by timelessnc | Nov 20, 2018 | life insurance, Managing Healthcare Expenses
No one plans to spend retirement in a nursing home or an assisted living community. However, that could be a reality for many retirees. According to the U.S. Department of Health and Human Services, someone turning 65 today has a 70 percent chance of needing long-term care in the future. Twenty percent of those individuals will need care for more than five years.1
Long-term care isn’t always provided in a nursing home or other facility. Many seniors need in-home assistance with tasks such as bathing, eating and mobility. Whether the care is provided in the home or in a facility, though, it’s likely to cost thousands of dollars a month. If the care is needed for several months or years, it’s easy to see how the cost could deplete one’s savings.
Fortunately, you can minimize the impact by planning ahead. Below are four common strategies many seniors use to fund their long-term care needs. A financial professional can help you determine which strategy is right for you.
Pay out of pocket.
There’s always the option to pay out of your savings and investments for your long-term care. That may be sufficient if you require minimal help, like hiring someone to run errands or do basic chores.
If you need more intensive assistance, however, you may find it difficult to pay for care out of pocket. A recent Genworth study found that the average assisted living facility costs $3,750 per month. An in-home health aide costs more than $4,000 per month on average.2
Consider what it would mean to pay those bills over several years. While you may cover some costs out of pocket, you may not want to rely on this method as your only funding option.
Use Medicaid.
Many retirees assume that Medicare will cover all their health care costs. That’s not usually the case. There are many services that aren’t covered by Medicare, and long-term care is one of them. Medicaid, on the other hand, will cover stays in nursing homes or other facilities.
There’s a catch to using Medicaid, though. You have to have few assets and little income to qualify for Medicaid protection. That means many seniors are forced to deplete their own assets before they transition to Medicaid funding. If you need to leave assets for your spouse or want to leave a legacy for your family, you may not want to spend down your assets to get Medicaid protection.
Get a reverse mortgage.
If your home is paid off, you may want to tap into the equity to pay for your long-term care needs. Your reverse mortgage lender gives you money for the home’s equity, usually in the form of monthly payments. When you die or permanently move out of the home, you or your heirs sell the property and pay off the reverse mortgage balance.
While a reverse mortgage can be a helpful strategy, there are a few drawbacks to keep in mind. One is that it may not be the right solution if you want to keep the home in the family after you pass away. Your heirs will almost certainly have to sell the home. Also, you’ll need to maintain the home so you can sell it to cover the loan balance. If you can’t afford to keep the home up to date, you may not want to take on a reverse mortgage.
Buy long-term care insurance.
A long-term care insurance policy may be the best strategy for your needs. You pay premiums to an insurer, either in a lump sum or on a periodic basis. The insurer then pays some or all of your long-term care costs if you ever need care in the future. Most policies cover care either in your home or in a facility.
You can adjust the features and benefits on your policy to meet your needs and budget. For example, you can choose the amount of protection, what kind of care is covered and even whether the benefit increases with inflation. Some policies even allow for a death benefit so your heirs receive a portion of any unused coverage.
Ready to develop your long-term care strategy? Contact us today at Timeless Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
2https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18148 – 2018/10/17
Facebook: Odds ar
by timelessnc | Nov 9, 2018 | Retirement Income Planning, Social Security
Social Security recently announced that the cost-of-living adjustment (COLA) in 2019 will be the highest since 2012. Next year’s benefit increase of 2.8 percent is significantly higher than 2018’s 2 percent raise. In fact, other than 2012, there hasn’t been an increase of more than 2 percent in the past 10 years. There weren’t any COLA increases in 2010, 2011 or 2016.1
The 2019 COLA may be welcome news for seniors who are struggling to keep up with rising costs for groceries, energy and much more. Social Security offers COLA increases to benefits to help recipients keep up with inflation. The COLA amount is based on a broad version of the consumer price index (CPI).
Why the COLA May Not Be Sufficient for Seniors
An increase in Social Security benefits is always good news. However, there are a few reasons why even a 2.8 percent increase may not be enough to help seniors keep up with rising prices.
First, for many retirees, Social Security makes up only a portion of their overall income. Since the COLA increase only applies to Social Security benefits, it doesn’t mean retirees are getting an overall increase in income. If you receive income from a pension or investment distributions, you may need to take other steps to keep up with inflation.
There’s also debate about how Social Security examines costs such as housing and health care to calculate COLA. Social Security uses the CPI-W, or consumer price index for urban workers, to estimate COLA.
The problem is that the CPI-W tracks costs for workers, not for seniors. Many retirees face different costs than the average worker faces. For instance, retirees may have increased health care and housing costs. The CPI-W doesn’t weight those areas heavily, so it may not be an accurate gauge for retirees.
Tips to Keep Up With Inflation
The good news is there are other steps you can take to manage your exposure to inflation and protect yourself against rising costs. One is to maintain a balanced approach and not become too conservative in your strategy. You’ll likely need some level of growth. That often means taking risk.
However, you may want to talk to a financial professional about tools that can generate increasing income and minimize risk exposure. For example, you can use an annuity to generate a guaranteed* income stream and potentially increase over time. Often, the annuity is guaranteed* for life, regardless of market performance.
You also may want to look at long-term care insurance with an inflation protection rider. Long-term care can be a sizable expense, and it usually isn’t covered by Medicare. Also, costs are rising every year, often at a higher rate than inflation. An insurance policy in which the benefits are aligned with inflation could help you keep up with rising costs.
Ready to develop your retirement inflation strategy? Let’s talk about it. Contact us at Timeless Solutions today. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1https://www.ssa.gov/cola/
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov
18149 – 2018/10/17
by timelessnc | Oct 24, 2018 | Estate Planning, life insurance, Managing Healthcare Expenses, Retirement Income Planning
Planning for retirement can seem like a complex process, but it tends to bring unique issues for singles. Married couples often benefit from joint pension payments and dual Social Security income streams, as well as multiple 401(k) accounts and IRAs. Single retirees may find it more challenging to plan for retirement without the benefit of a partner’s income and assets.
Increasing amounts of Americans are single as they enter retirement. That’s especially true for women. According to data from the U.S. Census Bureau, more than half of all women age 65 and older in 2014 were single.1
If you expect to be single in retirement, you may face unique planning challenges and issues. One of the biggest could be the need for long-term care, which is extended assistance with daily living activities such as eating, dressing and bathing. Long-term care is often provided either in a facility or in the home and can cost thousands of dollars per month. According to the U.S. Department of Health and Human Services, 70 percent of retirees will need some form of long-term care.2
Unless you have a strategy in place, long-term care could drain your retirement assets. Below are a few questions you can ask yourself to start planning for long-term care expenses. If you haven’t started planning, now may be the time to do so. It’s never too early to consider the risk and your options.
Who will provide help?
Long-term care is often caused by cognitive issues like Alzheimer’s, Parkinson’s or the aftereffects of a stroke. In the beginning stages of these conditions, a spouse may be able to provide much of the necessary support and assistance. That can delay the need for an in-home aide or a move to a facility.
However, single retirees don’t have the benefit of a spouse to help with day-to-day living activities. Consider who could provide assistance if you should develop a cognitive issue. Do you have grown children in the area? What about other relatives, like a sibling or nieces or nephews? Could you rely on friends or neighbors?
Be careful about depending on friends and family for too much help. While they may be willing to pitch in occasionally, you don’t want to be dependent on someone who has other important obligations. Consider that you may need to pay for a full-time health aide if you wish to stay in your home.
Who can make decisions on your behalf?
Incapacitation is another big concern in retirement. Incapacitation is the inability to make or communicate decisions about your finances or health care. Again, this is often caused by cognitive issues.
Without any input from you, your relatives or doctors may be forced to make decisions on your behalf. They may make choices that you wouldn’t make for yourself. You can avoid this risk by establishing written planning documents such as a power of attorney or a living will. These legal documents provide exact instructions on how your health and finances should be managed and who should make decisions on your behalf.
What are your funding options?
A recent Genworth study found that the average room in an assisted living facility cost $3,750 per month. An in-home health aide was more expensive, costing on average more than $4,000 per month.3 How long could you afford to pay those costs out of your retirement assets? Consider that many people need long-term care for several years.
You may want to look at long-term care insurance. You pay premiums today in exchange for long-term care coverage in the future. Coverage varies by policy, but most insurers cover care that’s provided either in a facility or in a home, and will pay some or all of your costs. A financial professional can help you find the right policy for your needs and budget.
Ready to plan your long-term care strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1https://money.usnews.com/money/personal-finance/articles/2016-09-23/many-women-will-be-single-in-retirement-are-you-ready
2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
3https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18087 – 2018/10/1
by timelessnc | Oct 10, 2018 | Estate Planning, Retirement Income Planning
Estate planning is an important part of any financial strategy. It’s a broad term that covers a lot of issues, but estate planning generally refers to the distribution of one’s assets after death. An estate plan may include a will, trust and other documents that state how your property and other assets should be distributed to your heirs.
In today’s digital age, though, estate planning isn’t just for financial assets. You may have virtual accounts and assets that also need planning and protection. For instance, your email may hold important or sensitive information. Your social media accounts may hold photos, videos or other assets with sentimental value. Perhaps you even have online investment accounts or income streams that will need management after your death.
Unfortunately, there’s no standard legal process for managing these assets. While a will, trust and other tools are accepted as legal documents to manage financial assets, it’s unclear how these documents can be used with regard to digital accounts. This is a relatively new area of estate planning, so your strategy could evolve over time. However, there are a few basic steps you can take today to protect yourself and your digital footprint.
Decide on your wishes for your digital assets.
Before you take any action, it’s helpful to sit down and think about your wishes and objectives. Make a list of your important accounts, such as email, social media, photo and file storage, and more. Then consider what you would like to happen to those accounts after you pass away.
Are there any compelling reasons why someone would need access to an account? For instance, do you do business through an email or online payment account? Would your family need access to that information?
Also consider the sentimental value of your various accounts. Do you have pictures or other memories that you would like to share with your family after you’re gone?
Finally, privacy is also a concern. If you give your family access to your email or social media after you pass away, consider that they may be able to see everything you have ever done in those accounts. There may be certain information or communications that you don’t want to share with your children or other loved ones.
Learn about your digital vendors’ rules.
Since there are no standard rules about posthumous digital management, each company has created its own rules and guidelines. Some email providers are strict and don’t allow any access after an account owner’s death. Others allow access if the account hasn’t been used in several months. Some social media companies will keep your page up as a “remembrance page” with limited access to others.
Do some research to see how your primary account platforms operate after a user’s death. They may allow you to designate a backup person to take over your account or access certain information. If they don’t allow that option, you may need to consider alternative strategies.
Create written instructions.
Theoretically, you could include account management instructions, usernames and passwords in your will or other documents. That may not be a great idea, however, as those documents are often filed as public record. That means anyone could gain access to your accounts.
Instead, consider using a password management tool to store login info, and then simply have your estate executor provide that info to the appropriate person. You could also store a document with digital asset instructions along with your other important documents, such as your insurance policy, will and others.
Ready to review your estate planning strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your objectives and all your assets, and then develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18086 – 2018/10/1
by timelessnc | Sep 21, 2018 | life insurance
Risk management is at the core of any strong financial strategy. Before you can try to achieve your biggest goals, you need to protect yourself from risk. All it takes is one costly emergency to throw your strategy off track.
One of the biggest risks you and your family may face is the possibility of an unplanned death. If you’re the primary breadwinner in your home, your death could leave the family in a challenging financial position. Even if you don’t provide most of the income in the house, you likely contribute in other important ways, and your family may struggle to overcome your loss.
Life insurance mitigates the financial risks associated with death. It provides a tax-free lump-sum benefit to your family, friends, business partners or whomever else you may name as a beneficiary. They can use those funds in any manner they like, such as paying off debt, saving for the future or replacing your lost income.
Not all life insurance is the same, though. There are many different types that meet a broad range of needs. However, most types fall into one of two categories: term or permanent. Both offer specific types of protection for specific goals. Below are the differences between the two and how you can use them to meet your objectives:
Term Insurance
As the name suggests, term insurance provides life insurance protection for a defined period of time, or term. You choose your term when you open the contract, and they often span from 10 years to 30 years. The longer your term, the higher the premium is likely to be.
You pay a flat premium every year during the term. As long as you meet the premium requirements, you are covered by a death benefit. At the end of the term, you may have a few options. You can continue the policy, though the premium may be recalculated to reflect your older age. You also may have the opportunity to convert the insurance into a permanent policy, again with a new premium amount.
One important note to consider is that term policies usually don’t have cash value. All of your premium payment generally goes toward the cost of the insurance. If you choose not to renew the coverage at the end of the term, you don’t get your premiums back.
Term policies are effective strategies when you have a finite need for protection. For instance, many parents buy term insurance when they have young children in the home. However, they may no longer need the coverage when the kids are grown and out of the house. You also may consider term insurance that aligns with a long-term loan, like a mortgage.
Permanent Insurance
Permanent insurance is life insurance coverage that stays in place as long as you live, assuming that you make all the premium payments. The premiums for permanent insurance are generally higher than those for term policies because there is certainty that you will pass away at some point during the policy’s life span. In other words, the insurer is certain to pay out the death benefit at some point, which isn’t necessarily the case with a term policy.
Permanent policies also have a cash value component. That means some of your premium payment goes toward the cost of the insurance, but a portion also goes into an account inside the policy. That account grows on a tax-deferred basis. Depending on the policy, the cash value may earn dividends, interest or even growth through market returns.
As you accumulate cash value, you can use it to increase your death benefit or pay down your premiums. You can also use it as a source of tax-efficient income through either loans or withdrawals.
Permanent insurance is a great option when you have an indefinite coverage need. For instance, perhaps you want to leave money for your spouse or children, no matter your age when you pass away. Or maybe you own a business that will need liquidity after your passing.
Ready to develop your life insurance strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and choose the coverage that’s right for you. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17963 – 2018/9/4
by timelessnc | Sep 6, 2018 | life insurance, Managing Healthcare Expenses
Are you planning to purchase life insurance? Or are you already in the process? That could be a wise decision. Life insurance is a valuable financial tool that can protect your family should you pass away. Your life insurance policy will provide a tax-free death benefit to your beneficiaries, which they can use to pay debts and medical costs or for financial stability during a difficult time.
Your eligibility for coverage is based on a number of factors, but your age and health are two of the most important. These factors are analyzed during a process called underwriting. During this time, the life insurance company looks at the proposed coverage and analyzes its potential risk. Essentially, it’s determining when you might die based on your age and your health.
Age is an easy factor to quantify. Health is more difficult. Life insurance companies often use questionnaires and medical exams to learn more about an applicant’s health. The result of that analysis can influence whether a person is eligible for coverage. It can also affect your rating and premium amount. The healthier you are, the lower your premium is likely to be.
You can’t change your health overnight, but there are steps you can take to prepare for the exam. Below are three tips to help you get the best rating possible and reduce your premiums or improve your odds for eligibility:
Cut back on bad habits.
You may already know that you have some unhealthy habits. Maybe your diet could use some improvement. Perhaps you smoke cigarettes or regularly drink alcohol. Now is the time to cut back on those habits, even temporarily. By reducing your trips to fast-food restaurants, you could lower your cholesterol. You could cut back on drinking and boost your liver health.
Smoking is an important habit to consider. Most insurance companies have two sets of rates—one for smokers and one for nonsmokers. If you plan ahead and stop smoking well in advance of underwriting, you may be able to qualify for a nonsmoker rate. As you might imagine, the smoker rate is usually higher than the nonsmoker rate.
Go into the exam as well-rested and healthy as possible.
Blood pressure is a big indicator of heart health and an important metric for life insurance underwriters. Since heart failure is a major cause of death, especially among seniors, life insurance companies will place a heavy emphasis on high blood pressure. Take steps in the lead-up to your exam to have a relatively normal blood pressure level.
Try to get a good night of sleep before your exam, and also try to eliminate any ongoing sources of stress. Get that big project finished at work, or resolve the home repair issue you’ve been dealing with. Think about taking a relaxing walk or some other form of light exercise the morning of the exam. Also think about skipping your morning coffee.
Tell the truth.
You may feel tempted to lie about your health or lifestyle in order to qualify for lower rates. For instance, you may not be honest about your tobacco, drug or alcohol use. Maybe you’re considering being dishonest about your participation in risky activities like sky diving or scuba diving. Or perhaps you’re thinking about omitting from your questionnaire a diagnosis you received in the past or a prescription you currently take.
Life insurers often understand that unintentional omissions happen. However, if you pass away and the insurance company suspects that you intentionally misled underwriters or lied during the application process, it may challenge the benefit payment to your beneficiaries. Resist any temptation to omit information from your medical exam.
Ready to protect your family? Let’s talk about your life insurance strategy. Contact us today at Timeless Solutions. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17965 – 2018/9/4
by timelessnc | Aug 29, 2018 | Social Security, Uncategorized
For nearly 80 years, Social Security has been a valuable resource for America’s retirees. The program was created in August 1935 when President Franklin D. Roosevelt signed the Social Security Act.1 The law created an independent governmental agency that would provide lifetime income benefits to retirees, the disabled and their surviving spouses and children.
The agency was originally called the Social Security Board but was later renamed the Social Security Administration (SSA). The SSA began collecting payroll taxes in 1937 and paid out the first lump-sum benefit to a Cleveland motorman the same year. He retired one day after paying a 5-cent payroll tax, and he received a retirement benefit of 17 cents.1
In 1940 the SSA started making monthly payments to retirees age 65 and older. While the benefits and eligibility requirements have changed slightly over the years, Social Security operates today much like it did in the beginning. Below are common questions and answers about Social Security and the role it may play in your retirement:
What does Social Security cover?
As of December 2017, Social Security provided benefits to more than 45 million retirees and dependents, over 10 million disabled Americans and dependents, as well as 6 million survivors. Retirees account for 72 percent of benefits; disabled workers account for 16 percent, and the remainder of benefits are paid to survivors.2
Nearly 90 percent of retirees receive Social Security benefits.2 Research indicates that many seniors rely on Social Security for a substantial portion of their income. Among retirement benefit recipients, half of married couples and 71 percent of singles say that Social Security represents more than half of their income.2
When can you file for Social Security?
You can file for Social Security as early as age 62, although you could see a benefit reduction of as much as 35 percent if you file at that time. To avoid a reduction, you need to wait until your full retirement age (FRA) to file. Most people reach their FRA between their 66th and 67th birthdays.3
You don’t have to file at your FRA, though. In fact, you can delay your filing all the way to age 70. Social Security offers an 8 percent benefit credit for every year that you wait after your FRA. If your FRA is 66 and you wait until age 70 to file, that’s a total permanent benefit increase of 32 percent.4
Will Social Security run out of money?
Much has been made of the prospect that Social Security may run out of money. While Social Security won’t disappear anytime soon, it’s true that the program faces some serious financial challenges. In 2020 the SSA will start paying out more in benefits each year than it collects in payroll taxes. That means it will have to dip into the trust fund, which is projected to be depleted by 2034.5
Even after the trust fund is gone, however, the program will continue to collect taxes to fund benefits. Experts estimate that with benefit cuts, perhaps as much as 21 percent, the program could remain solvent through 2090.5
Ready to plan your Social Security strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
1https://www.ssa.gov/history/briefhistory3.html
2https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf
3https://www.ssa.gov/planners/retire/agereduction.html
4https://www.ssa.gov/planners/retire/1943-delay.html
5https://www.fool.com/retirement/2017/05/22/a-big-social-security-change-is-coming-in-2020-and.aspx
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov
17846 – 2018/7/30
by timelessnc | Aug 29, 2018 | Uncategorized
If you’re just starting to save for retirement, you’re not alone. According to a recent study, a third of all Americans have nothing saved for retirement. An additional 22 percent have less than $10,000.1
Fortunately, you can get back on track and overcome your savings gap by taking quick action. There are plenty of tips and tricks on how to overcome a savings shortfall. You can make cuts to your budget so you can save more. You can delay your retirement. You could even work part time after you retire.
However, a solid retirement strategy is usually built on a foundation of good habits. Retirement is a significant financial goal. It takes decades of disciplined effort to reach your objectives. Below are three good habits that are at the core of any retirement plan. Master these habits, and you’ll greatly improve your chances of funding a comfortable and enjoyable retirement.
Pay Yourself First.
Saving is an important part of any retirement strategy. The most important contribution you may ever make, however, may be to pay yourself first. Your ability to earn income may be your most valuable asset. The more you can increase your income, the more money you may have to save for retirement.
Look for ways you can contribute to yourself and possibly increase your earning potential. Could you advance your education and put yourself in line for a promotion or raise? If you’re self-employed, could you learn new skills that would increase your earning ability? Should you consider a career change?
Your earnings are the fuel that drives your savings plan. If you can increase your earnings and savings, you can greatly increase your odds of hitting your retirement goal.
Become a disciplined saver.
Perhaps the most important habit when it comes to retirement strategy is disciplined saving. The most successful savers start putting money away early and save on a regular basis. You can’t go back in time and make up for lost years of saving, but you can change your savings habits today.
Put your savings on autopilot by setting up automatic contributions to your 401(k) and IRA. By making the contributions automatic, you take choice out of the equation and minimize the risk that you’ll use the money for something other than savings. Once you get used to the automatic contributions, you may not even notice the hit to your budget.
Regularly review your strategy.
Life changes, and when it does, it’s important to review your financial strategy. Remember that you’ll likely be saving for retirement over several decades. Your goals, needs and risk tolerance won’t stay constant over that time, so you’ll need to make changes to your strategy.
For example, it’s possible that you may become more conservative over time, and you may want to consider tools that can protect you from downside risk, such as annuities. Or you could be forced into early retirement and may need to adjust your plans. A regular review with a financial professional can help you identify new risks and make the appropriate adjustments.
Ready to build your retirement strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
1http://time.com/money/4258451/retirement-savings-survey/
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17845 – 2018/7/30
by timelessnc | Jul 11, 2018 | Retirement Income Planning
We’re halfway through 2018. Are you on track to hit your savings goals? If not, don’t worry. You have company. It’s easy to get off track with your savings, especially when it comes to a long-term goal like retirement. After all, you may have other expenses—such as debt, emergency costs or child care—that seem more urgent.
The good news is that you still have time left in the year to put away money for retirement. Qualified accounts may be the best way to do so. These accounts, like 401(k) plans and individual retirement accounts (IRAs), offer tax-deferred growth. That means you don’t pay taxes on growth inside the accounts until you take a distribution.
Below are three commonly used qualified accounts and how they can help you save for retirement. You still have time left this year to ramp up your savings. Work with a financial professional to implement a savings strategy.
Employer 401(k) Plan
Does your employer offer a 401(k) plan? If so, it may be your most powerful available savings tool. As mentioned, 401(k) plans grow on a tax-deferred basis. You don’t pay taxes on growth until you take distributions from the plan.
Your 401(k) contributions could also reduce your current taxes. Contributions are usually deducted from your pay on a pretax basis. They reduce your taxable income, thus reducing your tax exposure.
Another powerful aspect of the 401(k) is the potential of earning employer matching contributions. Many employers will match employee contributions dollar-for-dollar up to a certain threshold. For instance, your employer may match as much as 3 percent of your annual salary in contributions. By contributing up to the employer match level, you can substantially increase your savings.
In 2018 you can contribute as much as $18,500 to your 401(k) plan. If you’re age 50 or older, you can also contribute an extra $6,000 in catch-up contributions, bringing your total allowable contribution to $24,500.1
Traditional IRA
You can also contribute money to an IRA. These are individual accounts that offer tax-deferred growth and potentially other tax benefits. You open an IRA through a financial professional, who can help you implement the right strategy for your goals.
The traditional IRA is the most widely held. It’s taxed similarly as a 401(k). Your funds grow on a tax-deferred basis while they’re in the plan. You then pay income taxes on all distributions. You may face a 10 percent penalty if you take a distribution before age 59½. You also may be able to deduct your contributions from your current taxes, assuming you meet income limitations.
In 2018 you can contribute $5,500 to an IRA. If you’re age 50 or older, you can contribute an additional $1,000 in catch-up contributions, giving you a total allowable contribution of $6,500.2
Roth IRA
While the traditional IRA is a helpful tool, you may feel that the Roth IRA is better suited to your needs. The Roth is taxed slightly differently than a 401(k) or traditional IRA. Growth inside the account is still tax-deferred, but there are other components that are different.
First, contributions to a Roth are not tax-deductible. That means you fund the account with after-tax dollars. Your distributions from the Roth are tax-free, however, assuming you take them after age 59½. The Roth can be a powerful tool to create tax-free income in retirement.
Ready to implement your retirement savings strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
1https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2018-irs-401k-contribution-limits.aspx
2https://www.fool.com/retirement/2017/10/22/heres-the-2018-ira-contribution-limit.aspx
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17743 – 2018/6/19
by timelessnc | Jul 8, 2018 | College Planning
According to recent research from Fidelity, many parents are off track to fund their child’s college education. The study found that 70 percent of parents want to fully fund their child’s tuition and education costs. On average, however, parents are on track to cover only 29 percent of the costs by the child’s freshman year.1
College is a major financial challenge for many families, especially those who have multiple children. It’s only getting more expensive. From 1988 to 2018 the tuition for a private, nonprofit college rose 129 percent. Tuition for public college rose 213 percent over the same period.2
Fortunately, you have options available. Below are three different tools you can use to save for your child’s education. Each offers its own benefits and considerations. Your financial professional can help you choose the strategy that’s right for you.
529 Plans
The 529 plan has been around for years and has quickly become a popular choice for saving for college. These plans allow you to make tax-deductible contributions to an account for your child’s benefit. You can invest them as you like, and growth is tax-deferred. If you take distributions for qualified educational expenses, the withdrawals are tax-free.
Each state offers its own 529 plan, but you don’t have to use the plan in your state. You may get a deduction on your state income taxes if you use your state’s plan, but that’s not always the case. You also may find that another state’s plan has features and investment options that better fit your needs.
Keep in mind that 529 plan distributions are tax-free only if the funds are used for higher education. If your child doesn’t go to college, you may face taxes on your withdrawals. You can change the plan beneficiary to a different child. To take advantage of the tax break, however, you must ultimately use the funds for education.
UGMA/UTMA Accounts
These plans may be a better fit if you want more flexibility with regard to your child’s options. These are general savings accounts for minors. When your child reaches the age of majority in your state—usually either 18 or 21—the accounts transfer to their ownership. Your child can then use the funds as they wish.
However, you retain control of the assets until your child reaches adulthood. Also, while the growth in the accounts isn’t tax-deferred, it also isn’t fully taxable. Some growth is tax-free, and then, at additional levels, growth is taxed at the child’s rate.
Roth IRA
Do you use a Roth IRA to save for retirement? If so, you also may be able to use it to pay for your child’s education. Normally, you can’t take out distributions from a Roth before age 59½ without paying a penalty. However, you may be able to get a waiver on the penalty if you’re using the funds to pay for college.
You can also always take out your contributions from a Roth at any time without paying taxes or penalties. If you withdraw your contributions, however, you’ll reduce your balance and limit your growth potential in the future.
Ready to plan your child’s education funding strategy? Let’s talk about it. Contact us today at Timeless Solutions. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
1https://www.bankrate.com/finance/savings/3-ways-to-save-for-your-child-s-future-1.aspx
2https://www.cnbc.com/2017/11/29/how-much-college-tuition-has-increased-from-1988-to-2018.html
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17742 – 2018/6/19
