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Retirement Makeover

Many babies born today in the developed world are expected to live nearly 100 years.1 Given the vast changes over the past two decades in medicine, technology and the ways we work, communicate and even entertain ourselves, it’s almost hard to imagine how different life will be in 100 years.

While we won’t be around in 100 years, it’s an interesting perspective to assume while making our own retirement plans. For example, many young adults early on in their careers will make decisions (e.g., higher education degrees, skills training, extra certifications, taking low-level jobs or lower pay for better experience, etc.) that they are counting on to advance their careers further when they are in their 30s, 40s and 50s.

That’s the kind of thinking we need to engage in when considering retirement in the future. For example, adopting healthy eating and exercise habits early on are ways we can keep our aging bodies fit and maintain mobility in our later years. These efforts may contribute to lower health care and long-term care bills. Also, making decisions about how to position our assets for long-term growth and a reliable stream of income can help hedge the risk of outliving our savings during a long retirement. We can introduce you to a range of insurance products designed to do just that and help you determine which ones would best suit your circumstances. Feel free to contact us to learn more.

Worldwide, people are outliving their money, on average, by anywhere from eight to 20 years.2 There are plenty of people — and you may even know some — who lived a solid middle-class lifestyle throughout their lives but are now living in Medicaid-sponsored nursing homes because they cannot afford full-time care in their own homes. This is a tough scenario to think about, let alone plan for, but consider the contributing factors. Although concerns about the shrinking Social Security Trust Fund have taken a back seat to the COVID pandemic, the war in Europe and political priorities, it remains in trouble. Furthermore, the pandemic has strained our health systems and exposed just how vulnerable older adults, in particular, are within the health care spectrum.

It is important to consider — now — how to redesign the traditional retirement for stronger financial resilience, to be healthier and less reliant on public resources, and even be happier. After all, if you could live to age 100 or more, it’s important to plan on ways to enhance your quality of life. Part of your planning process should include taking inventory of not just your tangible assets (e.g., savings, property) but also your intangibles, such as health, relationships, knowledge and abilities than can help you continue to earn income even if you have mobility issues.

After all, working from home appears to be a phenomenon here to stay. Consider how you can work your way into a longer career path by adapting your skills and experience to a work-from-home model. For example, teaching/coaching, gig/consulting work, organizing/participating in the sharing economy, or making and selling your wares.

These are decisions and actions you can take mid-career — like those we make as young adults to further our careers. And consider the perks, such as no longer having to report to a contentious boss. In an ongoing study that covers decades, Gallup reports that the majority of employees quit their jobs due to their direct manager, not because of the company itself.3

If you love your job but hate your boss, consider that today, more than 90% of employers report that productivity has remained the same or even improved with the remote work model. Given today’s strong jobseeker’s market, now is the time to consider negotiating more flexibility for your work life in order to allow you to work longer to earn money for retirement while at the same time enjoying your job more than you do now.4

Can you retire now? If you can, should you? If your retirement could potentially last 20 or 30 years, would you get bored no longer having specific work responsibilities? Author Ken Dychtwald refers to retirement as “Life’s Third Age.” He encourages people to think about how they can continue to grow, learn, meet new people, try new things and even discover a new purpose for living. Possibilities include going back to school, starting a nonprofit, learning to play a musical instrument, learning a foreign language, or writing a memoir for your children and grandchildren.5

Abhinav Chugh and Martha Deevy. World Economic Forum. Jan. 19, 2022. “The 100-year life is here. How can we meet the challenges of longevity? An expert explains.” https://www.weforum.org/agenda/2022/01/the-100-year-life-is-here-how-can-we-meet-the-challenges-of-longevity-an-expert-explains/. Accessed April 6, 2022. Andre Belelieu and Yvonne Sonsino. World Economic Forum. Aug. 3, 2020. “Coronavirus is creating retirement insecurity. These 10 steps can defuse the timebomb of an ageing population.” https://www.weforum.org/agenda/2020/08/here-are-10-steps-to-diffuse-the-timebomb-of-an-ageing-population-post-covid19/. Accessed March 8, 2022. Sarah Korolevich. GoodHire. Jan. 11, 2022. “Horrible Bosses: Are American Workers Quitting Their Jobs Or Quitting Their Managers?” https://www.goodhire.com/resources/articles/horrible-bosses-survey/. Accessed March 8, 2022. Mercer. 2022. “Reinventing for the new shape of work.” https://www.mercer.com/our-thinking/career/the-new-shape-of-work.html. Accessed March 8, 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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Graduation Gift Ideas

Do you have someone in your life who is graduating this spring? The form and function of graduation gifts can be sticky territory. It’s important to consider not only the level of degree being attained but also the personal traits, interests and ambitions of new grads to ensure your gift will enhance their life.

High School Graduate

High school graduates, specifically in this immediate gratification era, like something they can use right away. This is especially true if it’s cool and somewhat unique among their peers, such as an Apple watch. This generation also likes to do its own shopping. They’re not limited to the mall and fashion magazines — they are influenced by ads, celebrities and “influencers” all over the globe, and they can order anything they want online. You may consider a prepaid credit card or gift card if they have a favorite store. This type of present lets you align the cost of the gift to how personal your relationship is to the grad and still offer a valuable gift they’ll enjoy.

If your high school grad is college bound, think about gifts/gift cards to help decorate their dorm room or apartment, or buy technology they can use during this time. This type of gift also takes some financial heat off the parents, since it may be something they’d have to buy anyway. Consider ideas like a portable charger/power bank, Bluetooth speaker or noise cancellation headphones, in case they live in a noisy dorm or want to listen quietly to their own music at all hours.1 Another idea is to pay for an annual Amazon subscription and/or a prepaid gift card. The subscription not only gives them fast, free delivery but also access to Amazon Prime music, movies and TV series, as well as limitless cloud storage for their smartphone photos.2

Grandparents in particular may want to contribute to the cost of going to college, buying a car or renting an apartment. Consider seeding a savings account or prepaid credit card to help them establish credit history. If the grad is taking a gap year, perhaps choose a high-end backpack for traveling or a prepaid gas card to help them get to and from a job.3

If you live on a fixed income, remember that some life insurance policies and annuity contracts allow you to take limited cash distributions each year. If you anticipate needing ad hoc cash during retirement, we’re happy to discuss various insurance options to ensure you have extra funds when you want them. Call us for more information.

College Graduate

A college grad may have many needs as she makes the big step from the relatively sheltered world of academia to “real life.” It may be the first time she rents her own apartment or moves to a new city. You might consider a subscription to Amazon Boxes, which offers regular deliveries based on personal proclivities — from tea lovers to pet owners.4 If the grad is setting up a new household, consider gifting a small toolkit, kitchen appliance, home store gift card or office supplies gift card if they’ll be working from home.

A busy young professional might appreciate a subscription to one of the popular meal kit services. These kits deliver a set number of meal plans/serving sizes and include the specified ingredients and instructions to cook at home. It’s a great way to encourage healthy eating as well as help your young adult learn to cook.5 If your new grad is a fitness guru, consider gifting a membership to a gym near where he lives. The costs of streaming services tend to add up, so consider paying for an annual subscription to a service like Netflix, Hulu or Spotify.

Not every entry-level salary allows young adults to splurge on luxuries. Think about their interests and something you can give that they wouldn’t be able to afford for a while, such as season tickets to a sporting event or live theater.

If your new graduate has time off before starting a job, you may want to gift a vacation. If you have credit card rewards points, you could use them for hotels/flights or even coordinate with other parents to spring for an Airbnb for your graduate and her friends.

When in doubt, you can never go wrong with cash. It’s easy, scalable and provides instant gratification. A big smile and a hug go a long way, as well.

Laura McMullen, Briana Boyington, Emma Kerr and Josh Moody. U.S. News & World Report. June 8, 2021. “20 High School Graduation Gift Ideas.” https://www.usnews.com/education/high-schools/slideshows/10-high-school-graduation-gift-ideas?slide=23. Accessed March 28, 2022. Amazon Prime. 2022. “Give the Gift of Prime.” https://www.amazon.com/gp/prime/pipeline/prime_gifting_landing?ots=1. Accessed March 28, 2022. Adam West. CardRates.com. March 10, 2022. “Best Gas Cards For Students in 2022.” https://www.cardrates.com/advice/best-gas-cards-for-students/. Accessed March 28, 2022. Amazon Subscription Boxes. 2022. “Amazon Subscription Boxes.” https://www.amazon.com/top-best-amazon-subscription-boxes/b?ie=UTF8&node=14498690011. Accessed March 28, 2022. Mili Godio. NBC News. Jan. 21, 2022. “8 best meal kit delivery services in 2022, according to experts.” https://www.nbcnews.com/select/shopping/best-meal-kit-delivery-services-ncna1287814. Accessed March 28, 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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Windfall Imaginings

Have you ever thought about what you would do if a windfall dropped in your lap? It’s not that unusual. After all:

  • The U.S. is experiencing the greatest wealth transfer in history. Nearly $68 trillion, mostly held by baby boomers, will be transferred to heirs in the next 25 years.1
  • Since 2018, individual lottery windfalls in the U.S. have ranged between $688 million and $1.59 billion.2
  • Lots of entrepreneurs build up businesses from scratch and then sell them for a substantial profit.3

No matter your situation, if you are blessed with a windfall, we encourage you to work with professional advisors. You may need several, such as a financial advisor, tax professional and estate planning attorney. We can help you get started with this process by tapping these types of professionals within our network. If there is a windfall in your future, it’s never too early to start preparing for it. Contact us for more information.

In the case of a cash windfall, request a direct transfer into your account at an institution that you trust. This will simplify any issues related to disruptions in mail, delivery services and the potential for excess paperwork. Also, make sure you understand the wire transfer instructions in order to correctly input the necessary information for the proceeds to be wired directly to your account.

In the case of the sale of a private business or business interest, it’s important to consult with an experienced tax advisor, as you may be able to take advantage of valuation discounts for gift tax purposes — should you want to share some of those proceeds with children or other beneficiaries. Valuation discounts will likely not be available if you make cash gifts after receiving the windfall. Another option is to invest the windfall and then use it as collateral for other investments. That way, the asset continues growing and you don’t have to cash out and pay taxes on gains in order to use the money for other endeavors.4

The same holds true if you’d like to defer some of your windfall to a charity or other trusts that you or your family members will manage. Before initiating the asset transfer, work with an estate-planning attorney to establish trusts, limited partnerships (LLCs) or other planning vehicles to retain, manage and transfer your new wealth. For a charity, bear in mind that you can create your own private foundation or direct a donor-advised fund to manage the assets and direct them to specific charities. This also can help manage tax liabilities and maximize those financial assets over time.

If you win big with the lottery, you’ll need to decide whether you want to receive the assets as a lump sum or as an annuity. There are plenty of tax and lifespan decisions to consider with this one, so it’s a good idea to consult with a financial professional before you take distribution of the money.5

Recognize that it can take time to set up certain accounts, trusts and various strategies for receiving and managing a windfall. Don’t be in too big of a rush to make decisions and take the chance on not setting up your newfound wealth properly to meet your goals. Also, don’t be in a big rush to reinvest it quickly, assuming you cannot simply transfer ownership and retain the current investment strategy. It’s important to understand if and how your life may change with this new influx of money. For example:6

  • Can you and do you want to quit working altogether? You’ll have to manage your assets to last the rest of your life.
  • Do you want to invest in a new endeavor, such as your own startup? You’ll need to make sure you have enough in reserves to live on until you receive income from the venture, as well as have backup reserves in case it fails.
  • Do you want to share your new wealth with family, friends or charitable organizations? Get tax advice first because you may be able to offset your own tax liability if your beneficiaries receive part of the windfall.
  • If you’re planning to invest your windfall, work with a financial professional to coordinate how your “new” money aligns with the asset allocation of your “old” money. For example, you may want to keep it separate with a higher or lower risk strategy. Or, you may want to incorporate it into your current asset allocation strategy.
  • If you are older, you may want to disseminate much of this windfall to keep it out of your estate, for tax purposes. Investigate gifting and giving options.

The key is to understand what you want your money to do for you, just the same as when you determine your retirement goals. If it’s enough money to substantially change your life, then you should take some time to figure out what you want your new life to look like. Either way, the bigger the windfall, the more time and professionals you’ll need to consult to determine how to manage your assets going forward.

Kate Dore. CNBC. July 12, 2021. “Are you prepared for tax impact of the $68 trillion great wealth transfer? Here are some options to reduce the bite.” https://www.cnbc.com/2021/07/12/the-great-wealth-transfer-has-a-big-tax-impact-how-to-reduce-the-bite.html. Accessed March 18, 2022. Jennifer Sangalang. Florida Today. Oct. 5, 2021. “Who won the Top 10 largest lottery jackpot prizes ever? List of Powerball, Mega Millions winners.” https://www.floridatoday.com/story/news/2021/10/05/lottery-jackpots-all-time-list-powerball-mega-millions-winners/6001715001/. Accessed March 2, 2022. 3 Issie Lapowsky. Inc. Feb. 6, 2020. “$243 Million: Crunchbase’s Very Rosy Picture of the Average Startup Exit.” https://www.inc.com/issie-lapowsky/average-successful-startup-exit.html. Accessed March 2, 2022. Chuck Marr, Samantha Jacoby and Kathleen Bryant. Center on Budget and Policy Priorities. Nov. 13, 2019. “Substantial Income of Wealthy Households Escapes Annual Taxation Or Enjoys Special Tax Breaks.” https://www.cbpp.org/research/federal-tax/substantial-income-of-wealthy-households-escapes-annual-taxation-or-enjoys. Accessed March 2, 2022. Investopedia. Jan. 13, 2022. “The Lottery: Is It Ever Worth Playing?” https://www.investopedia.com/managing-wealth/worth-playing-lottery/. Accessed March 2, 2022. JP Morgan. 2021. “What will you do if you suddenly become rich?” https://www.jpmorgan.com/wealth-management/wealth-partners/insights/What-will-you-do-if-you-suddenly-become-rich. Accessed March 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. We cannot provide tax or legal advice and you should consult with a qualified professional for guidance before making any purchasing decisions.
 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 the Russia-Ukraine Conflict Could Affect Americans

When Putin invaded Ukraine in late February 2022, President Biden announced sanctions targeting Russian banks, the country’s sovereign debt and Russian oligarchs, warning that Russia would pay an even steeper price if it did not cease its aggression. In the early days of the conflict, European banks braced for the fallout. However, U.S. bank executives believe the industry will remain somewhat insulated from major disruption, having disengaged with the Russian financial sector in recent years.1

In fact, real estate represents one of the weakest links within Russia’s kleptocratic system. Even members of Putin’s wealthy inner circle are not allowed to own property in the country, so they are heavily invested in real estate abroad — largely in the West, and largely laundered through offshore havens in the United States and United Kingdom. This is because they are the two major economies that permit anonymous company ownership.2

When you see the hoops that oligarchs must jump through to retain millions in assets, it is a lesson for us in two ways. First, because the investment markets, real estate markets and global geopolitical conflicts are ever-present and unpredictable, it is important to maintain allocations of both liquid and guaranteed assets. The second reminder is that as Americans, we are fortunate to have such a strong and reliable banking system, long-standing financial institutions and a stringent supervisory system — by both government and business self-regulatory agencies.

As we watch the wealthiest among one of the world’s most powerful countries scramble to access their assets, remember that ours is a privilege we must never take for granted. If you would like to review the disposition of your assets and consider ways to make them more secure and accessible, please feel free to contact us.

With all of this said, the Russia-Ukraine conflict may affect Americans in varying degrees. For example, higher oil prices will slow economic growth and lead to even higher inflation. This, in turn, may motivate the Federal Reserve to accelerate its schedule for hiking interest rates. Should a full-scale invasion of Ukraine continue, there will likely be further disruptions throughout the global economy that will affect the United States.3

One bit of good news is that the United States doesn’t trade much with Russia. However, there are still certain specific Russian exports, namely raw commodities, on which we do rely. For example:4

  • Russia is a major exporter of oil and natural gas to Europe, so if supply is thwarted, energy prices could rise even further. While the United States does not depend on oil from Russia, prices are set by the global market — meaning our prices could increase as well.
  • Russia is a major exporter of rare-earth minerals and heavy metals, such as titanium and palladium — used in production of airplanes and catalytic converters.
  • Ukraine is a major source of neon used to manufacture semiconductors. As if this sector hasn’t been brutalized enough by the pandemic, shortages could hurt the U.S. semiconductor and aerospace industries.
  • Ukraine and Russia are major producers of fertilizer. Export disruptions would mostly affect agriculture in Europe, but that will cause food prices to jump throughout the world.

Another threat is Russia potentially increasing its massively coordinated cyberattacks and influence campaigns in the United States. Penetration of our cybersecurity system could affect our power grids, hospitals and local governments. In turn, the stock market would likely become even more volatile than in February, when the conflict began. While investment markets have priced in the effects of the pandemic, it is not prepared for a European war or attacks on our power grid, so the effect could be substantial.5

It is important to note that Ukraine is basically a gateway to other European countries and, in effect, a buffer against Russian aggression. Should Putin succeed in taking over the country, his appetite could extend to smaller NATO countries, and the United States could bear the brunt of another world war. Let’s hope this never happens.6

Lawrence White et al. Reuters. Feb. 24, 2022. “Europe’s banks brace for Russia fallout while U.S. banks see limited pain.” https://www.reuters.com/business/finance/contagion-sanctions-europes-banks-brace-russia-fallout-2022-02-22/. Accessed March 17, 2022. Anders Åslund and Maria Snegovaya. Atlantic Council. May 3, 2021. “The impact of Western sanctions on Russia and how they can be made even more effective.” https://www.atlanticcouncil.org/in-depth-research-reports/report/the-impact-of-western-sanctions-on-russia/. Accessed Feb. 22, 2022. Patti Domm. CNBC. Feb. 28, 2022. “Oil prices could determine how markets react to Russia’s Ukraine invasion.” https://www.cnbc.com/2022/02/28/oil-prices-could-determine-how-markets-react-to-russias-ukraine-invasion.html. Accessed March 17, 2022. 4,5 Becky Sullivan. NPR. Feb. 19, 2022. “How a Russian invasion of Ukraine could affect you.” https://www.npr.org/2022/02/16/1081185004/russia-ukraine-invasion-us-impact. Accessed Feb. 22, 2022. Meredith Deliso. ABC News. Feb. 20, 2022. “Why Americans should care about the Ukraine-Russia conflict.” https://abcnews.go.com/International/americans-care-ukraine-russia-conflict/story?id=82907932. Accessed Feb. 22, 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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Consumers: Buying Power in 2022

One of the biggest economic stories of the first quarter was the rising rate of inflation, as consumer prices reached a 39-year high by the end of 2021. In the first quarter, the inflation rate floated around 7%.

Higher prices tend to hurt low-income families the most since the majority of their spending is on necessary consumables. This is especially true now that child tax credits – representing $300 to $360 payments per child per month – have come to an end. That money was largely used for food, clothes, school supplies and other essentials, so it contributed to overall consumer spending that drives the economy.1

In contrast, households that don’t need government stimulus, such as the $600 and $1,400 checks that were issued during the first year of the pandemic, are more prone to save surplus assets. Instead of spending that money to help jump-start the economy, a lot of wealthier households used it to augment savings during the pandemic. In aggregate, U.S. households saved up an excess of $2 trillion during the pandemic.2 That can be helpful for individuals to bolster their emergency savings, but it doesn’t help stimulate the economy.

It is important for all households to have robust liquid savings they can tap into during times of hardship. However, retaining too much in low-interest-rate accounts means that money may not keep up with the rising cost of living. That is especially true now, in a higher interest rate environment. If you are looking for ways to secure your money but also give it the opportunity to grow, we have an array of insurance products that may fit the bill. Contact us for more information about what vehicles may best suit your needs.

Rising prices are a sign of a growing economy, but unless wages keep up with inflation, that’s going to hurt consumers. We have seen significant income growth over the past year, but nowhere near the current 7% inflation rate. However, some economists predict that inflation will retreat as far back as 2.9% by the fourth quarter of this year.3

The Federal Reserve has made it clear that it intends to raise interest rates. Again, rate increases are more likely to impact lower-income consumers than households with considerable assets. Higher interest rates can increase payments on mortgages with a variable interest rate. However, 90% of American mortgages are at fixed rates. In fact, mortgage loans represent 70% of household debt and another 10% is in auto debt (also generally locked in to a fixed rate). Therefore, higher interest rates will be most painful for people who retain a balance on credit cards and other variable-rate loans. Unfortunately, once again, lower-income households are more likely to maintain credit balances, so this consumer group will be the most affected by a rising interest environment.4

As for the consumer market for the rest of this year, inflation should tame as supply chain woes improve and inventories are restocked. No group is looking more forward to this scenario than potential car buyers. If they have to spend more money on higher prices, they are looking for better value. One survey found that 66% of Americans are considering purchasing an electric vehicle (EV) now that the new infrastructure bill will support nationwide charging stations and financial incentives.5

Millennials are expected to be one of the predominant consumer groups for the foreseeable future. They’ve come into their own with hard-fought experience they can exploit for higher wages and more flexibility in today’s job market. And with higher discretionary income, economists predict millennials will spend more money on travel, apparel and the housing market in 2022.6

Ellen Zentner and Sarah Wolfe. Morgan Stanley. Jan. 28, 2022. “New Challenges for The US Consumer.” https://www.morganstanley.com/ideas/thoughts-on-the-market-zentner?subscribed=true&dis=em_202222_wm_5ideasarticle&et_mid=318442&et_mkid=. Accessed March 2, 2022. 2 Lucia Mutikani. Reuters. Feb. 25, 2022. “Robust consumer spending, core capital goods orders highlight U.S. economic strength.” https://www.reuters.com/business/us-consumer-spending-beats-expectations-january-inflation-rises-further-2022-02-25/. Accessed March 2, 2022. Ellen Zentner and Sarah Wolfe. Morgan Stanley. Jan. 28, 2022. “New Challenges for The US Consumer.” https://www.morganstanley.com/ideas/thoughts-on-the-market-zentner?subscribed=true&dis=em_202222_wm_5ideasarticle&et_mid=318442&et_mkid=. Accessed March 2, 2022. 4 Ibid. CarPro. Feb. 2, 2022. “Cars.com: 2022 Auto Buying Trends.” https://www.carprousa.com/blog/cars.com-2022-auto-buying-trends. Accessed March 2, 2022. Vijay Chandar. Morgan Stanley. Feb. 15, 2022. “Megatrends: Counting on the Long-Term Strength of U.S. Consumers.” https://www.morganstanley.com/articles/consumer-megatrends-spending-boom. Accessed March 2, 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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Household Budgeting for Retirement

Part of the retirement planning process is realistically imagining what you want your life to look like. Bear in mind that you’re really only planning for the first chapter of retirement — the one where you travel, pursue hobbies and spend more time with family and friends.

If you have a partner, it’s important to recognize that you may have different goals. For example, a wife may want to travel more frequently to see family, whereas a husband is thankful he no longer has to commute to work every day and would rather enjoy reading and watching television. Some folks find they slip into bad habits after a few months into retirement — sleeping late, watching too much TV, not exercising or getting out of the house to see people. It may be worth considering some type of volunteer opportunity or part-time job to give your days more structure.1 Earning extra cash is not a bad idea, either.

The second stage of retirement is when people start to slow down and don’t get out as much, so they don’t spend as much money as they did before. Then there’s the final stage — when you need more money than ever to pay for things like large health care expenditures and help with assisted living.2

As you can see, developing a retirement plan is more complex than just accumulating money and then spending it throughout time. Consider positioning your assets so that you have multiple sources of reliable income. You may want to consider ways to maximize your assets in case you or your spouse lives to a very old age. If you’d like to discuss various insurance options for your retirement plan, please contact us.

One source of retirement income that most Americans enjoy is Social Security, which is guaranteed to continue until you pass away. However, even this government-sponsored benefit is under duress. There’s been a focus in recent months on legislation for infrastructure bills and ways to economically rebuild the U.S. back to pre-pandemic levels. In addition, retirees just received their biggest cost-of-living increase in Social Security benefits in years. The problem is that neither Congress nor retirees (and approaching retirees) are actively lobbying to fix the current Social Security program. If Congress doesn’t come up with a supplement plan, retirees will see a reduction of about 22% of their current benefits beginning in 2034.3

Another facet of retirement planning is having a contingency plan for when things don’t pan out quite the way you thought. For example, make sure your beneficiaries are up to date on all of your accounts, that they have the information necessary to access those accounts and contact information for your financial advisor or estate attorney, and consider buying long-term care insurance.4

Paul Schoenfeld. Herald Net. Feb. 20, 2022. “What are your plans for reaching retirement?” https://www.heraldnet.com/life/what-are-your-plans-for-reaching-retirement/. Accessed Feb. 21, 2022. Dan Hunt. Morgan Stanley. Jan. 11, 2022. “What kind of retiree do you want to be?” https://www.morganstanley.com/articles/retirement-life-spending. Accessed Feb. 21, 2022. Trina Paul. CNBC. Feb. 10, 2022. “Will Social Security run out of money? Here’s what could happen to your benefits if Congress doesn’t act.” https://www.cnbc.com/select/will-social-security-run-out-heres-what-you-need-to-know/. Accessed Feb. 21, 2022. Ameriprise. 2022. “Unexpected events.” https://www.ameriprise.com/financial-goals-priorities/retirement/preparing-for-unexpected-life-events. Accessed Feb. 21, 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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Thoughts on Aging In Place

About nine out of 10 people over age 50 say they would prefer to remain living at home throughout their retirement, and some geriatric experts observe that doing so can help seniors stay mentally and physically fit.1

And yet, planning to “age in place” is more complex than it may first appear. You need to carefully consider factors such as how to pay for age-related renovations for things like getting in and out of the bathtub or navigating hallways and doorways if you need a wheelchair.2

You’ll also need to consider the cost of caregivers, which can be much more expensive than living in a senior community where this cost is shared. While retirement planning can be uplifting and exciting, planning for old age is not. However, it’s even more important that you do have a plan for some level of incapacitation, such as a sudden stroke, memory decline or even the loss of a spouse. We all dream of taking care of each other when we get older, but that’s not always practical. By age 65, it’s a good idea to consider how (and if) aging in place will work for you if you eventually need extra care.3 If you’d like to discuss ways to position your current assets to help pay for a long-term care plan should it become necessary, please contact us.

Recognize that while you may start as an active retiree, at some point, you will find yourself slowing down. It’s important to think ahead and have a plan for activities that will help keep your mind and body responsive once you can no longer swing a golf club or play tennis. In fact, starting these more sedentary hobbies while you’re active will make them more appealing to you later.

One of the perks of staying in place is having a local support network of friends and family. As you get older, you’ll have people available to help out when needed and provide social and emotional support, especially if you’re aging alone. Your home offers a wealth of routine and familiarity, which is particularly important when memory begins to fail. And lastly, it’s a good idea to maintain continuity with your same medical providers as you get older. On the other hand, if you don’t have family members that live near you, this may be a good reason to consider moving closer to them at some point during retirement. The sooner you make such an adjustment, the sooner you can begin establishing relationships with new friends and health care professionals. It is much more difficult to make this transition past a certain age.4

It’s also a lot more difficult to maintain a large home once you get older. Chores like replacing air filters and removing carpet stains are a lot easier with healthy knees and joints. It’s important to have a handyman or someone else you trust to conduct everyday chores before they get out of hand. Eventually, you may need someone to drive you to doctor’s appointments or to the grocery store — or do the shopping for you. These common tasks are easier if you have available children or friends to help out; otherwise, you need to be able to pay for home aid assistance. Caregiving assistance is not only expensive, but it’s also hard to find these days in light of the pandemic and the labor shortage.5

If you do end up with mobility problems, living at home can be both difficult and isolating. If you instead consider moving into a community for seniors, many of your basic needs, such as maintenance and food preparation, will be provided. But perhaps more importantly, there will be people around for you to engage with. This may not seem like a perk when you’re 70, but it could be critical when you’re 90.6

Rachel Hartman. U.S. News & World Report. Oct. 13, 2021. “Costs to Consider When Aging in Place.” https://money.usnews.com/money/retirement/aging/articles/costs-to-consider-when-aging-in-place. Accessed Nov. 15, 2021. Justin Goldman. Renofi. July 26, 2021. “Aging in Place: Home Improvements for Seniors.” https://www.renofi.com/guides/home-improvements-aging-in-place/?utm_campaign=14568944577&utm_source=google&utm_medium=cpc&utm_content=548390077120&utm_term=aging%20in%20place&gclid=CjwKCAiAp8iMBhAqEiwAJb94zx7dlE43CWmQFKKc-rlE5rvFGeidAeHUlUTEwVtjCEomFi9whGqdWBoC2cUQAvD_BwE. Accessed Nov. 15, 2021. Acts Retirement-Life Communities. Nov. 11, 2019. “Pros and Cons of Aging in Place.” https://www.actsretirement.org/latest-retirement-news/blog/2019/11/11/pros-and-cons-of-aging-in-place/. Accessed Nov. 15, 2021. Cathy Dyson. Culpeper Star Exponent. Nov. 13, 2021. “‘Helping field’ of caregivers particularly hard hit by staff shortages.” https://starexponent.com/news/helping-field-of-caregivers-particularly-hard-hit-by-staff-shortages/article_147a750d-b6f6-5b67-a140-f1a39b8d07d4.html. Accessed Nov. 19, 2021. Amy Fontinelle. Investopedia. Sept. 5, 2021. “Staying at Home vs. Moving to a Retirement Community.” https://www.investopedia.com/staying-at-home-vs-moving-to-a-retirement-community-5089910. Accessed Nov. 15, 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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The State of Real Estate

In late November, the National Association of Realtors (NAR) reported that home sales could reach a 15-year high in 2021, in excess of 6 million existing homes sold. And despite rising interest rates on mortgage loans, the activity does not look ready to recede yet. In all the major regions of the U.S., homebuyers continue to write contracts undeterred by high home prices.1

Remember that even if you are not interested in selling your home, the equity that has built up recently is an asset, and one you can tap if you ever need it. Owning your own home provides a sense of security, the same as having insurance does. You may never need it, but having an insurance asset to back up your income is a prudent way to shore up your long-term financial security. If you’re looking for ways to do this, we have ideas. Please feel free to contact us to learn more.

The past two years have been a bit of a seesaw. On one hand, we have experienced the first global pandemic since the early 1900s, accompanied by a swift economic decline. But on the other hand, the U.S. has enjoyed robust market performance and unprecedented growth in home values. In fact, the pandemic has actually reshaped the housing market to reflect new homeowner preferences that are expected to endure.2

For example, did you know that most U.S. homeowners are middle-aged and married with at least some college, and more than a third of homeowners (38%) live in the South? Today, only 13% of homeowners are in their 30s, and only 17% are in their 40s.3

The typical home is over 1,700 square feet and has three bedrooms and two bathrooms. Just under half (44%) of homeowners live in the first home they bought, while a quarter are in their second home. The majority of homebuyers who already own a home say they’re looking for more upgrades or a different neighborhood. A large number — 78% — say they want to move for family reasons. However, some homeowners are hesitant to put their homes up for sale because they don’t think they’ll be able to find another one.4 After all, if you sell your home now to take advantage of high market prices, where will you live then?

Real estate experts do not expect the typical seasonal slowdown to occur this winter. Particularly in more affordable areas of the country, such as the Midwest and the South, there is an unusual amount of activity in home-showing traffic for this time of year.5

As for new trends in residential real estate, it’s not surprising that homebuyers are looking for a dedicated office or workspace as part of their criteria. The good news is that today’s remote worker no longer needs a large space for storage and filing needs, now that most documents are paperless and cloud-based. That means an office can be tucked into a nook in a spare bedroom, the living room or even the dining area.6

However, many work-from-home employees are conscious of an appropriate background for their video conference calls. The ideal “Zoom room” should be a quiet space with a background that is both reasonably neat and professional but with enough personal items to demonstrate character and relatability. After all, with fewer people interacting in the office, it’s important to establish amiable working relationships from a distance.7

Other trends in real estate include the growing popularity of solar panels or modules that convert sunlight into electricity and even conserve energy through battery storage. Solar heating was first discovered back in the 1950s by researchers at Bell Laboratories. But over the past decade, solar power has grown by an average of 50% per year and is likely to increase exponentially. Some areas have mandates for renewable energy; for example, California has passed legislation that will require developers to include solar power and battery storage in new commercial and high-rise residential projects starting in January 2023.8

For context, note that the return on a solar investment may be pretty good for homeowners. It typically costs between $15,000 and $25,000 for equipment and installation for a residential solar panel system. If paid out of pocket, that could take up to 10 years of power savings to get a return on your investment. However, homeowners can lease a system for less and save on the upfront investment. In terms of residential sales, homes with solar systems already installed tend to sell faster than those without.9

1 Realtor Magazine. Nov. 29, 2021. “Home Buyers Eager to Act Sooner Rather Than Later.” https://magazine.realtor/daily-news/2021/11/29/home-buyers-eager-to-act-sooner-rather-than-later. Accessed Nov. 29, 2021. 2 Manny Garcia. Zillow. July 7, 2021. “Homeowners: Results from the Zillow Consumer Housing Trends Report 2021.” https://www.zillow.com/research/homeowners-consumer-housing-trends-report-2021-29736/?twclid=11465464374986956817. Accessed Nov. 29, 2021. 3 Ibid. 4 Ibid. 5 Realtor Magazine. Nov. 29, 2021. “Showings Aren’t Following Typical Seasonal Slowdown.” https://magazine.realtor/daily-news/2021/11/29/showings-aren-t-following-typical-seasonal-slowdown. Accessed Nov. 29, 2021. 6 Dave Adams. National Association of Realtors. Nov. 29, 2021. “6 Home Office Trends to Watch.” https://www.nar.realtor/blogs/styled-staged-sold/6-home-office-trends-to-watch. Accessed Nov. 29, 2021. 7 Ibid. 8 Barbara Ballinger. National Association of Realtors. Sept. 30, 2021. “What Homeowners Should Know About Solar Panels.” https://magazine.realtor/home-and-design/feature/article/2021/09/what-homeowners-should-know-about-solar-panels. Accessed Nov. 29, 2021. 9 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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America’s Seesaw Wealth

It is interesting to evaluate how various economic events throughout time affect different demographics. For example, the 2007-2009 Great Recession saw higher losses in male-oriented jobs, such as construction and manufacturing. The pandemic-induced recession of 2020 was quite the opposite, affecting women to such a degree that the event spawned the term “she-cession.”1

There is no question that the COVID-19 pandemic has had a tremendous effect on a wide variety of sectors, leading to millions of job losses. What is remarkable is that while some industries – such as travel, hospitality, entertainment, and restaurants – have been sorely affected, others have gone largely unscathed. In fact, the quick transition from in-office work to working from home enabled some companies – and households – to actually save money. Couple those savings with a quick stock market recovery and impressive performance since the initial onset of the pandemic, and many Americans have actually flourished during this difficult period.

Regardless of whether your household has experienced negative or positive effects during the past year and a half, the pandemic has driven home a very important lesson: Be prepared. For many, having a three, six or 12-month emergency savings fund has been crucial to saving them from plundering retirement portfolios. Many investors have an impressive investment portfolio but few liquid assets. This is important – we can help you discover ways to remain invested but position certain assets to access if necessary. Contact us to learn more.

On the privileged side of the spectrum, Boston Consulting Group reports that in 2020, financial wealth worldwide reached a record high of $250 trillion. One of the biggest areas of growth was lending among investment portfolio brokerages. In other words, individual investors borrowed against their portfolios to spend money. As their investments increased, so did their securities-based loans or lines of credit. Be aware that this can be a risky endeavor, and that these loans generally cannot be used to purchase additional securities.2

A recent study by the National Bureau of Economic Research (NBER) revealed that between 2001 and 2016, the top 1% of U.S. households increased wealth by 49%, from $7.7 million to $11.5 million. At the top of the wealth spectrum, 0.01% of wealthy Americans gained 40% of their wealth from corporate equity and another 29% from the pass-through businesses such as partnerships, limited liability companies, and sole proprietors.3

That report was reiterated by the Spectrum Group’s newly released Market Insights 2021 Report, which found that the number of U.S. households with $1 million to $5 million in net worth (not including the value of their primary residence) increased by 600,000 in 2020. The number of households with a net worth between $5 million and $25 million increased by 324,000. And yet, despite these impressive increases in net worth, that same survey found that 30% of investors are still concerned that they may need to delay retirement.4

On the other end of the scale, the NBER reports that between 2001 and 2016, average wealth for the bottom 90% of American households grew by only 17% (compared to 49% of the top 1%). Their wealth is largely driven by pension income (63%) and home equity (23%).3

Titan Alon, Matthias Doepke, Jane Olmstead-Rumsey and Michèle Tertilt. VoxEU. Sep. 22, 2020. “The shecession (she-recession) of 2020: Causes and consequences.” https://voxeu.org/article/shecession-she-recession-2020-causes-and-consequences. Accessed Oct. 22, 2021. 2 Elizabeth Dilts Marshall. Reuters. Oct. 8, 2021. “U.S. banks see wealth management boom on borrowing, new assets.” https://www.reuters.com/world/us/us-banks-see-wealth-management-boom-borrowing-new-assets-2021-10-15/. Accessed Oct. 18, 2021. 3 Andrew Keshner. MarketWatch. Oct. 18, 2021. “How America’s 1% build their wealth.” https://www.marketwatch.com/story/how-americas-1-build-their-wealth-11634580173. Accessed Oct. 18, 2021. 4 InsuranceNewsNet.com. March 15, 2021. “Spectrem Study: Household Wealth Hit Record Levels In 2020.” https://insurancenewsnet.com/oarticle/spectrem-study-household-wealth-hit-record-levels-in-2020. Accessed Oct. 18, 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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The Rise of the Unicorn

This past August, close to 4.3 million Americans quit their jobs — the most ever in just one month (since the government began collecting data two decades ago).1 But there isn’t just one reason people are quitting their jobs. There are dozens. Some who had to juggle care for children or elderly relatives have chosen caregiving over a second income in the household. Many people reevaluated their lifestyles amid the safety concerns and loss of loved ones and decided to focus on a better quality of life rather than a higher salary. Many in those essential service industries — from food and retail to healthcare professionals — suffered from burnout and determined that the risk wasn’t worth the wage.

For all these reasons and more, the United States is experiencing what one psychologist and professor at Texas A&M termed the “Great Resignation.”2

With the advent of the Great Resignation, there has been a dramatic increase in new business filings. Could this be the start of a rise in “unicorns?”3 In business, a unicorn — a phrase coined in 2013 — is a privately held startup company valued at over $1 billion. It refers to a successful startup, which traditionally has been considered as rare and far-flung as the mythical creature itself. However, there is evidence that in pure numbers alone, the rise of startups could see higher rates of success in the future.4

That’s because in the past, only about four unicorns reached fruition each year. And yet, already in 2021, there have been 264 that have reached that status. In fact, venture capitalists (VCs) are more interested than ever in investing in startups — to the tune of $240 billion invested so far this year alone. The largest investors tend to be private equity, hedge funds and corporations.5

If you don’t know the difference between an “accelerator” and an “incubator,” you can brush up on your startup jargon online at webpages such as The Glossary of Startup Jargon.6 Be aware, however, that this is not the first time startups have gained momentum only to suffer significant losses. The dot-com bubble of 1999 and 2000 comes to mind. Investors considering these high-risk ventures often hedge their risk by investing in several startups simultaneously, hoping that one good bet will compensate for other losses. If you’re interested in this type of investing, consult with us. We can help determine if this type of speculative investing would be an appropriate allocation for your portfolio.7

The United States is not the only country with an entrepreneurial streak. Globally, there are currently 817 unicorn startups. One of the most well known is TikTok, owned by Bytedance in China. India currently has nearly 70 unicorns, which makes it the third-largest startup ecosystem in the world.8

Even Japan, which is not known for its venture capital and startup success, is encouraging the entrepreneurial spirit via tax breaks and other government-sponsored initiatives. Much like in the United States, young Japanese are leaving traditional corporate jobs to start up their own ventures, with many receiving interest from major western VCs and other institutional investors.9

Knowledge@Wharton. Oct. 25, 2021. “Is the Great Resignation Giving Rise to the Entrepreneur?” https://knowledge.wharton.upenn.edu/article/is-the-great-resignation-giving-rise-to-the-entrepreneur/. Accessed Oct. 25, 2021. 2 Juliana Kaplan. Business Insider. Oct. 2, 2021. “The psychologist who coined the phrase ‘Great Resignation’ reveals how he saw it coming and where he sees it going ‘Who we are as an employee and as a worker is very central to who we are.” https://www.businessinsider.com/why-everyone-is-quitting-great-resignation-psychologist-pandemic-rethink-life-2021-10. Accessed Oct. 25, 2021. Knowledge@Wharton. Oct. 25, 2021. “Is the Great Resignation Giving Rise to the Entrepreneur?” https://knowledge.wharton.upenn.edu/article/is-the-great-resignation-giving-rise-to-the-entrepreneur/. Accessed Oct. 25, 2021. Arielle Pardes. Wired. Oct. 14, 2021. “Earth’s Unicorn Population Is Exploding.” https://www.wired.com/story/earths-unicorn-population-is-exploding/. Accessed Oct. 25, 2021. 5 Ibid. Angela De Luca. Science Center. May 13, 2021. “The Glossary of Startup Jargon.” https://sciencecenter.org/blog/the-glossary-of-startup-jargon. Accessed Oct. 25, 2021. Amit Kumar. Entrepreneur. Oct. 8, 2021. “Will the Unicorn Boom Lead to a Unicorn Bust?” https://www.entrepreneur.com/article/390109. Accessed Oct. 25, 2021. 8 Ibid. McKinsey & Company. Oct. 7, 2021. “Can Japan finally become a start-up power?” https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/can-japan-finally-become-a-start-up-power. Accessed Oct. 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.
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