’s attempts at creating income and health care safety nets, for most households that is not enough.2 Now is a good time to consider more life insurance coverage while premiums are at pre-pandemic rates. Please contact us if you’d like an insurance review to make sure you are properly covered should something happen to either the breadwinner(s) or the caregiver(s) in your household. We have solutions that can combine the need for life insurance, retirement income and long-term caregiving if necessary.

Do life insurance policies cover COVID-19? For the moment, yes. All existing policies must adhere to their terms and cover the death of policy owners. However, if applying for a new policy, it is important that you complete your application form honestly and correctly. If you don’t disclose that you’ve already had COVID or that you recently traveled to a highly affected area, your policy can deny benefits.

Has COVID-19 made it harder to get a new life insurance policy? Yes, it has. It can take longer to get approved for a policy if you’ve been infected with COVID-19 or have recently been in an area with a high outbreak. Some policies have reduced the oldest age for which they will issue a policy. And if more reliable life-saving vaccines and treatments are not developed, the industry could incur higher costs associated with life insurance policies.3

According to a new workplace study by Aflac, one-third of employees think supplemental insurance is more important now than they did before the pandemic. Nearly 50% (including 63% of millennials) have purchased at least one new benefit — life insurance, critical illness insurance or mental health resources — due to the pandemic. Just because we may survive this pandemic doesn’t mean we won’t suffer from its effects. In the past year, one-third of America’s workforce reported that the wear and tear on their mental health has impacted their job performance.4

In 2020, life insurance policies paid out over $90 billion, which was more than a 15% increase over the prior year. That was the largest year-over-year increase since the influenza pandemic of 1918. Perhaps the silver lining is that with more people facing the reality of their own mortality, more have been actively purchasing life insurance. The industry sold more than 43 million policies in 2020, representing a record $3.3 trillion in life insurance coverage.5

 John Hilton. InsuranceNewsNet. Jan. 10, 2022. “Sky-High COVID-19 Mortality Not Affecting All Life Insurers The Same.” https://insurancenewsnet.com/innarticle/sky-high-covid-19-mortality-not-affecting-all-life-insurers-the-same. Accessed Jan. 19, 2022. Harry Stout. InsuranceNewsNet. Jan. 10, 2022. “Why We Need To Build America’s Personal Financial Safety Net.” https://insurancenewsnet.com/innarticle/why-we-need-to-build-americas-personal-financial-safety-net. Accessed Jan. 19, 2022. Sterling Price. ValuePenguin. Jan. 20, 2022. “How Is the Coronavirus Affecting Life Insurance?” https://www.valuepenguin.com/life-insurance-coronavirus-faq. Accessed Jan. 19, 2022. InsuranceNewsNet. Jan. 18, 2022. “Pandemic Changed How Americans Make Benefits’ Decisions, Aflac Finds.” https://insurancenewsnet.com/oarticle/pandemic-changed-how-americans-make-benefits-decisions-aflac-finds. Accessed Jan. 19, 2022. Chris Morris. Fortune. Dec. 9, 2021. “Life insurance payouts see highest increase in over 100 years.” https://fortune.com/2021/12/09/life-insurance-payouts-2020-record-high-covid/. Accessed Jan. 19, 2022.
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.
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What Retirement Means for Men and Women

In general, retirement rates have increased during the pandemic. Before COVID-19, the retired population grew by about 1 million retirees per year. But during 2020 and 2021, 3.5 million more people retired.1

As it turns out, part of the “Great Resignation” that we’ve all been hearing about has been driven by the “Great Retirement” of women age 65-plus. Furthermore, older Americans who are married or widowed are more likely to be retired than their single peers, according to an analysis by the Federal Reserve Bank of St. Louis.2

Regardless of your status — single, married, man, woman, older or younger — there are plenty of retirement income strategies for every demographic. One of the key goals is to identify what you want your retirement to look like — bigger and better than when you were working, about the same or a downsizing of your expenses. We can help you figure out a strategy.

Thinking about what you want to do in retirement is an important step, and that can differ between men and women, even husbands and wives. A recent study that surveyed retirees in both the U.S. and Europe found consistencies in how men and women approach retirement. Men may suddenly develop more significant relationships with family members and friends. Women, who typically have already developed these relationships and sustain them during retirement, tend to spend more time involved in the lives of their grandchildren. Interestingly, wealthier men tend to gift more money to their children after they are retired than beforehand.3

Notably, a lot of the recent female retirees worked in retail, trade, leisure and hospitality, which put them at a higher risk for COVID exposure. That may have led to a decision to quit to avoid exposure and also to help with child care for their grandchildren. It is also likely that many of these women are married and have income and retirement resources through their spouse.4

When planning for retirement, it’s a good idea for couples to consider common activities they can do together. Not only does this help strengthen their bond, but it’s cheaper than funding numerous individual activities by each partner. Consider volunteering together, traveling, finding new hobbies — and have fun!

 Richard Fry. Pew Research Center. Nov. 4, 2021. “Amid the pandemic, a rising share of older U.S. adults are now retired.” https://www.pewresearch.org/fact-tank/2021/11/04/amid-the-pandemic-a-rising-share-of-older-u-s-adults-are-now-retired/. Accessed Jan. 24, 2022. William M. Rodgers III and Lowell Ricketts. Federal Reserve Bank of St. Louis. Jan. 4, 2022. “The Great Retirement: Who Are the Retirees?” https://www.stlouisfed.org/on-the-economy/2022/january/great-retirement-who-are-retirees. Accessed Jan. 24, 2022. Center for Retirement Research at Boston College. Dec. 9, 2021. “Men Make Bigger Changes After Retiring.” https://squaredawayblog.bc.edu/squared-away/men-make-bigger-changes-after-retiring/. Accessed Jan. 24, 2022. Megan Leonhardt. Fortune. Jan. 6, 2022. “Meet today’s retirees: Women over 65 who fled the workforce over COVID fears.” https://fortune.com/2022/01/06/retirees-women-over-65-covid/. Accessed Jan. 24, 2022.
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.
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Retirement Plans for Self-Employed People

As America’s work environment continues to evolve, one thing that has become evident is that — in many cases — the work-from-home (WFH) model has proved to be effective and even cost-efficient. However, many companies with significant investments in their office buildings and campuses are not likely to want their employees to keep working from home permanently. For workers who do not want to comply with return-to-office mandates, there may be a solution: Work with your employer to transition into an independent contractor.

At the end of 2021, the National Labor Relations Board announced it will consider revamping the current legal standard for determining whether workers are independent contractors or employees.1 Presently, many companies classify workers as independent contractors but still control much of the way they conduct their jobs. Yet they don’t provide the benefits of a full-time worker. As these standards begin to change, it may become more beneficial for independent contractors, especially if they establish their own benefits through an effective pricing model.

In 2020, the number of sole proprietorships grew, and business analysts predict this trend will likely continue.2 There are about 57 million “gig workers” in the U.S., with projections that they may represent up to half of the U.S. workforce by 2023.3

One of the drawbacks of working for yourself is not having access to a 401(k) plan and company match. However, there are plenty of options for self-employed folks. One of the elements of transitioning to independent contractor status is increasing your hourly wage. For example, if your current salary averages out to $30 an hour, you’ll want to charge around $50 an hour or more to cover your expenses, such as equipment, health and life insurance, and a retirement plan. If you’d like to discuss the various retirement plans available to self-employed individuals, please contact us. In the meantime, we’ve outlined various plans below.

SEP

With a Simplified Employee Pension, you may contribute as much as 25% of your net earnings, up to $61,000, in 2022. You can set up a SEP plan as late as the due date of your income tax return for that year (including extensions).4

Individual 401(k) Plan

With an individual 401(k) — also referred to as a solo 401(k) — you can take advantage of a much higher employer match, as long as your business has the revenues. In 2022, a self-employed person may contribute up to $20,500, plus an additional $6,500 for those age 50 or older. The kicker is that you also may contribute up to an additional 25% of your business’s net earnings — for a total contribution of $61,000.5

SIMPLE IRA

With a Savings Incentive Match Plan for Employees, you may contribute up to $14,000 (in 2022), an additional $3,000 if you’re 50 or older, plus either a 2% fixed contribution or a 3% matching contribution.6

Traditional IRA

A traditional IRA allows fully or partially deductible contributions depending on your filing status and income. Traditional IRA investments are not taxed until withdrawn. If withdrawn before age 59½, the owner may be subject to a 10% penalty as well as regular income taxes.7

Roth IRA

While Roth IRA contributions are not deductible, qualified distributions are tax-free. Other features include the ability to make contributions after age 70½ and no annual required minimum distributions after age 72.8

For tax years 2021 and 2022, the total contribution you can make to all of your IRAs combined is capped at $6,000 ($7,000 if you’re age 50 or older), or your taxable compensation for the year (if less).

Fisher Phillips. Jan. 3, 2022. “Unhappy New Year for Gig Economy Companies? Labor Board Will Reconsider Independent Contractor Standard in 2022.” https://www.fisherphillips.com/news-insights/gig-economy-companies-labor-board-independent-contractor-2022.html. Accessed Jan. 17, 2022. Tyler Gallagher. Forbes. Jan. 12, 2022. “Entrepreneurship Forecast For 2022: Stats, Trends And Analysis.” https://www.forbes.com/sites/theyec/2022/01/12/entrepreneurship-forecast-for-2022-stats-trends-and-analysis/. Accessed Jan. 17, 2022. Nasdaq. Jan. 12, 2022. “Gig Economy Retirement Planning.” https://www.nasdaq.com/articles/gig-economy-retirement-planning. Accessed Jan. 17, 2022. IRS. Nov. 15, 2021. “Retirement Plans for Self-Employed People.” https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people. Accessed Jan. 17, 2022. Ibid. Ibid. IRS. Jan. 3, 2022. “Traditional IRAs.” https://www.irs.gov/retirement-plans/traditional-iras. Accessed Jan. 17, 2022. IRS. Nov. 5, 2021. “Roth IRAs.” https://www.irs.gov/retirement-plans/roth-iras. Accessed Jan. 17, 2022.
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.
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Single Finances

Pew Research Center reported that in 2019, about 38% of adults ages 25 to 34 in the U.S. were not married or living with a partner, up from 29% in 1990.1 While marriage and even long-term relationships are growing less prevalent, the data shows that single people tend to be less financially stable than those with a partner.

As cohabitation has grown mainstream, it also appears that unmarried couples who live together tend to be more financially secure than their single peers. Yet, married adults still fare better than singles, regardless of relationship status, perhaps because high-earning men are typically more likely to get married. And, interestingly, men’s earnings tend to rise even higher once married.

That might have made more sense half a century ago, but today’s young adult couples tend to have two full-time incomes. Women in relationships are better educated than in the past and work at rates on par with single women. They also fare better economically by virtue of sharing expenses with a partner.

In fact, both unpartnered men and women earn less, on average, than their counterparts in relationships. In 2019, single men earned median earnings of $35,600 while partnered men made $57,000. Across the aisle, single women earned a median of $32,000 while their attached peers  made $40,000.2

If you think singlehood is tough during your career, note that it doesn’t get any easier in retirement. Single retirees are on the rise as well. Among U.S. adults ages 50 to 64, 28% are unmarried and unattached; and 36% of those age 65 and up.3

If you are single and likely to remain so, you may want to step-up your retirement planning efforts. In addition to simply saving more money, consider resources for caregiving assistance as you age. Many single adults have no children, so it’s important to strengthen relationships among siblings, nieces, nephews and friends (including those younger in age). Consider the advantages of moving into a senior community – not just for better value in living and caregiving expenses, but also to establish a strong social network as you age. Please contact us for personalized ideas in creating a reliable stream of income with a growing savings component.

A study by TD Ameritrade found that more singles are becoming aware of their financial insecurity, especially those aged 37 and older. Notably, lifelong singles are at a disadvantage in that they tend to earn less than their married counterparts, and therefore have lower savings and less money to invest.4

If this sounds like you or someone you know, consider the following tips for managing finances:

  • Save up an emergency fund of between three months to a year’s worth of living expenses. This can save you from wiping out your long-term investments if you’re unemployed for a significant amount of time.
  • Try to save 10% to 15% of your income, starting with a work retirement plan if your employer offers matching contributions.
  • Make your money work harder for you. One study found that while women tend to save more money than men (41% versus 35%), they also invest in less risky assets offering higher return opportunities (25% versus 32%).5
  • Brainstorm ways to save money. For example, binging Netflix for a month can cost less than one night at a movie theater.
  • Set specific goals, such as saving for a down payment on a home. Owning a home is one of the most effective ways to build wealth via equity.
  • Also, be realistic when buying a home – do you really need more than two bedrooms?
  • Don’t have money to spare? Consider moonlighting – take a second job a few days a week or turn a hobby into an income source.
  • Getting a roommate can cut your housing expenses in half. Consider doing this even just periodically, like whenever friends need a place to stay for a few months after a breakup.
1 Juliana Kaplan. World Economic Forum. Oct. 8, 2021. “What is the financial impact of being single in the U.S.?” https://www.weforum.org/agenda/2021/10/what-is-the-financial-impact-of-being-single-in-the-united-states. Accessed Oct. 17, 2021. 2 Ibid. 3 Principal. 2021. “Single and over 50? Here’s how to prepare for retirement.” https://www.principal.com/individuals/build-your-knowledge/single-and-over-50-heres-how-prepare-retirement. Accessed Oct. 17, 2021. 4 Donna Freedman. The Simple Dollar. Aug. 31, 2020. “13 Ways to Beat the Single-Person Penalty.” https://www.thesimpledollar.com/financial-wellness/13-ways-to-beat-the-single-person-penalty/. Accessed Oct. 17, 2021. 5 Karen Gilchrist. CNN. March 8, 2021. “Here are 3 ways women can manage their personal finances – and make money.” https://www.cnbc.com/2021/03/08/personal-finance-money-advice-for-women-how-to-start-investing.html. Accessed Oct. 17, 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.
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Medicare Open Enrollment

This year’s open enrollment for Medicare runs from Oct. 15 to Dec. 7. Any changes you make to your Medicare plan will begin on Jan. 1, 2022. Eligible Medicare beneficiaries can start receiving benefits once they turn age 65. Those who were already drawing Social Security benefits before that age are automatically enrolled in Original Medicare.

During the open enrollment season, you can switch from Original Medicare to a Medicare Advantage (MA) plan, or vice versa, or even change from one MA plan to another. You can enroll in a new Medicare Advantage plan or Medicare prescription drug plan or drop drug coverage altogether.1

It’s a good idea to use the open enrollment window to compare your current plan to other plans and shop for better benefits or greater value. Even if you’re not interested in making changes, this is a good time to review your current plan as some insurers change their benefits from year to year. But, perhaps, more importantly, comparison shopping enables you to see if there is another plan that offers better health and/or drug coverage at a more affordable price. Recent research found that nearly half of Medicare beneficiaries who shop for a new plan during open enrollment cut their premiums by at least 5%.2

We spend a lot of time discussing Social Security benefit strategies, such as when to begin drawing a payout. Because Medicare has a set age of 65, we don’t always take the time necessary to investigate what’s available — particularly after the first year. It’s often a “set and forget” proposition. However, it’s important to consider your Medicare benefits within the full context of your retirement income needs each year, particularly if you continue working past age 65. If you’d like a comprehensive review of how your health and insurance needs work with your retirement income plan, feel free to contact us.

If you are eligible for Medicare but receive health care coverage from an employer, see if your company requires you to enroll in Medicare upon eligibility. If not, you can wait for up to eight months after your employer coverage ends for a Medicare special enrollment period (Jan. 1 to March 31).3

Also, be aware that not all Americans are automatically enrolled in Medicare at age 65. Specifically, those who did not work 40 quarters (10 years of paying FICA payroll taxes) will not automatically be enrolled. Unless they qualify through a spouse’s work record, they may have to pay a premium of either $259 or $471 (2021 rates) a month for Medicare Part A. This is the hospital insurance plan that is free for those with the requisite earnings history.

Furthermore, note that if you don’t sign up for Medicare when you first become eligible for the program, your monthly premium could potentially increase by up to 10% — which you’ll have to pay for twice the number of years in which you delayed signing up.4

Medicare Part B pays for doctor visits, preventive care, screenings, treatments, and medical equipment. However, it does not cover dental, vision, or hearing care and only pays for procedures determined to be medically necessary. The premium in 2021 started at $148.50 a month (2022 premiums were not published as of this writing).

Medicare Part D covers prescription drugs. Premiums vary among insurers and typically include an annual deductible (no more than $445 in 2021), as well as an unusual coverage known as the “donut hole.” In other words, in 2022, once a Part D beneficiary spends/receives coverage totaling $4,430, he or she will begin sharing up to 25% of the cost for covered brand-name and generic prescription drugs until spending reaches $7,050. After that, full coverage kicks in again.5

Another option is to skip the alphabet soup and enroll in a comprehensive Medicare Advantage plan. Also known as Medicare Part C, MA combines Medicare Part A and Part B coverage, and in some cases, drug coverage as well. While MA plans generally do not include hospice care like Original Medicare, they typically do offer coverage for things like dental care and eyeglasses.6

1 Raymond James. Aug. 31, 2021. “Making the Most of Medicare’s Open Enrollment Period.” https://www.raymondjames.com/commentary-and-insights/retirement-longevity/2021/08/31/making-the-most-of-medicares-open-enrollment-period. Accessed Sept. 15, 2021.
2 ElderLawAnswers. Sept. 13, 2021. “It’s Medicare Open Enrollment Time: Is Your Plan Still Working for You?” https://www.elderlawanswers.com/its-medicare-open-enrollment-time-is-your-plan-still-working-for-you-18483. Accessed Sept. 15, 2021.
3 Raymond James. Aug. 30, 2021. “Navigating Medicare.” https://www.raymondjames.com/commentary-and-insights/retirement-longevity/2021/08/30/navigating-medicare-infographic. Accessed Sept. 15, 2021.
4 Alessandra Malito. MarketWatch. Sept. 10, 2021. “Avoid the 10%-per-year penalty for not enrolling in Medicare — know these rules.” https://www.marketwatch.com/story/avoid-the-10-per-year-penalty-for-not-enrolling-in-medicare-know-these-rules-11631301599. Accessed Sept. 15, 2021.
5 Andrea King Collier. MarketWatch. Aug. 18, 2021. “The twists, turns and myths of applying for Medicare: How we navigated the enrollment road.” https://www.marketwatch.com/story/the-twists-turns-and-myths-of-applying-for-medicare-how-we-navigated-the-enrollment-road-11628869916. Accessed Sept. 15, 2021.
6 Ibid.
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.
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How to Plan for Old Age

Thelma Sutcliffe turned 114 years old in April, making her the oldest living American and the seventh-oldest person in the world, according to the Gerontology Research Group. The Omaha, Nebraska, resident attributes her relative good health and longevity to the fact that she never had children, never smoked and made it a habit not to worry.1

Not many people make it to 114, but those who do outlive their friends and loved ones. That’s why it’s important to develop passions and hobbies you can enjoy for the rest of your life, no matter how long you live. It’s also a good idea to establish a plan that provides a confident retirement. That may include living below your means and casting a wide net of friends to help ensure you have close ones to grow old with. It also may include buying insurance policies that offer reliable income. If you’d like help planning, please give us a call.

One key factor to consider is where you want to live in retirement, particularly during the later years when you may need help. Paying for full-time care in your own home can be very expensive. However, COVID-19 has caused some hesitation moving to assisted living and nursing homes due to the potential for disease outbreaks in the future. You may want to start thinking and talking with family members about the possibility of moving in with them later in life, if necessary. You could even use proceeds from the sale of your home to build an accessory dwelling unit (ADU) next to their home. Also known as a backyard cottage or granny flat, an ADU can help cut expenses to pay for in-home care – so there is less burden on family members.2

Some ADU floorplans even feature two bedrooms, so you could hire a full-time caregiver and provide room and board. Later, your heirs can use the ADU for rental income or to plan for their own long-term care.

Apart from financial and housing plans, consider developing hobbies you can enjoy later in life. You may cultivate a love of history, art or music early in retirement through volunteer efforts. For example, work as a docent, usher or fundraiser for a local museum, art gallery or concert hall. A heartfelt appreciation of the arts has a way of eliciting joy, even if you develop mobility or cognitive issues.

1 Leah Asmelash. CNN. April 29, 2021. “She just became the oldest living person in the US and all she wants is to be able to eat meals with her friend again.” https://www.cnn.com/2021/04/29/us/oldest-living-american-trnd/index.html. Accessed May 3, 2021.

2 Zillow. March 18, 2021. “What is an Accessory Dwelling Unit (ADU) – and Tips for Building One.” https://www.zillow.com/resources/stay-informed/2021/03/18/how-to-build-accessory-dwelling-unit-adu/. Accessed May 3, 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.

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