Potential Models for Retirement Income

As important as it is to plan your retirement goals, you never know what variables could force you to change course. Fortunately, there are a variety of options that can keep speed bumps from running you off the road to retirement.

One of the most fluid aspects of retirement is the date. Some people have no choice but to enter retirement early as a result of a layoff, health problems or dependent care requirements. Others retire on schedule and then later decide to go back work. Still others transition into retirement slowly, cutting back on work hours or leaving a full-time job to take on part-time work.

These paradigms make the task of designing a retirement income plan more complex in some ways, but in other cases can remove some of the pressure of having to build a fully funded nest egg before retiring.

In recent years, nearly half of retirees’ income has come from a combination of Social Security and private- and public-sector pensions. The next largest resources are IRAs and tax-deferred retirement accounts.1

Whether your retirement is 15 years from now or right around the corner, there are a variety of strategies available to help put you on the path toward your retirement goals. One recent study found that retiree income security can be improved depending on the withdrawal strategy, or strategies, deployed.2

Kathy Kristof, a financial journalist, says one approach is to allocate reliable income sources, such as a pension, Social Security benefits and immediate annuities, to pay for fixed retirement expenses, while assigning other financial vehicles to discretionary expenses — a model she refers to as the “bucket” formula.3

Other strategies include withdrawing a set percentage from your retirement savings each year,4 building a well-diversified portfolio designed to deliver an acceptable range of returns to provide for long-term retirement needs and/or relegating a portion of your portfolio to assets that offer growth opportunity throughout retirement.

When you’re setting up an initial strategy, it’s also important to consider how and when you’ll  draw income once you’ve retired. The tax treatment of withdrawals can vary significantly in retirement and may be impacted by any current income you earn. Taxable accounts, tax-deferred retirement accounts, tax-exempt retirement accounts and even required minimum distributions should all be considered in determining the tax impact of retirement withdrawals.5 Individuals are encouraged to consult with a qualified tax professional before making any decisions about their personal situation.

Each of these retirement income models should be assessed in conjunction with your individual needs, tolerance for risk and time horizon. Remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Please give us a call to discuss your unique situation and how we can design a specific plan of action that helps you work toward your financial independence.

Content prepared by Kara Stefan Communications.

1 Anna Madamba, Stephen Utkus and John Ameriks. Vanguard. May 2014. “Retirement income among wealthier retirees.” https://personal.vanguard.com/pdf/CRRRIP.pdf. Accessed June 17, 2016.

2 Marlene Y. Satter. BenefitsPro. June 13, 2016. “Retirement income security depends on goals, strategies.” http://www.benefitspro.com/2016/06/13/retirement-income-security-depends-on-goals-strate?slreturn=1466189057. Accessed June 17, 2016.

3 Kathy Kristof. Kiplinger. Feb. 2015. “How to Invest After You Retire.” http://www.kiplinger.com/article/investing/T052-C000-S002-how-to-invest-after-you-retire.html. Accessed June 17, 2016.

4 Walter Updegrave. Money. April 20, 2016. “3 Ways to Be Smarter About Drawing Retirement Income from Your Nest Egg.” http://time.com/money/4296814/smarter-retirement-withdrawal-strategy/. Accessed June 17, 2016.

5 Fidelity. April 27, 2016. “Four tax-efficient strategies in retirement.” https://www.fidelity.com/viewpoints/retirement/tax-savvy-withdrawals. Accessed June 17, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

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

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Some Ways to Account for Inherited Assets

As difficult as it is to lose a loved one, it would be nice if the financial situation sorted itself out after a death.

Unfortunately, receiving the assets of a deceased spouse or family member can be a complex process. Most people have their money stored in a variety of different financial vehicles — checking and savings bank accounts, CD and money market accounts, investment accounts, employer retirement plans and pensions, life insurance policies, annuities and even real property.

So, how do you claim assets that are passed on to you? And should you just leave it where it is or transfer it to an account or policy in your name?

In the case of bank accounts, it helps if the decedent had a “payable-on-death” (POD) beneficiary form on file with the bank. If not, those assets will have to go through probate before they can be released. If the bank accounts were held in a living trust, the funds will be transferred to the beneficiary named in the trust and will avoid probate.1

If you inherit an IRA account, options vary based on whether you’re the account owner’s spouse. If you are the spouse, you can assume the IRA as your own, inherit the IRA, or disclaim the IRA. If you are not the spouse, you may either disclaim the IRA or inherit the IRA in which you would be required to take a required minimum distribution (RMD).2

If you inherit a non-retirement investment account, you can either transfer the proceeds from the inherited account into a new account in your name, or you can disclaim it and it will then pass to the other primary beneficiaries or, if none exist, to any secondary beneficiaries. If you disclaim an account, you can’t change your mind later.3

If you inherit a house, you don’t have to pay income taxes on its value. However, if you decide to rent the house, you will have to report the rent payments you receive as part of your taxable income each year. Therefore, you must pay income tax on the payments you receive.4

To claim life insurance proceeds and annuity benefits, each beneficiary needs to complete the insurance company’s claim form and submit it with a certified copy of the death certificate.5 Interestingly, many life insurance proceeds are never paid out because the owner didn’t tell his or her beneficiaries about the policy before dying. If you suspect this may have happened, visit MissingMoney.com (a database of governmental unclaimed property records) to conduct a search.6

Everyone’s financial situation is unique, so you could face any number of scenarios when claiming assets following the death of a spouse or loved one. If you want to prepare in advance to help simplify the process for your beneficiaries down the road, feel free to give us a call to review your current financial vehicles to ensure a beneficiary is listed.

Content prepared by Kara Stefan Communications

1 Mary Randolph. Nolo.com. 2016. “What Happens to Bank Accounts at Your Death?” http://www.nolo.com/legal-encyclopedia/what-happens-bank-accounts-your-death.html. Accessed June 10, 2016.

2 Vanguard. 2016. “I’m inheriting an IRA.” https://investor.vanguard.com/inherit/ira. Accessed June 10, 2016.

3 Vanguard. 2016. “I’m inheriting an account that’s not an IRA.” https://investor.vanguard.com/inherit/nonretirement. Accessed June 10, 2016.

4 Mary Randolph. AllLaw.com. 2016. “Must You Pay Income Tax on Inherited Money?” http://www.alllaw.com/articles/nolo/wills-trusts/must-pay-income-tax-inherited-money.html. Accessed June 10, 2016.

5 Mary Randolph. Nolo.com. 2016. “How Beneficiaries Can Claim Life Insurance and Social Security Benefits.” http://www.nolo.com/legal-encyclopedia/beneficiaries-claim-life-insurance-32433.html. Accessed June 10, 2016.

6 Annie Shalvey. WPRI-12. May 16, 2016. “RI treasurer’s office: Thousands owed life insurance benefits.” http://wpri.com/2016/05/16/ri-treasurers-office-thousands-owed-life-insurance-benefits/. Accessed June 10, 2016.

We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

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

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Boomer Boom or Boomer Bust?

The phrase “boom or bust” refers to a scenario of great prosperity or economic growth followed suddenly by a period of decline. Some economists suspect the aptly termed “baby boomers” could potentially create just such a phenomenon during their twilight years.

As the largest demographic group in history, baby boomers have been an important economic force over the past 70 years. Their influences include the suburbanization of cities, women breaking into corporate America and an overall prosperous period of consumer demand yielding great leaps in technology, health care and education — all of which also have impacted the securities markets. Now, with this massive population in or approaching retirement, will the drop off in the workforce and drain of public entitlement programs create additional challenges?

Putting aside the generational impact of baby boomers for a moment, we are interested in the financial health and well-being of our individual clients. If we can help you create a retirement income strategy you can feel confident about, please give us a call.

Presently, baby boomers hold the highest percentage of net worth among Americans and account for 40 percent of consumer demand.1 This fact, coupled with trends for a more active lifestyle and longer lifespan, means that baby boomers will continue driving demand in consumer markets, particularly with regard to discretionary spending. Naturally, the health care and long-term-care industries are likely to continue benefiting from this generation as well.

Some analysts see value stocks on track for significant growth due to boomer demand for conservative capital appreciation. Value stocks have begun to outperform this year due to relatively low prices (compared to growth stocks) and a better global outlook than in recent years.

According to analysts at Merrill Lynch, value stocks typically perform best when expectations for economic growth are on the rise and there is less fear of recession. The wealth manager observed that for value stocks to continue to outperform, corporate profitability needs to improve, particularly return-on-equity at value firms.2

Other investments that appear to benefit from boomers’ desire for conservative growth include low-volatility ETFs, which have substantially increased assets under management this year.3

Another theory posits that, as boomers retire and start taking distributions from their portfolios, market valuations will shrink. The concern is that the Gen X population — born after the baby boomers — is not large enough or wealthy enough to absorb the sell-off, which will drive down the value of those investment shares.4

Nor are succeeding generations plentiful enough to purchase the 5.5 million small businesses owned by baby boomers, currently valued at $10 to $15 trillion. Without buyers, a boomer relying on the sale of his or her business to fund retirement could experience a rude awakening.5

Baby boomers also continue to impact residential real estate. One strong trend is that empty nesters ae migrating back to the metro areas they abandoned for the suburbs 40 years ago. Boomers are now finding the restaurants, shops and cultural venues of walkable cities and college towns as appealing for their retirement years as the mainstay southern climates.6

Content prepared by Kara Stefan Communications

1 Jeff Reeves. USA Today. April 2, 2016. “The best investment for Baby Boomers may be in themselves.” http://www.usatoday.com/story/money/personalfinance/2016/03/30/best-investment-baby-boomers-may-themselves/81986134/. Accessed June 3, 2016.

2 Dennis Stattman. Merrill Lynch. April 2016. “The Monthly Letter.” https://mlaem.fs.ml.com/content/dam/ML/Articles/pdf/GWIM-CIO-Monthly-Letter-April-2016.pdf. Accessed June 3, 2016.

3 Yakob Peterseil. Bloomberg. May 31, 2016. “Boomers Fueling a Boom In Low-Volatility ETFs.” http://www.bloomberg.com/news/articles/2016-05-31/boomers-fueling-a-boom-in-low-volatility-etfs. Accessed June 3, 2016.

4 Lawrence Hamtil. ValueWalk. May 15, 2016. “Will Aging Baby Boomers Doom the Stock Market?” http://valuewalkposts.tumblr.com/post/144395831485/baby-boombers-stock-market. Accessed June 3, 2016.

5 Donald Feldman. Business2Business Magazines. April 1, 2016. “Boomer Bust: Why exit planning is becoming more critical than ever.” http://www.business2businessonline.com/Article/1689. Accessed June 3, 2016.

6 Clare Trapasso. Realtor.com. May 17, 2016. “Reverse Migration: How Baby Boomers Are Transforming City Living.” http://www.realtor.com/news/trends/why-more-baby-boomers-are-moving-back-to-cities/. Accessed June 3, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

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

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More Options Don’t Always Lead to More Money

When it comes to managing finances, people have more choices than ever. Convenience may be at an all-time high — with financial vehicle options that fit a wide variety of needs — but this also means there are more choices that aren’t necessarily in the clients’ best interests.

The growing number of options makes it more difficult to properly analyze all of them, leading more and more Americans to take on more risk than is necessary to meet their goals. It’s become common for people to opt for a shortcut rather than taking the slow and steady route to build up their savings.

For example, credit cards have become increasingly popular since their creation in the 1960s, and it’s now become the norm to buy items now and pay later. This option gives consumers the ability to pay small monthly minimums which, when paired with high interest rates, could turn manageable debt into out-of-control debt.

The already-complicated field of finance has only gotten more complex over the past 50 years. This is all the more reason to rely on financial professionals for financial advice, as opposed to searching around online or taking guidance from a robo-advisor. It is important to regularly evaluate your financial strategy to ensure it reflects your current goals and objectives, so please keep us in mind any time you’re considering making changes to your strategy.

The average household debt, as a percentage of personal income, increased sixfold from 1946 to 2008.1 And while the concept of debt may not be that difficult to understand, the complicated rules that surround credit scoring are hardly intuitive. For example, leaving cards with zero balances open doesn’t hurt your credit score, but closing cards without a balance doesn’t help it.2

Interestingly, while all of these financial vehicles offer people more choices, as a general rule, Americans have become more averse to change. According to a recent study, we are now less likely to change jobs, relocate to another state or open a startup business than we were 30 years ago. As a result, Financial Times reports that productivity is likely to drop in the U.S. for the first time in over 30 years.3

Even seemingly smart investment choices experience volatility. It’s important to remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. However, just because a financial vehicle has downsides doesn’t mean you should eschew it if it is appropriate for your situation.

Here’s one example: 529 college savings plans have become popular among grandparents who want to help their grandchildren graduate from college without student debt. However, when 529 funds are distributed to students, the next year those assets are reported as the student’s income — which, in turn, may decrease the amount of financial aid the child  may receive by 50 percent. In dollar terms, that means if a student received $10,000 from his grandmother’s 529 plan, his student aid for the next year could be reduced by $5,000.4

For all practical purposes, financial choices these days are boundless. There are approximately 2,400 stocks traded on the New York Stock Exchange alone.5 We suggest that the best way to manage your options is to seek quality advice from a licensed financial professional and appropriate financial products for your situation. As always, we’re here to help.

Content prepared by Kara Stefan Communications

1 Center for Retirement Research at Boston College. May 26, 2016. “Array of Financial Products is Dizzying.” http://squaredawayblog.bc.edu/squared-away/array-of-financial-products-is-dizzying/. Accessed May 27, 2016.

2 Barry Paperno. CreditCards.com. Feb. 25, 2016. “Credit utilization rules for managing your credit score.” http://www.creditcards.com/credit-card-news/credit-utilization-rules-managing-credit-score-1586.php. Accessed May 27, 2016.

3 Derek Thompson. The Atlantic. May 27, 2016. “How America Lost Its Mojo.” http://www.theatlantic.com/business/archive/2016/05/how-america-lost-its-mojo/484655/. Accessed May 27, 2016.

4 John F. Wasik. The New York Times. May 27, 2016. “The Best Way to Help a Grandchild with College.” http://www.nytimes.com/2016/05/28/your-money/the-best-way-to-help-a-grandchild-with-college.html?smid=tw-your_money&smtyp=cur&_r=0. Accessed May 27, 2016.

5 Heather Long. CNN Money. May 13, 2016. “How much $$$ do you need to start investing?” http://money.cnn.com/2016/05/13/investing/how-to-start-investing/index.html?sr=twmoney052816how-to-start-investing0233AMStoryLink&linkId=24774777. Accessed May 27, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Stay Plugged in to New Tech Trends

Technology hasn’t just improved over time; it’s also matured its users. Today, the average child gets his or her first cellphone at age 10.1 In past generations, 10 was about the age when parents finally let their kids use those creepy crawly bug makers that required a heating device.

These days, one of the biggest growth trends in IT is wearable technology, such as medical and fitness devices. As much of the nation continues on its prolonged health kick, companies have adapted to consumers’ needs by rolling out wearable technology. The U.S. has accounted for the largest share of these medical and fitness devices that encourage improved health and activity.2

New products are constantly rolled out with a variety of everyday applications, such as cloud delivery services, digital entertainment/gaming, location-based services, increased digital security and big data analytics.3

The bigger and better the breakthrough, the more expensive the product sells for in stores. Just as you would do your research and shop around before buying a fitness wristband or new TV, we believe it’s important to apply the same level of scrutiny to your financial strategy. If we can help you create a retirement income strategy utilizing both investment and insurance products, please give us a call.

Technology developed specifically for the financial industry has fostered a new generation of smaller, more nimble and virtual companies. For the first time in history, smaller banks now have the opportunity to compete with large ones. Taking out loans and withdrawing and depositing money has become a do-it-yourself industry thanks to online services.4

In terms of investments in the technology industry, there’s a growing trend for start-ups to remain private, and they are increasingly able to generate investor money in doing so. In 2015, 146 private tech companies achieved valuations upward of $1 billion in private markets — which is twice as many as the year before. By contrast, some technology companies that underwent initial public offerings (IPOs) over the past four years have performed poorly; since 2011 over 40 percent are flat or below their final private-market valuations.5 Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Clearly, technology is an industry that will continue to grow and adapt. Not only is it innovating for businesses and consumers — young and old — but even in the way it funds and sustains business operations.

What’s interesting is that the creepy crawler machine of yesteryear is coming back on the market. Mattel is reintroducing a 3-D printer version this fall that will retail for $299.6 The high-tech twist on this classic toy is a prime example of how technology will affect younger generations moving forward, while the price tag puts the potential cost of a 10-year-old’s cellphone in perspective.

 

Content prepared by Kara Stefan Communications

1 Influence Central. May 20, 2016. “Kids & Tech: The Evolution of Today’s Digital Natives.” http://influence-central.com/kids-tech-the-evolution-of-todays-digital-natives. Accessed May 20, 2016.

2 FOX8live. May 17, 2016. “Global Wearable Technology Industry 2016 Market Analysis, Size, Share, Growth, Research, Forecast, Trends, Opportunities and Challenges: QyResearchReports.” http://www.fox8live.com/story/31994070/global-wearable-technology-industry-2016-market-analysis-size-share-growth-research-forecast-trends-opportunities-and-challenges-qyresearchreports#.VzwC_w5_Hkc.twitters. Accessed May 20, 2016.

3 Steve Andriole. Forbes. Dec. 15, 2015. “Technology M&A in 2016: Macro and Enabling Trends Predictors.” http://www.forbes.com/sites/steveandriole/2015/12/21/technology-ma-in-2016-macro-and-enabling-trends-predictors/#7def80b95e11. Accessed May 20, 2016.

4 Business Insider. April 14, 2016. “The fintech industry explained: The trends disrupting the world of financial technology.” http://www.businessinsider.com/fintech-ecosystem-financial-technology-report-and-data-2016-2. Accessed May 31. 2016.

5 Begum Erdogan, Rishi Kant, Allen Miller and Kara Sprague. McKinsey&Company. May 2016. “Grow fast or die slow: Why unicorns are staying private.” http://www.mckinsey.com/industries/high-tech/our-insights/grow-fast-or-die-slow-why-unicorns-are-staying-private. Accessed May 20, 2016.

6 Edward C. Baig. USA Today. Feb. 13, 2016. “Mattel resurrects ThingMaker as a 3D printer.” http://www.usatoday.com/story/tech/columnist/baig/2016/02/12/mattel-resurrects-thingmaker-3d-printer/80236104/. Accessed May 20, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

You Can Bank on Financial Apps – to a Degree

Financial technology, also known as fintech, is a growing business model among companies looking to use software to provide financial services.

The ability to make transactions from any location, and at any hour, makes online banking and bill paying increasingly appealing. For this reason, fintech is being embraced by startups and large banks as an offshoot idea for proprietary technology.1

However, while it’s convenient to withdraw or deposit money on a smartphone or tablet, we believe it’s still best to consult a financial professional when dealing with more complex financial decisions. As a financial professional, we’re a call away when you need a detailed assessment of your retirement assets or personalized advice that an app can’t provide.

In the meantime, banks are making strides in simplifying the basic transactions that you can complete from home. We’ve entered an era in which institutions collect “big data” to serve customers the way they prefer. Beyond “multichannel” (delivery on multiple platforms) or “omnichannel” (delivery through all channels similarly), the new “optichannel” approach will analyze a customer’s bank experiences to tailor and deliver services via his or her preferred channel.2

One of the latest fintech innovations attempts to cross the barrier between banking and investment products. Launched in January of this year, an app named Clink is designed to help investors conduct small, low-risk investments. The app links bank and investment accounts to create an automated investing plan — either on a regular basis or every time you make a credit card purchase.

Similar to how some checking accounts allocate money to a separate savings account, a portion of your charge is routed to your Clink account and then invested in a portfolio of exchange-traded funds.3 Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

We believe there are benefits to the simplicity of this technology, but again, you also don’t want to invest your retirement savings on a whim. Before tinkering too much with apps like Clink, it’s best to talk it over with someone who will help you create a retirement strategy that you can feel confident about.

 

Content prepared by Kara Stefan Communications

1Paul Schaus. Bank Innovation. Jan. 5, 2016. “4 Fintech Predictions for 2016.” http://bankinnovation.net/2016/01/4-fintech-predictions-for-2016/. Accessed May 31, 2016.

2 Jim Marous. BAI. Jan. 15, 2016. “Top 10 Banking Trends for 2016.” https://www.bai.org/banking-strategies/article-detail/top-10-banking-trends-for-2016. Accessed May 31, 2016.]

3Bill Peters. Investor’s Business Daily. April 29, 2016. “How Your Apple iPhone Could Become Your New Bank.” http://www.investors.com/news/why-your-local-bank-is-moving-into-your-iphone/?_cldee=a2FyYWNvbUBlYXJ0aGxpbmsubmV0&urlid=14. Accessed May 31, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

FDR’s Influence in Challenging Times Still Resonates

When President Franklin D. Roosevelt was sworn into office in 1933, the United States was mired in the worst financial period of its history.

FDR’s election came in the middle of The Great Depression, when unemployment reached 25 percent overall, and as high as 50 percent in some cities and industries. More than 9,000 banks closed in a four-year period, representing $2.5 billion in lost deposits.1

Yet, in his first presidential inaugural address, Roosevelt counseled Americans with his now-iconic statement that “the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

The newly elected president’s words inspired confidence, but some of his first actions as president were just as impactful. FDR deployed two quick, decisive measures within his first week as president: (1) He declared an immediate weeklong bank holiday, and (2) he addressed the nation with a “fireside chat” radio speech to explain the banking problem.

In doing so, he calmed the populace’s fears, restored rational thought and demonstrated his ability to lead with courage and confidence. When the banks reopened, lines formed once again — this time for citizens to deposit the money they had withdrawn.

We believe how we cope with financial concerns can help determine our long-term success, both as a nation and in our own personal lives. Despite an economy that is significantly better than it was in the 1930s, having enough money in retirement is still a common concern.

According to government research, the two primary expenses in the average 75+ retiree’s household budget are housing (36.5 percent) and health care (15.6 percent), despite the fact that this demographic frequently has Medicare and a paid-off mortgage.2

It’s interesting to look back and analyze how FDR helped mitigate our nation’s greatest financial crisis, using decisive action, transparency and communication. His wife, Eleanor Roosevelt, once said of him, “I have never known a man who gave one a greater sense of security.”

Perhaps by considering the challenges President Roosevelt faced when he first took office, each of us can gain the courage to help face our retirement income concerns with confidence. Few people in U.S. history have had the calming effects FDR displayed in his nationally broadcasted speeches, but if there’s anything we can do to address your long-term financial goals, please give us a call.

 

Content prepared by Kara Stefan Communications.

Want to read more? Here are some articles that may be of interest to you:

[CLICK HERE to read the transcript, “Franklin D. Roosevelt: First Inaugural Address,” from Bartleby.com.]

[CLICK HERE to read the article, “Don’t Let Your Emotions and Fear Influence Your Investments” from Philadelphia Magazine, March 9, 2016.]

[CLICK HERE to read the article, “The Secret Shame of Middle-Class Americans” from The Atlantic, May 2016.]

[CLICK HERE to read the article, “What FDR Knew about Managing Fear in Times of Change” at Harvard Business Review; May 4, 2016.]

1HistoryMatters.com. “‘More Important Than Gold’: FDR’s First Fireside Chat.” http://historymatters.gmu.edu/d/5199/. Accessed May 25, 2016.

2Center for Retirement Research at Boston College. May 3, 2016. “Housing, Health Are ½ of Elderly’s Costs.” http://squaredawayblog.bc.edu/squared-away/housing-health-are-12-of-elderlys-costs/. Accessed May 25, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Why Dividend-Paying Stocks Are So Popular Now

Not only are the economy and financial markets sending mixed signals, now the Fed is too.

Up until recently, the Federal Open Market Committee of the Federal Reserve Board had been unanimous in its efforts to either hold steady or slowly increase interest rates based on labor market conditions and inflation factors. However, at the April meeting, at least one member expressed dissention about the board’s lack of more aggressive action.1

Uncertainty among the FOMC also makes it difficult for investors to see a clear future. As such, many have “fled to quality.” With continued low bond yields, high-quality stocks that pay growth dividends have become an attractive alternative to fixed income products.2 They tend to have less earnings volatility and generally more dividend income contributing to their returns than low-quality stocks.

A large allocation of equities, regardless of whether they’re dividend-paying, may not be the right move for all investors. We’re happy to take a look at your portfolio and entire financial picture to see if this asset class would be appropriate for your situation.

Dividend stocks generally pay out on a quarterly basis a portion of the company’s earnings for each share to shareholders. For example, if a company pays an annualized dividend of 20 cents per share, the company will send each shareholder a check for one-fourth of 20 cents (5 cents) for each share he or she owns at the end of each quarter. However, it is important for investors to understand that dividends are paid at the discretion of the board of directors and are therefore not guaranteed.

Many investors have gotten in the habit of reinvesting those dividends throughout their working careers, which has afforded them the opportunity to buy more shares. Once retired, they can take those dividend distributions instead of reinvesting them, thereby generating a stream of income from dividend-paying stocks. Again, this assumes that the company’s board of directors continues to declare and pay dividends on a regular basis.

Unlike the interest from bonds, stock dividends also tend to grow over time. In fact, stock dividend growth has historically outpaced inflation.3 If you count the value of dividends as part of the stock market’s overall total return, the S&P 500 has already surpassed its highest return on record.4

If you’re considering making any changes to your portfolio, it’s important to work with a financial advisor to review your options within the context of personal goals and your investment timeline. Even the securities you select need to be aligned with what’s already in your portfolio. Remember, investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Depending on your particular investment goals and risk tolerance, it may be suitable to consider a mutual fund or exchange-traded fund that bundles dividend stocks in one package for diversification and risk management purposes. Please feel free to contact us to discuss your particular situation.

 

Content prepared by Kara Stefan Communications.

Interested in reading more? Here are some articles that may be of interest to you:

[CLICK HERE to read the article, “How to pick dividend stocks,” from Fidelity, March 24, 2016.]

[CLICK HERE to read the article, “Warren Buffett’s Top 10 Dividend Stocks,” from TheStreet.com, April 22, 2016.]

1Patti Domm. CNBC. April 27, 2016. “Divided Fed aims for clarity but could create confusion.” http://www.cnbc.com/2016/04/26/fed-will-do-a-cautious-dance-to-avoid-volatility.html. Accessed May 17, 2016.

2Dani Burger. Bloomberg. April 23, 2016. “Aging Baby Boomers Push Spam, Diaper Stocks to Record Valuations.” http://www.bloomberg.com/news/articles/2016-04-24/aging-baby-boomers-push-spam-diaper-stocks-to-record-valuations. Accessed May 17, 2016.

3Aaron Levitt. Investopedia. “How To Live Off Your Dividends.” http://www.investopedia.com/financial-edge/0812/how-to-live-off-your-dividends.aspx. Accessed May 17, 2016.

4Jason Zweig. The Wall Street Journal. April 21, 2016. “S&P 500 Already Hit a Record – If You Count Dividends.” http://blogs.wsj.com/moneybeat/2016/04/21/sp-500-already-at-a-record-if-you-count-dividends/. Accessed May 17, 2016.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the complete loss of principal.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Home Sweet Home

Like other aspects of the economy, the real estate market has been slow to recover to “normal” levels. But we believe there are some positives that come with the lull in housing sales. In some pockets of the country, prices have escalated substantially due to low inventory, high demand and relatively low interest rates.

According to the National Association of Realtors, existing home sales in the Midwest and Northeast bolstered the market in March. Buyers are also expected to be out in force in most regions of the country during this spring sales season.

The mid-priced market is much stronger than properties that are very low or very high priced. This is because fewer mid-level homes are on the market, and lenders have stringent qualifications, leaving many low-end potential homeowners on the sidelines.

[CLICK HERE to read the article, “Existing-Home Sales Spring Ahead in March” from National Association of Realtors, April 20, 2016.]

[CLICK HERE to read the article, “Home sellers see strongest appreciation since the recession” from MarketWatch, April 21, 2016.]

If you’re in the market for buying or selling, consider talking with a qualified professional about how these changes may impact your financial strategy. Remember that profits may be able to be repositioned to strengthen your retirement savings, and that overextending for a real estate purchase could potentially impact your financial plans for the future.

It’s always good to review your retirement strategy within the context of your complete financial picture — particularly before you make any big decisions. Let us know if we can help you with your long-term financial goals.

[CLICK HERE to read the article, “Use the 20% Rule to Guide Real Estate Decisions” from NerdWallet.com, April 21, 2016.]

[CLICK HERE to read the article, “7 Home Buying and Selling Tips from the Property Brothers” from HGTV, 2016.]

It’s interesting that, despite the drop in home prices over the last decade, Americans still like their real estate. In a recent poll, 35 percent named real estate the “best long-term investment,” over stocks (22 percent) and gold (17 percent). Remember, investing involves risk, including the potential loss of principal, and no investment strategy can guarantee a profit or protect against loss in periods of declining values.

Millennials, on the other hand, favored savings accounts over real estate as their top choice. It just goes to show you that young adults have taken their first life lessons to heart, and that long-term experience can provide a wider perspective.

[CLICK HERE to read the article, “Gallup: 35 Percent of Americans Pick Real Estate as ‘Best Long-Term Investment’” from NewsMax.com, April 20, 2016.]

[CLICK HERE to read the article, “Investors should look beyond REITs to gain real estate exposure: Jeffrey Kolitch” from Investment News, April 19, 2016.]

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 has been prepared for our firm and contains general information to help you understand basic financial planning strategies that may help you work towards your financial goals. Please understand that I cannot make any promises or guarantees that you will accomplish such goals.  All investments are subject to risk including the complete loss of principal.

Throughout, we may generally discuss different financial vehicles; however, nothing contained herein should be construed as a recommendation to buy or sell any financial vehicle, nor should it be used to make decisions about your investments.

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

More Retirees Heading for Hubs

When retirement is on the horizon, many people put their current hometown in the rearview mirror. As the retiree population continues its upward trajectory, we expect popular retirement destinations to grow right along with it.

A recent study by McKinsey & Company identified 13 U.S. “retirement hubs” — cities that are most likely to experience rapid growth by retirees. In the next 14 years, the number of retirees is expected to grow by more than a third, from 164 million to 222 million.

Although modest Midwest towns are drawing more interest, the biggest draw for retirees is still the warm weather and sandy beaches of Florida.

[CLICK HERE to read the article, “Urban World: The Global Consumers to Watch” from McKinsey & Company, April 2016.]

[Copy and paste this link into your browser http://www.forbes.com/best-places-to-retire/list/ to read the article, “Best Places to Retire” from Forbes, 2016.]

[CLICK HERE to read the article, “The World’s Best Places to Retire In 2016” from International Living, Jan. 1, 2016.]

When you need guidance to reach your desired destination, both location-wise and financially, we’re here to help. There are a variety of ways to manage retirement assets, from annuities and 401(k) plans to IRAs, pensions and investments. Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. If you’re looking to relocate in retirement, we can help evaluate what your expenses will look like and help create a personalized retirement income plan using a variety of insurance and investment products.

[CLICK HERE to read the article, “Should Annuities Be Part Of Your Retirement Portfolio?” from Fortune, Feb. 3, 2016.]

[CLICK HERE to read the article, “High-Yield Corporate Bonds: Compelling Relative Value Despite Volatility” from Guggenheim Partners, March 17, 2016.

[CLICK HERE to read the article, “How to get guaranteed retirement income for life” from CNN Money, Jan. 20, 2016.]

On the flip side, staying put is another popular option for retirees, especially if all their friends and family still live nearby. Much like the relaxing “staycations” that became commonplace during the recession, there’s no reason why you can’t make a retirement hub in your own hometown.

While your place of retirement may not be a college town, there’s likely one nearby. Check out what opportunities are available for local residents, such as auditing classes, use of athletic facilities and traveling performances by theatre groups, authors or artists.

Also, see what your library has going on. Many offer a range of classes taught by locals who specialize in a specific topic, whether it’s religion, technology or archeology.

By making the most of your surroundings, the town you’ve been living in all along can become a desirable retirement locale in its own right. Retirement hubs aren’t just about warm weather and sandy beaches, but also staying busy and experiencing new things. Consider both options, and when you decide whether you’d rather stay nearby or set out for a new destination, visit us and we will help you create a financial strategy that you can feel confident about.

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 has been prepared for our firm and contains general information to help you understand basic financial planning strategies that may help you work towards your financial goals. Please understand that I cannot make any promises or guarantees that you will accomplish such goals.  All investments are subject to risk including the complete loss of principal.

Throughout, we may generally discuss different financial vehicles; however, nothing contained herein should be construed as a recommendation to buy or sell any financial vehicle, nor should it be used to make decisions about your investments.

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