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Does Your Portfolio Fit Your Retirement Lifestyle?

Most portfolios are constructed based on an individual’s investment objective, risk tolerance, and time horizon.

Using these inputs and sophisticated portfolio-optimization calculations, most investors can feel confident that they own a well-diversified portfolio, appropriately positioned to pursue their long-term goals.1

However, as a retiree, how you choose to live in retirement may be an additional factor to consider when building your portfolio.

Starting a Business?

Using retirement funds to start a business entails significant risk. If you choose this path, you may want to consider reducing the risk level of your investment portfolio to help compensate for the risk you’re assuming with a new business venture.

Since a new business is unlikely to generate income right away, you may want to construct your portfolio with an income orientation in order to provide you with current income until the business can begin turning a profit.

Traveling for Extended Periods of Time?

There are a number of good reasons to consider using a professional money manager for your retirement savings. Add a new one. If you are considering extended travel that may keep you disconnected from current events (even modern communication), investing in a portfolio of individual securities that requires constant attention may not be an ideal approach. For this lifestyle, professional management may suit your retirement best.2

Rethink Retirement Income?

Market volatility can undermine your retirement-income strategy. While it may come at the expense of some opportunity cost, there are products and strategies that may protect you from drawing down on savings when your portfolio’s value is falling—a major cause of failed income approaches.

  1. Diversification and portfolio optimization calculations are approaches to help manage investment risk. They do not eliminate the risk of loss if security prices decline.
  2. Keep in mind that the return and principal value of security prices will fluctuate as market conditions change. And securities, when sold, may be worth more or less than their original cost. Past performance does not guarantee future results. Individuals cannot invest directly in an index.
  3.  
    A financial professional can help: If you’re a woman concerned about saving for retirement or have questions about your unique situation, give us a call. Our team understands the unique challenges women face, and we’re passionate about helping women just like you plan for a comfortable retirement. Contact us and let’s get started. Email retire@herretirement.com.

 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.

 

 

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Current Market Conditions Drive Demand for Annuities

 

Hello and welcome to this week’s episode of her retirement podcast. This week, I am talking about economic concerns and it’s based on the fed, which is expected today. Announced another rate hike of 0.7, 5%. This moves the benchmark federal funds rate to a range of 3% to 3.25%. The last time we saw this level was during the recession of 2008. In addition, the fed signal that rate hikes would likely increase an additional 1.2, 1.5% by December. And at first glance, this news does not seem very welcome, but guess what? As always, there are some silver linings for those near or in retirement. So I want to talk about a few of those. One is that deposit rates increase along with the Fed’s benchmark rate. So if you have assets in stable funds, now is the time to compare various CD rates to find even better options. And if you’ve been considering an annuity, now might be the time to reach out to someone like your retirement advisor.

And I can connect you to find out if an annuity makes sense for your retirement plan. And also, on October 13th, social security will announce its annual cost of living adjustment or COLA. And with the rise in inflation, and obviously the rise in interest rates to fight it, it’s anticipated that COLA will be the highest since it’s been since 1981. And on the 13th, we will find out how much that COLA is. I’ve seen estimates upwards of eight to 9% Kohl increase. So next thing I want to talk about is how economic concerns can spur interest in guaranteed retirement income. And I want to talk about some of those guaranteed retirement income sources. There are four key ones. One is social security income. Two is defined benefit. For pension income, three are HECM loans, also known as reverse mortgages. And yes, you can use your housing wealth as a guaranteed income source.

It’s a pretty unique and interesting strategy because some people are sitting on a really big pile of housing wealth, and it’s basically a dead asset and you can turn that housing wealth into a guaranteed income source. It’s really valuable during times when we’re experiencing a sequence of return risks. Like we are now where the market is going down, and in order to put off or delay pulling monies out of those accounts that are down while we allow them to recover, which following all bear markets that have been bull markets, it’s just a matter of when that happens. You can use your housing wealth through a comb or a reverse mortgage to create that guaranteed income stream. And you can rely on that and not pull monies from your investments. And fourth are those guaranteed annuity income streams, which I just mentioned. So going on that theme of the annuity theme, the recent volatility in our markets is basically altering perceptions around what it means to have a secure retirement, and a new survey finds that more Americans are interested in having a guaranteed stream of retirement income.

Of course, during the bull market, you know, 10 or 12 years of a bull market, everyone’s, you know, really confident, perhaps even overconfident. And they tend not to worry so much about their income. You know, things are everybody’s riding high. And then the minute we hit a bear market, people are like, oh boy, why did I have so much at risk? Maybe I need to have more protected from downside risk. Maybe I need more guaranteed income streams. I know my mother, as a teacher, has a teacher pension, and of course, that represents a great guaranteed income stream. any pension is, you know, worth its weight and gold, according to a new joint poll from Kiplinger and a theme three fourth of respondents to the polls say they would like more guaranteed income in retirement than they already have or expect to have. Interestingly more pre-retirees express this desire than current retirees do, registering at 82% versus 69%, respectively.

Their survey fielded by Qualtrics found fears about a potential recession in uncertainty over the financial strength of social security. Our respondent’s top two financial concerns right now, and almost three-fourths, 74%, say they’re worried about the impact of each on their retirement. In addition, the rising cost of healthcare, 72% in inflation at 71% closely followed as other top threats cited in the survey. Most respondents, 57%, say that having more guaranteed income in retirement would specifically ease their concerns about running out of money. And more than a third, 34%, say having more guaranteed income sources would ease concerns over market volatility. And, you know, it’s interesting because retirees with enough guaranteed income to pay their fixed expenses can stay fully invested in the stock market during a downturn. And this is one of the values of having those guaranteed income sources and what I was alluding to with your housing wealth.

It is a debt asset that can be used nicely to allow you to stay fully invested in the stock market in those 401ks or whatever. other investments you have. And, you know, this allows your investments to rebound once the market picks up again. So how much guaranteed income is not enough? According to the poll respondents of those already collecting social security, more than three-fourths, 76% say it provides 20% of more or more of their income in retirement, while 43% say it provides 50% or more of those who have a pension nearly two thirds, 63% say it provides or could provide 20% or more of their income in retirement. Well, 28% say 50% or more. And of those who have an annuity, more than a third, 34% say it provides or could provide 20% or more of their income in retirement, but only 7% say 50% or more.

The poll also shows how guaranteed lifetime income can help people feel more secure in retirement respondents without any kind of annuity report a higher level of concern across several measures than respondents with an annuity. In contrast, 62% of respondents without an annuity feel confident they will have enough retirement income to live comfortably 74% of respondents with an annuity feel that way. In addition, respondents without a lifetime income stream express higher levels of concern about the impact of inflation on their retirement savings than those with an annuity do. They are also even more likely to have already cut back on spending because of inflation. And just a side note. When I went to the doctor yesterday, a woman there was probably getting close to retirement. I would say she was three to five years from retirement. She found out what I do and said, “oh my goodness.”

You know, give me some advice. What can I do? This inflation is crazy. The market’s crazy. And one of the things I said to her was to make sure you beef up her emergency fund – really important right now to put as much into your emergency fund as possible during this inflationary period. That’s a simple thing that most people should consider unless you’re already well-funded in the emergency area. And did additionally, these respondents are also somewhat more worried about the following long-term threats to their retirement. So 75% versus 71% for recession financial strength of social security, 75% versus 69%. And the potential of long-term care, 69% versus 64%. And among respondents who are already retired, those with lifetime income report being more satisfied with their lives than those without a lifetime income option. Here’s how the two groups responded when asked if they agreed with the following statements.

Okay. So those with lifetime income spend their time doing things that they enjoy, 88% who have lifetime income, and those without 78%, I’m as busy as I want to be. 87% versus 75%. I have enough money to buy the things I need. 86% versus 75%. I am enjoying life 85% versus 78%. And I have enough money to splurge on things I want. 59% versus 50%. This poll again was conducted by Qualtrics from June 21st to June 24th, 2022, with about 818 respondents ages 50 or older, roughly split between fully or partially retired and not retired as well as between men and women respondents with less than a hundred thousand dollars in household net worth excluding a primary residence were not included in the survey. I have also read in other surveys how guaranteed income adds to happiness in retirement research has proven that money can buy happiness.

At least for retirees, it’s found that the two greatest contributing factors to a happy retirement are, being surrounded by friends and family. You know, having those great strong relationships and having a substantial, guaranteed lifetime long income stream. Since the number one concern among retirees is outliving their assets, it stands to reason that having adequate guaranteed income for life would go a long way to offsetting this cause of stress. Historically, retirees have enjoyed a combination of social security benefits and employer-sponsored pension plans. But the days of pensions are really scarce; on average social security payments equal about 40% of pre-retirement income. So today’s retirees may have to supplement their income with savings and investments, and creating that guaranteed income source will go a long way toward greater satisfaction and happiness. Research by the Lira Secure Retirement Institute found that retired annuity owners tend to be more confident about sustaining their retirement lifestyle than those without an annuity.

Close to 70% of retirees who own an annuity, according to LIRA, are confident. Their savings will not run out even if they live to age 90 compared with 57% of retirees who don’t own an annuity, keep in mind that annuities are insurance contracts designed for retirement or other long-term needs. They provide guarantees of principal and credited interests. Subject to surrender charges. Annuity guarantees are backed by the issuing insurer’s financial strength and claims-paying ability. So how can you get a guaranteed income annuity? Well, they’ve often been overlooked in the past, and they’ve also been kind of poo-pooed mainly by the investment community because, guess what? They don’t make money on annuities with income annuities; an insurance company converts a lump sum or series of premium deposits into an income stream that will either begin immediately or, in the case of deferred income annuities, at whatever future age you choose.

Typically starting no later than 85 and most annuities offer an option for a guaranteed lifetime income. Many also let you name a joint income recipient so your spouse can receive a guaranteed lifetime income. And, of course, as the research shows, annuities provide both psychic and financial benefits. It’s all about feeling more confident. And that’s what we want for her retirement. We want women to feel more confident, and women are more at risk for longevity and running out of money in retirement. So annuities are powerful, but they’re not for everyone. You don’t want to invest in them unless you know what’s right for you. Okay. Before you buy an annuity, you need to ask yourself some questions, how much income will I need in addition to social security and other sources to cover my expenses? Will I need supplemental income from anyone else besides myself?

How long do I plan on leaving money in the annuity? And when do I expect to need income payments? And will I be able to gain access to the funds from the annuity if I should need them, and do I have enough cash reserves to meet my expected needs? And am I using the funds to save for retirement to generate a retirement income, or both? And once you’ve decided that an annuity is right for you, you can decide which type would be best. There are many different annuities available in the marketplace today. So knowing how you plan to use the product will help you make the best choice. And also, finding a retirement advisor and a retirement coach who can guide you and educate you about annuities and the role that they can play in your retirement plan is essential. And, of course, as you all know, anyone that’s listened to my podcast in the past, I am here to help you.

I’m here to connect you with some reliable resources that you can work with to figure this out, right? You may be able to figure it out on your own. Certainly, research and connect with an insurance person if that’s the way you want to go. But I believe that an insured person will look at the annuity side of the picture. You really need someone that can integrate your annuity into your income, into your other income streams and your investments. It’s, it’s kind of like looking at the whole puzzle and piecing it together versus just one piece of it. It doesn’t make much sense to me to look at just one piece of it. Although some people will just sell you an annuity, know you don’t want to be sold an annuity. You need a comprehensive retirement plan that incorporates all these components and asset classes.

And they all work together, hand and glove it’s, you know, it’s a very well-articulated. It’s like a symphony. Quite honestly, everything has to play together and sound together. It all has to work together in your retirement plan to give you the best possible retirement outcome. So reach out to me at lynnt@herretirement.com. Here’s to, you know, bracing ourselves for whatever comes down the pike. We have to control what we can control. Maybe there are some ways that you can take advantage of an annuity. Now protect your portfolio from further downward slide because of market exposure. Whatever it is, we can connect you to someone who can help you immediately. Or we can further educate you whatever the case, maybe reach out to me at ly@herretirement.com and as always, here’s to knowing more and having more, and here’s to getting her done. Thanks for listening.

 

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Going Through Gray Divorce with Grit and Grace

 

Divorce after 50 – aka “gray divorce” – is becoming more common (for several reasons). Couples over 50 are now seeing the highest divorce rates among all age groups in the world. 

 

The United States has the highest divorce rate in the world, with nearly half of all marriages breaking up. I am twice divorced, and so is my significant other. In fact, between the two of us and our parents, there are 13 divorces between the 6 of us. So when I say I am familiar with divorce…trust me!

Research indicates that even people married 20 years or longer are getting divorced more often in recent decades. There has been a significant uptick in “gray divorce,” a term used to describe a split involving married couples at least 50 years of age or older.

According to a study from The Journal of Gerontology, persons aged 50 and older account for one-fourth of divorces, and the divorce rate for this demographic has doubled since the 1990s. It also found that “over half of those divorces happened after 20 years of marriage.” A Pew Research report shows that higher gray divorce rates are linked to Baby Boomers, who comprise the “bulk of this age group,” but what factors are spurring the increase, and why is it more prevalent now?  

Jeff Stokes, assistant professor in the University of Massachusetts Boston’s Department of Gerontology, cites three main contributing factors to the rise in gray divorce. 

The first entails “changes in gender equality among current primary cohorts of gray divorce and less defined gender roles in the labor force,” said Stokes. “There are much more equal proportions of men and women in the labor force.” 

An increase in women’s financial independence has reduced the fear of financial repercussions stemming from divorce. Women earn incomes independently, which takes away the financial barrier to divorce for many. Many women are earning more than their spouses.

Secondly, there is greater cultural acceptance of divorce now that our society has developed a more equitable division of labor. Men engage in a more evenly divided share of household work and child-rearing responsibilities than was typical in previous generations. 

A third contributing factor and something unique to gray divorce, stated Stokes, is increased life expectancy. “Decisions on relationships and planning are often based on people’s expectations for the future,” he elaborated.  50% of people in mid-life today, especially women, will live past 85. The idea of putting up with a spouse you’re not happy with seems a lot less palatable if it’s going to be for 20, 30, or even 40 more years.

Before the Baby Boomers, people in their fifties and sixties were not anticipating decades more of healthy living, which may have influenced their views on enduring a boring marriage. With longer average life expectancies, that social dynamic has changed. “Remaining in an okay marriage is different when you’re in physical decline,” mused Stokes. “A spouse can be a caregiver. In intimate relationships, decisions are often based on the alternatives.”

A spouse in a turbulent marriage might prefer being alone to staying in a toxic relationship, but most older couples seeking divorce are just in a marriage that has deteriorated over time, maintained Stokes. If you’re 65 and still expecting decades of active life ahead, the thought process becomes less about ‘Will I find someone else?’ and more ‘Why should I spend it with this person who doesn’t make me happy anymore?’ 

And finally, I believe many couples have married and had children later and are experiencing empty nesting at 50 or 55, and these major life transitions force us to examine what we really want out of life…and this might not include the person you’ve been looking across the table at for 30 or 40 years.  

Getting Some Grit and Grace

Regardless of what happened to break the camel’s back, so to speak, when you find yourself “suddenly single” after 50, you’ll definitely face a unique set of challenges. This will require a concerted effort, planning, and serious grit and grace to protect your happiness, health, and wealth.

Looking at wealth, divorce at any time has one of the biggest negative impacts on building a couple’s nest egg.

Here are some important factors to consider and baby steps to starting over…

  • Consider your family and children: Divorce is hard on everyone, even when it’s a joint decision and amicable. Financially dependent children or adult children who still require parental support represent a major consideration. It’s important to discuss the children factor with your spouse and attorney. Equally important are the emotional effects that divorce has on children. Sometimes, it’s worse for adult children. Be careful not to overlook these emotional issues for everyone involved.
  • Mind your income sources…In your 50s is typically when people hit their peak earning years, which is the good news. Conversely, income from employment changes as you go past the 50 milestones. The talent pool you’re competing in changes. So if you find yourself suddenly unemployed and looking for work as you also face divorce, it’s critical to have some safeguards in place. Protecting your income from work becomes vital if you’re facing the prospect of divorce.  It’s also very important to consider all potential future salary scenarios for you and your spouse before you agree to any financial details in your divorce agreement.
  • Dividing your retirement nest egg: A divorce can impact your retirement nest egg…big time. But it can also affect your liabilities. Most people think about how it will impact assets, but I know from experience that your joint liabilities can be assigned unfairly during a divorce. Financially devastating the other spouse in the process.

During a gray divorce, that six or seven-figure nest egg you’ve built as a couple will suddenly be significantly cut down. Hopefully, it’s divided fairly. But that’s why you need a certified financial divorce analyst to help in this process. There are also tax consequences that need to be considered.

  • Protecting your health: Understanding your healthcare needs and health insurance coverages is important. You must also think beyond your employer’s health benefits when you’re retired. If you plan to retire before you’re eligible for Medicare, you need to consider COBRA and Individual Health Insurance Under the Affordable Care Act (ACA) can help you bridge the gap.
  • Care issues: In cases of elderly divorcing couples, or for couples when one is the healthcare provider for the other, there are significantly more issues to address. Sometimes, you may even need to consider a guardian or conservator.

As unsettling and crappy as it may feel to start all over again at 50 or older, here are some baby steps to keep in mind. I am also including a link to my Ultimate Divorce Checklist.

Envision Your New Single Life

When couples decide to divorce after many years of marriage, they face not one but two sources of unsettling uncertainty –a newly single life plus an entirely new phase of life around the corner…retirement. Or perhaps, you’re already retired.  You may have recently made decisions with your partner about retirement, and now you’re faced with redefining what retirement looks like for you. In a perfect world, you’d get this gray divorce thing over with before retirement, so you’d avoid planning your life in retirement twice…if only life could be that well planned out.

The question remains, regardless of when the divorce happens…what do you want your life to look like?  Who do you want to be? Where do you want to be? Who do you want to surround yourself with? How do you want to spend your time? Whether you’re married or single, facing or in retirement, the questions don’t change much. In the case of divorce, this is an opportunity for you to design life on your own terms. If the divorce wasn’t your decision, you can see this as a silver lining just because I’m a half-glass full kind of person.

Know Your Options and Get Good Help

Regardless of the split and subsequent divorce, it’s critical to get educated about all your options, create a comprehensive plan, and then try to move on as best as possible. There are some excellent resources to help you navigate this potentially unknown territory. And it’s not just the divorce process, but potentially the retirement preparation process as well, which brings up so many other issues to deal with. I highly recommend you find the help you can trust. There are divorce mediators, coaches, lawyers, and a Certified Financial Planner (CFP) or Certified Divorce Financial Analysts (or CDFA’s), which many women aren’t even aware exist. They can provide tremendous collaboration and support to protect yourself financially. Investing in the right team is extremely valuable…trust me, I know.

Formulate a sustainable future 

Once you have the legal and financial aspects figured out, you must focus on your future and formulate a plan. Remember, a goal without a plan is just a wish. Fortune favors the smart, the bold, and the prepared. The mantra that I created from the famous quote.

Dr. Joe Coughlin, head of the cutting-edge AgeLab at the Massachusetts Institute of Technology, suggests that a good life is based on having sound finances, a thriving social network, a strong sense of purpose, and fun, as you look forward to a better future life. He suggests putting in place the three “F’s” as your foundation for a sustainable future: Friends, Finances, and a Forward Focus. My suggestion is similar but is to create a plan for being HappiHER, HealthiHER and WealthiHER. 

I, too, believe that when you have all three elements (regardless of what you call them) firmly in place, chances are much higher that you’ll end up in a better place despite a major life transition you may have never expected. You can divorce, retire and live better than you’ve imagined. It all starts with you and a little help from experts, family, and friends. You’ve got this. Let’s Get Her Done. Don’t forget to check out the link to my Ultimate Divorce Checklist.

 

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Here’s What You Need to Know About Life Insurance

To have a good financial standing, sometimes you have to face the things you would rather ignore. For example, death and what will happen to your finances when you pass away. However, everyone has to consider this, especially if you have a family or other dependents. This is where life insurance comes into play.

If you are reading this article, you likely understand what life insurance is generally for: It provides financial security for loved ones in the event of your death. However, you may be surprised to learn that it can cover more than that. In fact, it may be a good idea to get life insurance even if you are the only person you financially support.

 

What is life insurance, exactly?

Life insurance is designed to protect your loved ones financially in the event of your death or to provide a safety net if you live beyond the policy period. By ensuring that your financial obligations are taken care of, life insurance allows your loved ones to focus on their lives without worry.

These are the three main types of life insurance. 

  • Term life insurance protects you for a specific amount of time. If you were to pass away during that time frame, your beneficiaries would be taken care of- however, once that term is up, the policy expires. You do have the option to renew it, but it would come at a higher monthly price. A lot of people choose “level” term life insurance, which means that the monthly premium would stay the same throughout the entirety of the term.
  • Whole life insurance is a type of life insurance that covers you for your entire life. It is usually more expensive than term life insurance, and the payments are often fixed. The premiums for whole life insurance go towards the policy’s cost and build up a cash value over time. This cash value can be borrowed against and may even pay dividends, depending on the company.
  • Universal life insurance is another type of permanent life insurance; it has features for both term life insurance and whole life insurance. The policy’s cash value grows in a tax-deferred savings account. You can borrow against the cash value of the policy. The premiums, just like term life insurance, are flexible and will probably increase as you age.

Do I actually need life insurance?

As you may be thinking, this process may seem more complicated than you have the capacity for, and you may wonder if you really need to do this or if it can wait. I understand that it can be discouraging to plan for a future financial situation that you will not be around to see, but it is important.

If any of these criteria apply to you, it is worth considering.

  1. If you have children or other people who rely on you financially. You probably know that life insurance is for people who want to ensure their children or spouse are taken care of after death. But life insurance can also be used to help cover the needs of other dependents, like siblings, parents, friends, or even pets. It can also be used to help pay for big expenses like college, living expenses, or mortgage payments.
  2. If you don’t have much money saved up, you may be putting a burden on your loved ones when you die. Truthfully, funeral and burial expenses can be expensive, averaging around $7,000–10,000 in the US. You can get life insurance to ensure your memorial costs are covered.
  3. If you have private student loans or any type of loan with a cosigner, it’s important to know that many private loans are not forgiven upon the borrower’s death, unlike federal student loans. If you die before paying off a private student loan, your estate will be responsible for the balance owed. This means that your loved ones could end up with nothing after you die. A life insurance policy can help ensure that your debts are paid off so that your beneficiaries don’t have to worry about them.
  4. If there is a history of a life-threatening disease or illness in your family, it is important to do your research as soon as possible. If you wait until you start showing symptoms, your insurance premiums will be much higher if you can even get coverage. One positive aspect is that you can start estimating any expenses that might occur. Hospital bills, funeral costs, and other expenses can add up after a person passes away. Life insurance can help cover those costs.
  5. If you’re a business owner. What will happen to your business if something happens to you or your employees? How will your clients and partnerships be affected? A life insurance policy can provide financial protection for your business in the event of your death, disability, or other unforeseen circumstances.
  6. If you have a large estate. If you have a lot of property that will need to be divided after you die, a life insurance policy can help cover the cost of carrying out an estate plan.

In short, life insurance can be used to pay for a wide range of expenses in the event of your death. This can provide peace of mind for loved ones by ensuring they will not have to worry about financial matters while grieving.

Is there anything I should know about life insurance before taking out a policy?

No matter what policy you choose, most life insurance companies will require a medical exam to help them calculate your premiums. This is based on your physical health. Even though this process can be very intrusive, it is important to be honest with the provider, as they will cross-reference your application and exam with your existing Medical Information Bureau file.

Here is some advice: If you are considering having children and a uterus, get a life insurance policy before you get pregnant or give birth. Wait a few months so your body can go back to normal. Insurance companies will look at things such as your weight and blood pressure when calculating your premium, which can be different when you are pregnant. Being pregnant at the time of the exam can make it, so you have to pay more for insurance in the future.

How much life insurance should I get?

A few methods can be used to determine the amount of money your life insurance policy should be worth. The most common way is to:

  1. Your salary: The most common way is also the quickest and simplest way, but it is accurate for most people – just multiply your current salary by 7-10 times.
  2. Capital needs: What are all the expenses you are dealing with currently? How many years of income do your beneficiaries need to replace what you earn? Also, consider how much you want to set aside for your loved ones’ education. Are there any debts that need to be paid off? If you do unpaid work like childcare, cooking, cleaning, or landscaping, how much would your loved ones need to pay someone to do that work if you weren’t around? Finally, how much will your funeral and burial cost? Add all of these items to the total.
  3. Human life value: I don’t mean the value of your life (which is priceless), but the value you’d bring in over the course of your life: Calculate your income (including the value of unpaid services you perform for your family) from now until retirement and subtract the 20-40% you would pay in taxes.

How do I choose a life insurance policy? What should I be looking for?


When it comes to life insurance, there are many options to choose from, each with different rules and criteria. Comparing policies side-by-side can help make the decision process easier. Talking to a financial advisor will help a lot as he/she can provide resources and advice that are insightful enough to guide you in making the right life insurance choice based on your specific needs and circumstances. 

Making a life insurance decision can be difficult and unpleasant, but it does not need to be complicated. familiarizing yourself with all of your choices will allow you to have power over the process. As with all other decisions about your financial well-being, you will feel much better once it is complete – both for yourself and the people and pets you care about.

Should I have life insurance when or after I retire?

There are mixed opinions, some people believe you’ve accumulated enough assets to cover costs and do not need the insurance. Look at this on a case-by-case basis. Some other life insurance policies, such as an index universal life policy, a hybrid policy with a life insurance benefit, a long-term care rider, and a cash value that allows you to take out money later in retirement. This could be an important component of your retirement plan. Discuss with a retirement advisor licensed in both insurance and investing to get the best balanced opinion as you approach retirement.

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Emotional vs. Strategic Decisions

Information vs. instinct. When it comes to investing, many people believe they have a “knack” for choosing good investments. But what exactly is that “knack” based on? The fact is, the choices we make with our assets can be strongly influenced by factors, many of them emotional, that we may not even be aware of.

Investing involves risks. Remember that investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Deal du jour. You’ve heard the whispers, the “next greatest thing” is out there, and you can get on board, but only if you hurry. Sound familiar? The prospect of being on the ground floor of the next big thing can be thrilling. But while there really are great new opportunities out there once in a while, those “hot new investments” can often go south quickly. Jumping on board without all the information can be a mistake. A disciplined investor may turn away from spur-of-the-moment trends and seek out solid, proven investments with consistent returns.

Risky business. Many people claim not to be risk-takers, but that isn’t always the case. Most disciplined investors aren’t reluctant to take a risk. But they will attempt to manage losses. By keeping your final goals in mind as you weigh both the potential gain and potential loss, you may be able to better assess what risks you are prepared to take.

You can’t always know what’s coming. Some investors attempt to predict the future based on the past. As we all know, just because a stock rose yesterday, that doesn’t mean it will rise again today. In fact, performance does not guarantee future results.

The gut-driven investor. Some investors tend to pull out of investments the moment they lose money, then invest again once they feel “driven” to do so. While they may do some research, they are ultimately acting on impulse. This method of investing may result in losses.

Eliminating emotion. Many investors “stir up” their investments when major events happen, including births, marriages, or deaths. They seem to get a renewed interest in their stocks and/or begin to second-guess the effectiveness of their long-term strategies. A financial professional can help you focus on your long-term objectives and may help you manage being influenced by short-term whims.

A financial professional can help: If you’re a woman concerned about saving for retirement or have questions about your unique situation, give us a call. Our team understands the unique challenges women face, and we’re passionate about helping women just like you plan for a comfortable retirement. Contact us and let’s get started. Email retire@herretirement.com. 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.

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A Bucket Plan to Go with Your Bucket List

John and Mary are nearing retirement and they have a lot of items on their bucket list. Longer life expectancies mean John and Mary may need to prepare for two or even three decades of retirement. How should they position their money?1

One approach is to segment your expenses into three buckets:

  • Basic Living Expenses— Food, Rent, Utilities, etc.
  • Discretionary Spending — Vacations, Dining Out, etc.
  • Legacy Assets — for heirs and charities

Next, pair appropriate investments to each bucket. For instance, Social Security might be assigned to the Basic Living Expenses bucket.2

For the discretionary spending bucket, you might consider investments that pay a steady dividend and that also offer the potential for growth.3

Finally, list the Legacy assets that you expect to pass on to your heirs and charities.

A bucket plan can help you be better prepared for a comfortable retirement.

Call today and we can develop a strategy that may help you put enough money in your buckets to complete all the items on your bucket list.

  1. John and Mary are a hypothetical couple used for illustrative purposes only. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
  2. Social Security benefits may play a more limited role in the future and some financial professional recommend creating a retirement income strategy that excludes Social Security payments.
  3. A company’s board of directors can stop, decrease or increase the dividend payout at any time. Investments offering a higher dividend may involve a higher degree of risk. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.

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5 Reasons Why Women Need to Invest

Despite progress toward financial planning and saving, women often face challenges regarding their financial security. These challenges can include more time away from the workforce (often caring for children or for parents), the gender pay gap, and other factors that impact their investing and saving for retirement. Women need to recognize these barriers to saving and investing and prepare by making informed decisions for themselves.

Here are a few of the unique challenges women face when saving for retirement:

Women live longer: The average life expectancy for women is age 86, and she’ll spend, on average, 21 years in retirement.

Women are more likely to live in poverty: Women age 65 or older are 43% more likely than men to live on an income below the poverty level, and 65% of the elderly poor are women.

Women are more likely to work part-time: 30% of female workers are part-time workers with no retirement savings benefits.

Women earn less than men: In 2020, women earned 84% of what men earned of both full- and part-time workers.

Women care for others: 35% of caregivers are women, and mothers are more likely to reduce their work hours or step away from employment to care for their children. Often, they provide care to other adult family members.

Even though women face more significant risks and challenges in saving for retirement, there are essential components to retirement readiness that can help you put a more solid foundation in place as you prepare for retirement:

Participate in your employer’s retirement savings plan: If you work for an employer that offers a retirement savings plan, participate in it. Even if working part time, you may be able to participate. Contribute at least enough to ensure you receive the employer’s matching contributions.

Set up and contribute to a self-directed retirement savings vehicle: The more you save at an earlier age into a Roth IRA or Traditional IRA, the better prepared you’ll be for retirement. While some rules apply based on your income and if your spouse contributes to a retirement savings plan, a financial professional can help determine which is appropriate for your situation.

Prepare for emergencies and have a backup plan: Circumstances like divorce, death, or injury can prevent retiring as planned. Setting up an emergency savings account with three to six months of expenses, life insurance, disability insurance, a budget, and a plan to reduce your debt can help ensure you have enough left to fund your retirement savings in an emergency.

Create a ‘single-view’ financial plan: Women should work with a financial professional to create a single-view financial plan that reflects only their retirement savings contributions, and only their source of income. While you may have a secure relationship, having a single view plan will help prepare you for the future, regardless of what happens.

Consider the possibility of delaying your retirement: A 2021 report indicates that eight in ten women are taking steps to ensure continued work:

  • 61% are staying healthy so they can work longer
  • 48% are keeping their job skills up to date
  • 25% are networking and meeting new people
  • 22% are taking classes to learn new skills
  • 17% are scoping out the employment market and opportunities available
  • 16% are obtaining a new degree, certification, or professional designation
  • 12% are attending virtual conferences

A financial professional can help: If you’re a woman concerned about saving for retirement or have questions about your unique situation, give us a call. Our team understands the unique challenges women face, and we’re passionate about helping women just like you plan for a comfortable retirement. Contact us and let’s get started. Email retire@herretirement.com.

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Avoiding Scams

Scams got a big boost during the pandemic and I’ve been hearing about more folks (even very tech-savvy ones) getting caught up.

I wanted to reach out with some tips so you and your loved ones can stay safe.

I’d also like to ask for your help: Please forward this email to anyone you know who could use a refresher on the latest scams.

You might think your friends, family, and elders would be too smart to get caught, but the wider we spread awareness of the latest info, the better. Saving even one person would be worth it.

The goal of scams is to steal your money, steal your accounts, or steal your identity.

Here’s what you need to know:

Phishing emails and texts mimic legitimate communications to trick you into giving up account logins, credit card or bank details, or other sensitive data so scammers can use or sell them.

What do they look like? Scammers send you an email or text message asking you to verify your account or payment info, track a package, or unfreeze your account. Inside is a link to a (very convincing) fake website that steals your info.

Scammers might also send you a file attachment or document link to get you to click and install malware on your computer or phone.

Here’s how to avoid getting scammed:

  • Remember that legitimate institutions will never ask for sensitive information (like usernames, passwords, SSN, or bank details) by email or SMS.
  • Be suspicious if a message contains odd phrasing, grammatical mistakes, or typos.
  • Check the “from” information carefully to make sure messages are from a legitimate domain name or number that is actually associated with the company (e.g. bankemail@yourbank.com and not bankemail@bank23abc.com). Not sure? Call the company’s public phone number and check.
  • Don’t click on links or open attachments unless you fully recognize and trust the sender and are expecting the message. You can hover over a link to view the URL and make sure it’s sending you to a legitimate site.

Here’s a phishing email in action. Can you identify the red flags? (Answers in the P.S.)

How many did you see? Did you catch the fake number at the bottom? Sneaky!

Spoofing calls are another scam that’s on the rise. Scammers “spoof” the info on your caller ID to make it look like they’re calling from a legitimate organization.

What do they look like? Scammers may claim to be from your bank, the IRS, the Social Security Administration, or other organizations to trick you into sending money or giving up sensitive information.

They may claim you owe money or threaten you with the police if you don’t take action right away.

In other cases, they will impersonate a financial institution, claim your account is locked, and attempt to gain your account credentials to “unlock” it.

They might even call about an unexpected refund or windfall that you can only receive right now by handing over your personal information.

How to avoid getting scammed:

  • Be suspicious of calls from the IRS, SSA, or any financial institution. If you receive one, ask for a case or employee ID, hang up, and call them back on the official number on their website.
  • Never confirm information over the phone unless you have personally called the official number or are expecting a call.
  • Hang up immediately if the caller threatens you or pressures you to resolve an issue over the phone right now.

Want to report a scammer who targeted you? The FTC collects reports here.

Folks, stay safe out there.

Scams work by taking advantage of fear, greed, and the desire to do the right thing. If something seems “off” or “too good to be true,” take a break.

Never be afraid to contact a company through its official phone number or website to ask for clarification about a message or call. Better safe than sorry.

 

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How Will Working Affect Social Security Benefits?

In a recent survey, 70% of current workers stated they plan to work for pay after retiring.1

And that possibility raises an interesting question: how will working affect Social Security benefits?

The answer to that question requires an understanding of three key concepts: full retirement age, the earnings test, and taxable benefits.

Full Retirement Age

Most workers don’t face an “official” retirement date, according to the Social Security Administration. The Social Security program allows workers to start receiving benefits as soon as they reach age 62 – or to put off receiving benefits up until age 70.2

“Full retirement age” is the age at which individuals become eligible to receive 100% of their Social Security benefits. Individuals born in 1960 or later can receive 100% of their benefits at age 67.

Earnings Test

Starting Social Security benefits before reaching full retirement age brings into play the earnings test.

If a working individual starts receiving Social Security payments before full retirement age, the Social Security Administration will deduct $1 in benefits for each $2 that person earns above an annual limit. In 2022, the income limit is $19,560.2

During the year in which a worker reaches full retirement age, Social Security benefit reduction falls to $1 in benefits for every $3 in earnings. For 2022, the limit is $51,960 before the month the worker reaches full retirement age.2

For example, let’s assume a worker begins receiving Social Security benefits during the year he or she reaches full retirement age. In that year, before the month the worker reaches full retirement age, the worker earns $65,000. The Social Security benefit would be reduced as follows:

Earnings above annual limit                $65,000 – $51,960 = 13,040

One-third excess    $13,040 ÷ 3 = $4,347

In this case, the worker’s annual Social Security benefit would have been reduced by $4,347 because they are continuing to work.

Taxable Benefits

Once you reach full retirement age, Social Security benefits will not be reduced no matter how much you earn. However, Social Security benefits are taxable.

For example, say you file a joint return, and you and your spouse are past the full retirement age. In the joint return, you report a combined income of between $32,000 and $44,000. You may have to pay income tax on as much as 50% of your benefits. If your combined income is more than $44,000, as much as 85% of your benefits may be subject to income taxes.2

There are many factors to consider when evaluating Social Security benefits. Understanding how working may affect total benefits can help you put together a strategy that allows you to make the most of all your retirement income sources – including Social Security.

  1. EBRI.org, 2022
  2. SSA.gov, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.

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Five Questions to Ask Your Mother, Grandmother, and Yourself

Hi there. And welcome to this week’s episode of the Her Retirement Podcast. This week, I’m sharing five questions to ask your mother or grandmother. I found this content on the website wiser.org, which stands for women’s Institute for a secure retirement. Too often, older women live out their retirement years in pretty precarious financial straits. Some are trying to stretch modest incomes to meet increasing healthcare costs, housing, and even day-to-day expenses. And on average, women live longer than men, some have significantly lower retirement income, and some are really likely to outlive their savings.

Even with sound retirement plans, and financial plans, many older women sometimes struggle at some point with their savings accounts, going down, feeling stressed about watching those declining savings accounts, watching their health deteriorate, having mobility problems in other challenges, and whether your care recipient, your mother, your grandmother is approaching retirement, or is already retired. You can give her a very valuable gift. You can use these “conversation starters” I will share with you. These five questions or conversation starters to talk with her about her financial needs. Then take advantage of some of the suggestions, and together you may find solutions that will improve both of your lives.

The first question is, have you received sales calls or pressure for loans, home improvement services, or other purchases, or been asked for personal financial or insurance information or for money older Americans hold the largest percentage of this nation’s wealth. Making them prime targets for abuse by unethical financial professionals, scammers, caregivers, and even sometimes family members, many senior citizens fall prey to financial fraud and scams, depriving them of their hard-earned dollars. Particularly women who are more likely to live alone. In fact, 80% of women die. Single financial scams are a multi-billion-dollar industry.

I know my mother’s 87 and my mother-in-law’s 87, and they both have been targeted. Luckily, they are astute and educated by us, their children to be leery of those scams. Studies estimate the annual financial loss to be anywhere from 2.9 billion on the low end to 36.5 billion on the high end, and women are anywhere from twice to two-thirds as likely as men to be victimized. The scams are really numerous, from identity theft to bogus home improvement services, predatory loans, fishing, and stealing personal financial information from grandparents or sweetheart scams in foreclosure or debt relief services. Elder financial abuse can also happen when a person responsible for an elder’s financial matters misuses funds or neglect the duties that were assigned to them. It’s important to understand that financial abuse can happen to anyone. I mean anyone, and you can do your part to prevent it by educating yourself and the older people in your life and being aware.

Warning signs that an older person may have been a financial crime victim include large sums of money missing from bank accounts, unusual wire transfers, unpaid bills, the inability to buy essentials like food and medicine, missing property, or isolation from family and friends. And next, you should discuss and educate your family members, ask your care recipient to check with you and get a second opinion before making any large purchases or sending cash to anyone suggest that they let you place a no soliciting sign at their front door and leave a note by the phone, reminding them to say no to phone calls and numbers that they don’t recognize. Also, discuss these common fraud schemes and tips from the postal service on how to avoid being a target of fraud and how to report mail fraud. So, fraud and theft should be reported to the state attorney general. Visit the national association of attorney generals to find the office in your care recipient state. Be sure to inform the operator that you are reporting elder fraud, and it should be reported to the federal trade commission. Also, theft of property or cash should be reported to the local police department. The

The second question is, are you making ends meet and able to pay your bills on time? And are you worried about running out of savings as savings dwindle? Of course, you’re drawing down those retirement savings accounts in retirement. Financial and security can increase in many seniors, who struggle in silence, are too proud to say anything, or do not want to be a burden on others. I know because my mom, she always says that to me. I don’t want to be a burden. I don’t want to be a burden. Alternatively, your family members may have financial resources but struggle with managing their paperwork, paying their bills on time, and keeping track of everything. Understanding where that person’s money goes can make a big difference in their financial situation.

Sometimes a budget can help sitting down with them, helping them go through their bills and their paperwork, or perhaps removing that burden or that responsibility from them altogether. A critical step is to examine income. If your care recipient is spending down savings but is worried about running out of money, make sure that the savings withdrawals are paced appropriately. So as a general rule, a person at age 65 can withdraw three to 4% each year from their total savings, like a 401k and other accounts. And if accounts a counselor invests appropriately, the money, in theory, will last 20 to 30 years, depending upon the individual’s circumstances. And of course, a financial advisor should be able to step in and help and make sure that you and that person you’re caring for are on track and know what that withdrawal amount is okay, is your family member cash poor but house rich, another alternative, in this case, is a reverse mortgage or line of credit to access home equity.

And as I talked about in last week’s podcast, a reverse mortgage may be beneficial under the right circumstances, but they’re not the right choice for everyone – really important. You might want to go back and listen to last week’s podcast. If you want more information about a reverse mortgage, I had a fantastic conversation with a gentleman named Luke, and for some older women, buying an annuity can make sense in terms of income and retirement. There are many different types, but generally, an annuity is an insurance product that you purchase with a lump sum of money and, in return, receive a monthly income for life, much like getting a pension. So, I call it a personal pension plan. It’s a pretty complicated area. So again, really, really important to talk to a retirement advisor to get some advice on how annuities fit into the overall picture.

There are different products and price points, so choosing the right one should be done very carefully. And a woman is three times more likely to be widowed than a man and faces important legal and financial decisions, particularly at that very difficult time of loss. So, it’s really important. Should you be helping a mother or a grandmother deal with that situation to ensure that you are there to help guide them through that? Because the financial implications alone are, are pretty significant and can be overwhelming when you’re dealing with the death of your loved one.

Question number three, are you getting all the healthcare you need for those with multiple medical needs, making appointments, and managing their prescriptions and their private insurance can be really, really overwhelming aging-related memory loss can further complicate these issues. They could have skipped appointments, lacked preventative care, and been non-compliance with medication instructions.

All of these things can undermine their personal help, and seniors experiencing memory problems may need extra help with these appointments and medications. Things like copays, the cost of uncovered services, and the cost of transportation can sometimes keep seniors from getting the care they really need. Some programs like the state health insurance counseling program or ships offer no cost, unbiased health benefits, counseling education, and advocacy to help empower people, make informed benefit decisions, and help find a ship that serves your area. You could go to www dot ship, help.org. There may be options under the person’s Medicare programs, such as Medicare Advantage plans, part D prescription coverage, and private MEAP insurance or state Medicaid. These are our programs, all administered by Medicaid that cover Medicare premiums and copays for seniors with limited incomes, and a local ship counselor can outline options tailored to that person’s need.

And there are also local agencies on aging that can point to other types of assistance, including assisted living resources or other local programs that can help. And you can also use the federal elder care locator and enter your care recipient zip code at the top of the page to find your local area agency on aging and state and local aging and disability resources in the area. So really important to look for those resources.

Question number four to ask your mother or your grandmother: are you having trouble with mobility, driving balance, sight, or hearing? I know in the case of my mom, she’s still independent. She still has her car. She still drives. But most of the time, when I go with her somewhere, I drive. So, I really haven’t taken the time to drive with her. And that’s probably the next thing I need to do.

Although maybe I’ll ask one of my brothers to do it <laugh> no, I seriously, I think she’s driving fine still, but you know, it’s, as you get on in, in years, it is a little nerve-wracking to be the child of a parent who’s still driving around, and you’re hoping that they’re safe. So as people age difficulties, with these issues of mobility driving balance sight, or hearing, maybe keeping an older person from social and other daily activities and, and it can put them at risk of injury. Often seniors can become isolated and depressed if they’re physically unable to get out and see people they know during COVID. It had a tremendous impact on people like my mom, seniors who live alone, or even seniors living in facilities where they were on lockdown. You know this. This can all prevent them from participating in activities.

They enjoy, you know, being social is really important to longevity, and taking away that social aspect from a senior’s life can have detrimental effects. Injuries can lead to nursing home admissions, which is really scary, or other costly care expenses. Often a family caregiver will move back home, quit a job, or reduce their hours to take over care for a frail relative. This can have a major impact, not only on the caregiver’s finances and retirement savings, but potentially on the person receiving the care because they require more services and more medical intervention check for local services and support investigating services and sources made that can help get your loved one back on track, contact your area agency on aging and make an appointment to discuss local services like discounted transportation, senior centers, senior daycare, and social activities. You could also ask a doctor about possible medication or health conditions that could be contributing to problems and ask about things like walking aids, review the person’s home setup and identify hazards that might contribute to falling because mobility can become an issue.

Please note that Medicare does not cover things like eyeglasses or eye exams except in limited circumstances. So, it’s really important if your family member has limited resources and needs coverage, you can go to ARP. They have a guide to finding the best deal on these types of services, and the federal elder care locator can help you find services and point you to your local agency on aging.

Question number five, do you have adequate financial and tax advice? So, as I talk about each week, I believe that a financial advisor or, better yet, a retirement advisor can really, really help with critical decisions about one’s savings and investments and mapping out a sound plan for your retirement years. And for those of your mother and grandmother, before choosing an advisor, do your homework. The key to choosing someone is knowing what services they provide, what services you need, and the cost of those services.

You want to make sure that there is value in that relationship. You should know exactly what you’re getting, how much they cost, and how your planner will get paid. Ask tons of questions and again, do your homework. No investment is too complicated to be explained to you. So, make sure the person spends the time to answer your questions. You deserve clear answers. If this seems like a sound choice for you and your family member, ask for recommendations from people you trust. And obviously, I can connect with you as well. Okay? So, there you have it. Those are the five questions to ask your mother, your grandmother, and even yourself because, depending upon your age, you need to address these questions. Also, I do hope you found this week’s podcast helpful. So go ahead, ask those questions, get some answers, and take care of those moms. Take care of those grandmoms. They probably did a lot to sacrifice for you. Now it’s your turn to help them. Here’s to knowing more, having more, and getting her done.